Germany is the largest European consumer goods market - Essay Example

Germany has proved to be a very good destination of the other countries to invest in. they offer a wide rangeof activities and environment which is favorable to the investment of different types of investment that promises high returns and sustainability. The country also offers an environment that is so welcoming to foreign investors as the government is involved in ensuring that they live in the country comfortably. It is the fifth largest economy but the largest in Europe. In addition to this, it is the largest investment and trade partner to US. This has occurred due to its strong financial economy. [Horst Seibert, 2005] Due to this, it is going to offer a better advantage to investors who want to invest in it especially the consumer industry that is dealing with the consumer goods like clothes as there will be a wider market for the same. The social market economy of Germany has made it very favorable since the formation of the federal republic. The policy makers have continuously pursued the parallel national goals of export driven economic growth as well as a national social cohesion that will ensure even the foreign investors are treated well and with respect just like the nationals of that country. This has been done through the robust system of social welfare programs. There are many government funded programs which in due time reduce economic disparities and affect every person who is in Germany. The result of this is that the citizens in Germany will be well to do and their incomes are going to be higher resulting to increased consumption and sales. When the investors from the different countries have a variety of products like the consumer goods which are not in Germany, the consumers will tend to try the new products as they have the finances. The law of demand applies here in that the higher income will increase the demand of the goods and will also go for the new products which are in the market the political leaders have shown a greater concern for the economy of the country by sacrificing to see to it that the social cohesion is obtained. Germany is the largest European consumer goods market. It has a very large population that ranges beyond 82 million people. This offers a wide market for the new goods in the form of clothe as the higher population creates a greater demand for the goods. The retail trade is the third revenue generator in Germany. The high population is in the higher proportion with the young generation who has high money volatility. They have a high definition of the new clothes and will there for favor the investments in that place. Their spending is very high especially on new things and will therefore consider taking the new consumer goods and therefore this can be a very good market. Germany is experiencing a low inflation rate. This ensures that the living standards are moderate and that the goods are not that expensive from the outside world and investments in that country. The living standards are therefore very low as compared to many other countries and therefore the spending power is very high. The domestic purchasing power in the recent years has experienced a stable growth even considering the economic crisis in the past few years that has seen the euro go down and some economies like that of Greece suffer but Germany has remained intact and has in fact ended up being the savior to these economies. The consumption level decreased by 0.5% in 2010, from the previous year. It is this that has made Germany one of the worlds thriving private consumer markets. [Andreas Falke, 2009] There are very many retail industries. In 2009 only, the retail revenue in the country was 398 billion which brings it at the top three retail markets in Europe together with France and UK. This has made it a home to a rich and diverse market surrounding. The small and medium sized enterprises have become part of this environment and there are more than 400,000 companies and 2.9 million employees thus making the retail sector among the most important. The workforce have salaries and wages which allows them to afford the products in the market and therefore the consumer goods like clothes have an upper hand as they are in high demand in places where there are many people and especially who have an income. This sector has recently produced 10% of the GDP whereas their consumption on non food items is Euros 147 billion which ranges at 24% of private spending. In this regard, the investors can comfortably invest in the consumer goods like the clothes and this is what makes the investors to join in the German cycle as it is very productive and profitable. In addition to this, the introduction of a new product type or design is something that consumers may want to try and therefore attractive as a destination for non food consumer items. The government is offering incentives to the investors regardless of the country of origin. These may come from the public incentives program or the private sources. The public incentives are there for all companies. These fit the needs of the investment projects from the first stage until the last one. There are working capital loans for the day to day business operations and this can assist the foreign investors in settling in the country as they bridge the temporary financial need with the permanent supply of the finances. There are public subsidies for the investors through the loan program in Germany which offer loans with a lower rate of interest and also the repayment free duration for the starters. In addition to this, there are cash incentives for the investment projects like the cash investments that attract non repayable grants especially for new machinery and therefore if a company to produce clothing would be set up in such a place, then it would have very low in terms of financial constraints. In addition to these, there are labor incentive that is indirectly through undertaking of research and development. These are aimed at reducing the operational costs. The European countries consider Germany to be the most attractive investment destination in terms of the regional investment focus for the years ahead. The country has had corporations with the universities in the country as well as the research firms and have tended to as well reduce the tax burden in the country by almost 8% and this has made to be one of the most competitive tax systems in the world for the developed countries. The result of these is that the companies will have much in terms of returns on investments. Germany has excellent infrastructure as sited by different studies like the IMD’s world’s competitiveness yearbook and other UNCTAD investment surveys. It has very efficient and extensive infrastructure that will aloe efficiency in the transportation of the cloths to different locations of the country thus a great reach and wider market due to the road network. This is in various forms, that is, roads, rail, air as well as considering the energy and communications infrastructure. The air transport is a good link to eastern and western Europe markets. In addition to this, the shopping centers in Germany have increased their space by almost 50% in the recent past and this will give space for the setting of the cloth industry near the centers, with assistance from the government. The consumers in the country have reduced the sellers cost of having to shift from none place to another to advertise their products as there are online purchases and placement of orders. The consumers turn to the internet to check for the available clothing and the new designs if there are any and will therefore reach many consumers within a short span of time. Around three quarters of the households in Germany have internet access and the consumers carryout their research there before making the purchasing decisions and thus the country becomes one of the largest e-commerce markets in the world. The payment is also made online and therefore may not need to travel to get the money [Matthew Saltmarsh, 2009,]. The only thing that is going to be different is the delivery of the clothing. The country has a body of experts who assist investors to set up operations in Germany. The project management is supported from the early stages and the investor is provided with information concerning the key markets and the related supplies. This is done by the people who have a lot of experience of the market, especially that of Germany. The result of this is that the clothes firm will not take much time to settle or to make an impact in the market as these investment advisers will help to reach the market at a cheaper and a fast way. The location of the country is a big motivator to invest in that country. The country is strategically located as an entry point to the other European countries, their markets and technological leadership. This position allows it to have partnerships with major perfuming companies and firms which help in the reaching out of more areas. Germany is therefore like a source and a destination market for all countries around it and therefore takes advantage of that to equip it more. The country offers competitive labor costs due t the high productivity rates. This makes it a place to be in terms of investing in. the average labor increase are the lowest in Europe and has highly flexible working practices like the contracts which are fixed termed the permit to work is 24 hours acceptable. The labor pool in the country is the largest due to the population and the education level as more than 80% have attained the university training. In addition to this, most of the Germans can speak more than one foreign language and therefore it wouldn’t be difficult to trade there as one will find others who speak one or more of the languages that he speaks. This will make communication simpler. The country experiences one of the most stable political, economic and social environments that are favorable for investment. [Ahearn, 2009] It provides a solid corporate projects base for external investors who may want to set up their firms in the country. The judicial and civil services exercise professionalism and ensure that the agreements reached at are secure to the letter. In addition to this, the intellectual property is protected in that country. Reference list: Ahearn, Raymond J. 2009. “Rebalancing the World Economy: Germany,” Retrieved 15 November 2011 http://fpc.state.gov/documents/organization/133909.pdf Andreas Falke,2009 “The Internationalisation of the German Economy,” p. 219 Horst Seibert, 2005 The German Economy, pp 21-42. Matthew Saltmarsh, 2009, “Charges of Protectionism Great G.M.’s Deal on Opel,” New York Times, September 9. Read More