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| Places
To Do Business In Europe - Where
To Invest In Europe |
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| After living
for loads of years in New Zealand and South Africa, there is no doubt for
me that I am now more fluent in English than in German. When I do not deliberately
speak English, German or Spanish, words come out of my mouths automatically
in English. Every now and then I am aware that I know the word for something
in British, American, South African and New Zealand English but need a
few seconds to recall the German word. Who cares? I cannot help it. |
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| Thus
it may not surprise you to learn that I almost always do my reading in
English, not in German. First, because doing my reading in English comes
across a bunch more naturally than doing it in the language that we may
call my mother tongue. Second, at least the books and newspapers as well
as magazines that I am usually inclined to read do offer a little more
fresh air intellectually than the German alternatives. “The Economist”
and “The Spectator” are more fun to read than “Manager Magazin” and “Wirtschaftswoche”. |
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| However,
every now and then my humble self cannot resist scanning German newspapers
and magazines. Even though I cannot claim to have difficulties containing
myself when reading them, at least sometimes they offer some useful information.
A while ago, “Manager Magazin” published a ranking about the most attractive
regions in Europe for investing and doing business. “Wirtschaftswoche”
did a smiliar ranking about German cities and doing business there. As
I have not graced that part of the world with my presence for about twelve
years, in the course of time I have developed some distance to it. That
distance may turn out to be some healthy distance when chatting a little
about the findings of these two rankings. At least yours truly hopes so. |
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| According
to the findings of the ranking done by “Manager Magazin”, even the
top regions in Germany for doing business do not deserve to be called competitive
when compared to more attractive regions in Europe for investment. There
are two sorts of regions in Europe that offer – at least by European standards
– top notch conditions for doing business. First, countries that have recently
joined the European Union and are relatively advanced with their economic
transformation – e.g. Estonia, Poland, Hungary. Second, countries of the
“Old Europe” like Ireland and Austria. In particular in the sector of simple
services no region in Europe can compete with Estonia. In the sector of
high technology Ireland turns out to be head and shoulders above the crowd. |
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| The
ranking draws the conclusion that the corporate taxation in Estonia helps
the country outperform its competitors. The corporate tax rate in Estonia
is zero when profits are reinvested there. That sort of corporate taxation
appears to be beneficial in particular when you are in the process of setting
up a business. Businesses being set up and operating in Estonia also benefit
from comparatively low labour costs there. In terms of offering a
competitive business environment Estonia and Ireland have done in Europe
what New Zealand did a little earlier. |
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| On
the other hand, even the top notch regions in Germany for doing business
cannot compete with countries like Estonia because of a specifically German
combination of high labour costs and high taxation as well as short working
hours. German politicians in all shapes and sizes were already rambling
about revamping the German economy when I was a student at university.
That was about twenty years ago. Nothing worth mentioning has happened
then since. |
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| Look
at the calibre of folks in Germany that gets involved in politics and you
understand why. It is primarily the sort of folks with the flair of a post
office clerk. One of the things in the United States I am still favourably
inclined to is the regular exchange of people and experience among government,
business and academia. There is no doubt for me that Germany would benefit
from that sort of exchange. |
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| Doing Business
In German Cities |
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| Even though
there is virtually no US – style exchange among government, business and
academia in Germany, there are a few German business hubs worth chatting
about. The German business magazine “Wirtschaftswoche” recently did a ranking
about these business hubs. |
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| According
to the findings of that ranking, no business hub in Germany prospers as
much as Munich. I cannot claim to be surprised. After the second world
war Bavaria and its capital Munich suffered from a lack of heavy industry.
In the course of time, that lack was balanced out by the gradual development
of services and biotechnology as well as high tech industries. As a result,
Munich and its surrounding region can face economic challenges a bunch
more confidently than other regions in my valued country of birth. By the
way, Munich enjoys a reputation for having some sort of high society glamour
and the social hanky panky that this sort of thing entails. |
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| Second
placed in the ranking done by “Wirtschaftswoche” is Frankfurt. Frankfurt´s
nickname is Mainhattan because the city at the river Main displays a few
similarities to its counterpart Manhattan. Frankfurt radiates a cool, reserved,
modern flair with its skyline dominated by high rise buildings with offices
for national and international banks. It lacks the upper class ease of
Hamburg and the elegance of Dusseldorf. But it has managed to turn into
Germany´s most dynamic business centre. Nowhere else in Germany has
prosperity increased as fast and as much as in Frankfurt. |
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| Third placed
in that ranking is Stuttgart in southwest Germany. There are a few similarities
between Stuttgart and Munich. Like Munich, Stuttgart and its surrounding
region suffered from a lack of traditional industries. Similar to Munich,
it started from scratch by attracting services and modern industries. |
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| In my humble
opinion, it is no coincidence that the three most dynamic business centres
in Germany – Munich, Frankfurt and Stuttgart – are all located in the southern
half of the country. Even though the state governments of Bavaria and Baden
Wurttemberg in particular – Stuttgart is the capital of Baden Wurttemberg
– in no way deserve to be characterised as market radicals, at least they
have practiced a bunch more economic common sense than the rest of my valued
country of birth. The ranking reflects that the movers and shakers in Munich,
Frankfurt and Stuttgart are less brain damaged than in other parts of the
country. |
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| Does all this
mean that I fancy the idea of returning to Europe or Germany? No, not really.
You should never say never. But at the moment, it does not sound like an
appealing option. To my liking, most of Europe and in particular
Germany are a bunch too regulated in almost every respect. There may be
exceptions that offer niches. But the old world as a whole does not have
plenty on offer for individuals who value personal freedom. |
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| Moreover,
claiming that the economic fundamentals in Europe look brighter than in
the United States appears a little far fetched. Debt – at government ,
corporate and consumer levels – may look bad in Gringolandia. But at least
debt at government level in Europe is about twice as bad. |
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| Do you have
confidence in a single currency for a whole load of countries even though
each country does its own economic policy? In the course of time – during
my so far twelve years in the United States, South Africa, New Zealand
and Mexico – I have turned into something like a Eurosceptic – similar
to the British Tories, just without their nationalistic mambo jumbo. However,
depending on where you come from things may look a little different from
your angle. |
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| By
contrast, Kenya got rid of Daniel arap Moi in a peaceful and democractic
election after arap Moi had turned the country into a kleptocracy. His
successor is trying to rid the country of sleaze. Kenya has always been
ashamedly capitalist, which does not tend to be politically correct. Kenya
realises that an entrepreneurial culture and private investment will improve
its lot, not loads of handouts from self – proclaimed do gooders like the
United Nations and its agencies. |
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| The
UN Conference on Trade and Developement (UNCTAD) published a couple
of months ago a report on the world´s poorest countries. The report
implies that global integration and free trade impoverish. Of course the
report does not provide anything that comes more or less close to prove.
As “The Economist” remarks: “....no one is suggesting that once a country
has lowered trade barriers, it can relax and play golf”. |
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| That
remark pretty much reflects my attitude. Free lunches given by politically
correct aid agencies neither help countries nor people to stand on their
own feet. In case you are fond of reading an alternative blue print for
solutions, just turn to “The Economist” and the “Financial Times”. |
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| Markets Mobs
And Mayhem |
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| Robert Menschel
is a mover and shaker who exercises a little clout in the world of high
finance. More precisely, he is senior director of Goldman Sachs. He founded
the institutional investment department there. Like most folks with a purpose
in life, his life does not solely revolve around work. Robert Menschel
also sits on the Board of Trustees of The Museum of Modern Art and a few
other outfits. Moreover, Robert penned a book with the title “Markets Mobs
and Mayhem”. |
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| In his book
Robert explores the psychology of crowds and its consequences for business
and culture. The author resorts to illustrations that range from the rise
of the Nazis to the impact of brands on ordinary folks. Robert examines
traits and characteristics of followers as well. Throughout the book Robert
does not really applaud individualism in business. He rather gives individualism
subtly a standing ovation, if this way of putting it is not a contradiction
in terms (like military intelligence). More important to the reader who
is capable of thinking independently, conclusions may be drawn about sheep
mentality in other areas of life. The lessons are not only applicable to
business. |
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| All over the
book there are heaps of relevant quotations scattered that make the book
even more fun. Just two examples – “I do not believe in the collective
wisdom of individual ignorance” (Thomas Carlyle) and “crowds are by nature
unstable, with TV we now have the artificial crowd”. |
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| Is it worth
reading the book? In case you are fond of marching to the same drum, no.
In case you are fond of individualism and thinking independently as well
as walking the talk, yes. |
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| The following
is a list of articles written by Jurgen for the magazine: |
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