| |
SMEs in the economy
The German economy is characterized above all by its approximately 3.3 million small/midsize enterprises (SMEs) in the crafts, industry, trade, tourism, service, and liberal professions. Defined as businesses with under 500 employees or less than 50 million euros turnover, SMEs contribute 57 % of corporate value added, create nearly 70 % of jobs, about 80 % of training slots, and account for 46 % of gross investment in Germany.
Framework policies
With its tax policy, the German government has given decisive impulses to strengthen SMEs. The reform measures adopted for the years 1998 to 2005 give SMEs some 15 billion euros in tax relief in their respective year of establishment. SMEs were relieved in the rough amount of 8 billion euros alone in 2001. Households will be relieved by more than 34 billion euros by 2005. This will particularly benefit domestic demand.
To cut the burden of red tape that impedes SMEs in particular, the federal government established a project group at the end of 1999 that is studying all specific indications of possibilities for more efficient systems and procedures and that is translating them insofar as possible into proposals for action. One focus of the project group is to increase the use of the new technologies to accelerate administrative processes and remove bureaucratic obstacles. In March 2001, the project group published an interim report with more than 80 individual measures of a specific nature. Among the concrete projects for 2002 are the testing of a nationwide ID number for companies (to be used with all government agencies) that will eliminate the many existing number systems and registers. In addition, the Federal Ministry of Economics and Technology has issued a publication providing 150 good examples of how government agencies and local authorities can make their services "business friendly." These examples are outlined in public presentations, the purpose being their imitation. Business transactions between companies and health insurance funds, including the benefits sector, have been possible via data transmission since October 2001. The data are passed on to the health insurance funds that are responsible for individual employees, with the result that employers have only virtual partners to deal with. There is no longer the need for completing, sorting, and sending forms.
SME policies and programs
With its SME policy, the German government aims to strengthen the performance and competitiveness of SMEs and offer them new growth and development possibilities. In particular, the start-up process in Germany is to be given additional dynamic and the stability and growth of existing companies supported. In this connection, the government observes the limits set by the European Union's policy on government aids.
Entrepreneurship
Entrepreneurial dynamic in Germany is fostered by, among other things, programs at schools and universities that familiarize students with issues of entrepreneurship. The initiative to set up university chairs for start-up studies, which has been undertaken by the German government in co-operation with the Deutsche Ausgleichsbank, has grown to include the participation of additional partners from the business sector and has resulted in the establishment of 42 chairs. More chairs are in the process of being established. The EXIST program has thus far furnished financial assistance to five regional networkers which create and operate models to motivate, train, and support start-up entrepreneurs from universities. More than 350 innovative business start-ups have been launched by the EXIST regions. Some of them are also receiving financial assistance from the EXIST-Seed program.
Furthermore, as part of the JUNIOR school project launched by the Deutsches Institut der Wirtschaft, students in school grades nine and above establish mini-companies operating under market conditions while participants learn under school supervision the appropriate responses to issues arising in self-employment. During the 2001/2002 school year, some 220 mini companies with 3,000 students from 12 German states participated in the project. And in 2001, the first business camp for mini companies was held, also to promote enterprise and individual responsibility. There are also many other school initiatives in the individual German states, as well as a brochure-binder developed by the Deutsche Ausgleichsbank with practice-related school material on self-employment which has already been sent to 14,000 teachers.
Financing
The imperfections encountered on capital markets can present obstacles that are hard to overcome for start-up entrepreneurs and for SMEs. The German government is therefore supporting start-up entrepreneurs and SMEs with a set of financing-assistance instruments tailored to their needs. The establishment of companies in the more traditional fields such as handicrafts is thus assisted by the ERP (European Recovery Program). In 2001, a total of some 5.6 billion euros were made available for ERP loans at favorable interest rates. In addition, start-ups and existing companies are being assisted by programs of both assistance banks (Deutsche Ausgleichsbank and Kreditanstalt für Wiederaufbau), which in 2001 gave more than 10 billion euros to fund loans granted to SMEs. The introduction of the so-called start-up funding program, which was established for the special purpose of covering the capital needs of smaller start-ups (up to 50,000 euros) and gives borrowers' banks an 80 % release from liability, has proved to be particularly helpful for start-up entrepreneurs. Women are taking advantages of this possibility to a greater-than-proportional extent. Since its launching in May 1999, more than 17,000 start-ups have been assisted with a loan volume of nearly 550 million euros. To help start-up entrepreneurs and SMEs gain access to bank loans, loan guarantees have also been made available as the security normally required by banks.
In the field of risk capital, the German government makes available in considerable volumes venture capital for young technology companies above all via the VTC - Venture Capital for Small Technology Companies. The funds are provided either as direct co-investment via the Deutsche Ausgleichsbank's technology venture capital fund association or as venture capital via the venture capital donors refinanced by the Kreditanstalt für Wiederaufbau. Through this program, more than a half billion euros in risk capital were mobilized in 2000 for some 1,000 young companies. While only companies in which venture capital donors have already taken stakes have been able to receive assistance under the VTC - Venture Capital for Small Technology Companies program, the VTC - Early Phase program, established in June 2001, helps start-up entrepreneurs even if there has not yet been any involvement by commercial stakeholders. The technology venture capital fund association takes on shares of up to 150,000 euros per company. With these programs, the federal government is assisting the development of a private risk capital market in Germany. It is providing supplementary support for these direct measures by strengthening the business angels market. Under the "Business Angel Network Germany," some 40 business angel networks which were created only in the past few years have been joined together.
Technology and Innovation
In the field of technology, R&D, and innovation, there are a number of assistance measures especially aimed at helping improve SMEs' technology base. The new PRO INNO program (PROgram INNOvation Capabilities for SMEs) aims at intensifying R&D cooperation both among SMEs and with the scientific community. This also entails the temporary transfer of staff from companies to research facilities and vice versa, as well as companies' support for the exploitation of innovations. In addition, the program "Technologies of the Future for SMEs" and the program "Support for Innovative Networks," which was launched in September 1999, assists demanding collaborative projects within which SMEs, including handicraft firms, cooperate with research facilities and universities. Special assistance is given SMEs in Germany's new states in the form of the program to "Assist Research, Development, and Innovation in SMEs and External Industrial Research Facilities in Germany's New States." The program section for "R&D Staff Assistance" is aimed at stimulating SMEs in the goods producing industries in Germany's new states and strengthening and expanding their personnel base in the R&D sector. The program section for "R&D Project Assistance" supports SMEs in trade and industry and assists external industrial research facilities in the development of new products and processes. The InnoRegio competition is also tailored to the special innovation circumstances in Germany's new states; it assists new forms of regional cooperation among educational and research facilities, business, and administrations, thus helping develop marketable products and services.
Electronic Commerce
The German government is assisting 24 regional centers of expertise in e-commerce in which SMEs are given a broad range of information, advice, and training for the better use of the Internet. In addition, there are branch-specific centers of expertise for trade and tourism. A further center for the liberal professions is now in preparation. With a number of initiatives, the federal government is helping to make SMEs fit for the Internet age. The Multimedia start-up competition will thus be a stimulus for turning innovative business ideas into reality in the promising multimedia sector. The German Internet Prize seeks to encourage the creation of model examples and already successfully tested best-practice examples of innovative Internet solutions taken by SMEs, which can furnish orientation assistance to other interested parties.
Management
Offering training and advisory services to start-up entrepreneurs and SMEs is a central element of Germany's SME policy. In this context, the German government particularly relies on the chamber organizations and on other partners in the business community that supply corresponding consulting and training measures, and it assists start-up entrepreneurs and SMEs in making use of such offers. In the year 2000, some 30 million euros were allotted by the Federal Ministry of Economics and Technology in assisting consulting and training efforts. Roughly 200,000 start-up entrepreneurs and small businesses were trained and advised. In addition, the Deutsche Ausgleichsbank operates its own consulting centers at more than 40 locations in Germany's new states.
The round tables established by the Deutsche Ausgleichsbank and the chambers are assistance measures that are used for companies experiencing crisis situations and that have proven to be of great value. Such companies can receive assistance at more than 30 locations in Germany, also with the aid of external experts.
Export Promotion
Assistance for the development of foreign sales markets and production sites is primarily undertaken by a close network of German chambers of commerce abroad, by so-called "delegates' offices," and by representations. Their offerings for SMEs range from market reconnaissance to the preparation of market studies, concrete advice in structuring joint ventures, and the placing of investments. Important information on markets, products, and possible cooperation partners abroad are also provided to SMEs by the Federal Office of Foreign Trade Information. Alongside general information services on specific topics (such as customs requirements, import procedures), branches, and markets, the Office also provides a special information service with targeted research, supported by numerous market observers abroad. The third pillar of external economic assistance are the business and economic services of the German embassies and consulates abroad. At the initiative of the Federal Ministry of Economics and Technology, the most important protagonists of Germany's external economic assistance created the Internet portal "iXPOS" early in 2001 in the framework of service collaboration in external economic affairs; this is an overview of all of the important service offerings in connection with doing business abroad and with the support measures available to SMEs.
The federal government also assists SMEs by providing export credit guarantees, investment guarantees against political risks in order to protect foreign investment, and assistance for participation in trade fairs abroad since international fairs are of particular significance for opening up the possibility of and transacting exports. Foreign investment is also facilitated through low-interest loans granted in the framework of the "KfW SME Program -Abroad." Finally, the establishment of contacts to foreign partners is facilitated through the organization of cooperation meetings.
Image Campaign "nexxt" - Initiative Business Successorship
To bring the topic of passing business ownership along to the next generation to the greater attention of the public, the Federal Ministry of Economics and Technology launched the image campaign "nexxt - Initiative Business Successorship" in May 2001; the campaign aims at informing present owners and potential successors. In this connection, events have been held throughout Germany together with many other partners from the business community; they have concentrated on the topic of successorship. In cooperation with the chambers, the Deutsche Ausgleichsbank is operating the project of an Internet firm bourse CHANGE/CHANCE. Participating in this project nationwide are more than 700 network partners in chambers, savings banks, and bank cooperatives. There are presently approximately 10,000 ads placed in the firm bourses. |
 |
|
