Navigator 2020 Germany - Together we thrive - Presseportal
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Contents 1. Overview 1. Overview Competitiveness and Current status of business Germany Global 2. Business outlook customer focus help Surviving day-to-day 3. Future strategy German businesses adapt 4. International trade to the new normal 5. Reshaping supply chains 10% 19% 6. Sustainability Survey methodology German expectations of business growth have waned in the wake of COVID-19. As Adapting to a changing environment a result, companies are taking a more cautious approach to future investing than their global peers. However, the proportion adapting to the new normal mirrors the global figure, achieved Introduction through focusing on entrepreneurialism, competitiveness and customer-centricity. 58% 58% Looking ahead, intra-regional trade remains dominant, with fewer German businesses The German government’s response to anticipating an upswing in international COVID-19 has been impressive, both in terms trading. Supply chains are a concern, with of public health and fiscal support. The latest priority given to suppliers within home regions fiscal package in June included VAT cuts to that can deliver fast, plus improved security, boost spending and employment. Shortly cost reduction, and lower exposure to one Thriving in the new normal before our 2020 Navigator survey opened, single market. it also extended its short-time working scheme and relaxed its corporate insolvency Although generally seen as good for business, law. But unemployment and corporate Germany’s engagement with sustainability is bankruptcies could rise when these initiatives lower than globally. Pressure from consumers 32% 24% end, hampering recovery in 2021. And as and governments, among other influences, is everywhere, further waves of COVID-19 likely to increase the focus. pose an ongoing threat. Navigator 2020 Germany | 2
2. Business outlook % German business is less When businesses expect to return optimistic about future to pre-COVID levels of profitability growth than its global peers 65 % Already ahead of our pre-COVID levels End of 2020 to 2022 2023 to 2025 Consistent with global findings, Spain optimism among German businesses has declined. Only 15% feel more confident Russia than a year ago – the lowest in Europe, and half the global proportion. of businesses expect France Expectations of revenue growth have also to return to pre-COVID Belgium fallen by 20% compared with 15% globally. profitability levels by What’s more, the proportion of German the end of 2022 UK companies that fall into the higher growth category is below the global average. Greece Encouragingly, more German businesses Germany say they are thriving in the new normal than globally. They’re also slightly ahead of the Italy global average for when they might return to pre-COVID levels of profitability. Netherlands Of the strategies available to aid recovery, Top 3 drivers of business growth Ireland enable growth and increase competitiveness, German businesses intend focusing on defensive cost-cutting, pro-actively expanding 1 2 3 Poland Company Introduction Technology- to new markets and improving products and culture / of new driven Sweden services. motivated products & efficiencies workforce services Switzerland Navigator 2020 Germany | 3
2. Business outlook (continued) % How business outlook has changed CHANGE IN BUSINESS OUTLOOK VS PAST 12 MONTHS [Q15] Germany Business investment in the last 12 months* German companies are more conservative 59% More pessimistic More optimistic or about investing than their peers: six in expect to stay the same ten (59%) intend increasing investment, compared with two-thirds globally and 22 2019 77 Germany in Europe (67% and 64%). They are also 34 2020 65 cautious about the level: a third (34%) plan to increase investment by 10% or more, compared with half globally. 20 2019 80 APAC 32 2020 68 These businesses will focus investment on of German businesses product innovation, the customer experience, employee wellbeing, expansion into new intend to increase 20 2019 79 Europe markets and marketing. But in each case investment in their 36 2020 62 the proportion is lower than globally. business in the 12 2019 88 Four in five companies plan to increase next year, despite North America 26 2020 73 investment in technologies that facilitate product/ the challenging service innovation, automation/operational efficiency, and targeting new customers. environment 13 2019 86 South America 18 2020 80 Strategies of German businesses to benefit MENAT 15 2019 85 from growth drivers and address threats 22 2020 77 1 2 3 4 5 Rest of 18 2019 82 Cutting costs Expanding Improving Investing in Collaborating Africa into new the quality of new skills / more with 32 2020 67 markets the products / employee industry partners services wellbeing / peers *Excludes businesses answering 'Don't know' Navigator 2020 Germany | 4
3. Future strategy % For German businesses, Investment priorities enabling entrepreneurialism businesses to move forward and innovation are key to future success 85 84 81 81 80 79 77 75 74 72 72 68 63 More companies in Germany have 84 implemented changes over the last 12 % months than globally, with a higher proportion of long-term/transformational changes – particularly among corporate, international and offline businesses. In line with the global position, the key reasons were cost reduction, advances in digitisation, future uncertainty, and regulatory requirements. of businesses have Product innovation Process innovation Upskilling workforce Employee wellbeing Customer experience Sales channels New markets Marketing Cashflow Supply chain transformation Cyber security Sustainability Digital-only tools undergone changes German businesses believe the successful companies of the future will be well-rounded in the last 12 months and defined by innovation. More than half (55%) say that becoming more entrepreneurial will make their business more customer- centric. Half say it will make them more competitive, and just under half (45%) say Top 5 facets of a successful entrepreneurial business it will improve their people focus. There are clear and tangible benefits to 1 2 3 4 5 Technical Agility / Open- Recognising Speed becoming more entrepreneurial: three in ten innovation capacity for mindedness / the vailue to market businesses in Germany believe it will lead to change inclusivity of failure an increase in market share, in line with global. Navigator 2020 Germany | 5
4. International trade A less optimistic outlook Priorities for expansion in the next 3-5 years prompts Germany to Markets, territories and regions in which German businesses are looking to expand maintain focus on intra-regional trade 63 % Markets & territories Regions Fewer German companies think international trade has or will become more difficult than their global peers. This reflects the lower proportion (40% of companies expect compared with 64% globally) who believe protectionism has increased. their international trade prospects over the next Despite this, fewer businesses expect their 1-2 years to be positive international trade prospects over the next couple of years to be positive (63% compared with 72% globally). But sentiment appears to be improving, with more German companies not reducing external trade in the past two Protectionism years, as well as not considering doing so in the next two years, than in 2019. Percentage of businesses that think that countries/territories/governments Intra-regional trade remains dominant in are becoming more protective of their Germany – seven in ten businesses trade within Europe, with Austria and France the domestic businesses 10% 11% 50 most important markets. And slightly more US 5% 19% APAC German companies (15%) are opting to operate domestically only than in 2019 (11%), 40 (9% in 2019) 11% 42% (14% in 2019) Central Austria instead of expanding internationally. 30 and South (18% in 2019) France Europe America 2017 2018 2019 2020 (8% in 2019) (48% in 2019) (9% in 2019) Navigator 2020 Germany | 6
5. Reshaping supply chains Supply-chain anxiety % Priorities for the supply chain motivates companies to (Priorities immediately in 2021 and beyond) reassess selection criteria 44% 70 69 68 65 62 61 61 60 60 Nearly nine in ten German companies (89%) have concerns about their supply 58 chains, chiefly around increasing costs, 51 instability and insufficient agility. of businesses expect In response, they are selecting suppliers according to their operational resilience and that reshaping their ability to deliver quickly, as well as their use supply chain will of digital/technology. Businesses have also focused on suppliers located within their reduce costs home regions. Of the companies that have made changes, slightly more have reduced their supply chain (20%) than have diversified it (17%) – the reverse of the global trend. Use of digital/technology Resilient/able to deliver quickly Suppliers closer to customers Tighter specifications/contracts Future pandemic control Suppliers’ sustainability practices Greater transparency Focus on home region Work with more suppliers Transport/storage management Work with fewer suppliers Looking ahead to 2021, businesses will invest Top 3 benefits of reshaping in areas of the supply chain that reflect the the supply chain changes they’ve been making. They expect these priority areas to reduce costs, as well as minimise exposure to one single market, 1 2 3 Cost Reduction Enhancement while also improving security. reduction of exposure of security/ to one reduction of risk market to supply chain Navigator 2020 Germany | 7
6. Sustainability Greater focus on Companies believe a greater focus sustainability is expected to on sustainability will drive growth benefit German business 50% expect modest growth of up to 5% German companies recognise that sustainability is good for business, 19% expect growth of between 6% and 9% 86 although less so than their global % peers. And while nearly three-quarters 4% (73%) expect an increased focus on expect growth of sustainability to result in sales growth, 10% or more this is also a lower proportion than their global counterparts (86%). Approximately three-fifths of German companies have set targets for a broad range of German companies of environmental, social and governance- think there are multiple Measuring sustainability related (ESG) elements. Again, though, this is a lot lower than the global proportion, opportunities for their More companies in Germany have been measuring all 3 aspects compared with 2019 which stands at around three-quarters. business from improving The metrics that have seen the biggest its environmental and increases since 2019 include energy usage ethical sustainability (almost twice the level of a year ago), labour 2019 65% 55% 34% standards, and executive salaries and compensation. 40% 2020 76% 70% Over the year to come, businesses believe that consumers, governments and supply chains are the most likely to ramp up pressure to be sustainable. Environmental Social Governance Navigator 2020 Germany | 8
About HSBC Navigator Germany For further information about The HSBC Navigator survey, which is the the research please contact: largest of its kind, is conducted on behalf of HSBC by Kantar. The study gauges sentiment Kate Woodyatt and expectations of businesses in the near to HSBC Global Communications mid-term future on topics including: business katewoodyatt@hsbc.com outlook, future strategy, international trade, supply chains and sustainability. It is compiled Or click on from responses by decision-makers at 10,368 www.business.hsbc.com/navigator businesses – from small and mid-market to large corporations – across a broad range of Note industry sectors in 39 markets. There may be a slight discrepancy between the sum of individual items and the total as Sample sizes for each market were chosen shown in the tables due to rounding. to ensure the statistical accuracy of results, with 350 businesses surveyed in Germany. Whilst every effort has been made in the Global results are based on an average of the preparation of this report to ensure accuracy 39 markets (using weights based on each of the statistical and other content, the market’s share of world trade). The survey was publishers and data suppliers cannot accept conducted between 11th September and 7th liability in respect of errors or omissions or October 2020. Interviewees were polled on a for any losses or consequential losses arising range of questions including how COVID-19 from such errors or omissions. The information has affected their business and potential provided in this report is not intended as for growth. The survey represents a timely investment advice and investors should source of information on the fast-evolving seek professional advice before making any international business environment. investment decisions. . Navigator 2020 Germany | 9
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