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Wednesday, July 10, 2013

Germany's Mittelstand: Hidden champions of the economy

The Harvard Business Review says that the amazing resilience of the German economy is often attributed to its reliance on Mittelstand companies, small to medium sized enterprises. These typically family-run businesses employ more than 70% of all German employees in the private sector, and are export-oriented, making Germany the second-largest exporter in the world. There is a wonderful account of these companies in the book 'Hidden Champions' by Hermann Simon, former INSEAD professor and now Chairman of Simon, Kucher & Partners.

Germany's more than 1,300 'Hidden Champions'

The Washington Post said in 2010:

"Buy a bottle of champagne and it puts money in the pocket of Schneider and Co., a family-owned manufacturer that from a remote perch in the German countryside has created a global monopoly on the wire cages that secure the corks on sparkling wine. Obscure in a country of marquee exporters such as Mercedes-Benz and Siemens, the company's international focus is common among small and often family-owned firms in Germany.

Schneider's highly automated plants (in Germany) and in Italy, Spain and Brazil churn out 2bn of the devices a year. Its dominant market share -- amassed over 30 years -- helps explain Germany's complex and controversial role in the European economy."

2008 presentation: How Germany's mid-size companies get ahead and stay ahead in the global economy [pdf]

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