The in­credi­b­ly shrin­king Ger­ma­ny, Inc., by Ulf Som­mer.

Handelsblatt Global Edition Magazine - - Table Of Contents - BY ULF SOM­MER

Ger­ma­ny’s lea­ding firms are drop­ping out of the glo­bal cor­po­ra­te ran­kings. The rea­son: shrin­king banks, ex­po­sure to a Chi­ne­se slow­down and a striking lack of ho­me-grown IT.

Ger­ma­ny might bo­ast so­me of the world’s most suc­cess­ful and re­co­gniz­able com­pa­nies, from au­to­ma­kers BMW and Mer­ce­des to glo­bal sports­we­ar gi­ant Adi­das. But among the world’s hig­hest-va­lued corporations, Ger­man com­pa­nies ha­ve be­en ra­pidly drop­ping down the list. On Han­dels­blatt’s ran­king of the world’s Top 100 by mar­ket ca­pi­ta­liza­t­i­on, Ger­man com­pa­nies ha­ve disap­peared from the hig­hest 50 spots al­to­ge­ther. The hig­hest­va­lued Ger­man com­pa­ny, co­m­ing in 66th place, is drugs and pesti­ci­de ma­ker Bayer, worth €96 bil­li­on, or $105 bil­li­on (see chart).

The do­mi­nan­ce by U.S. firms in the top spots of Han­dels­blatt’s world­wi­de ran­king has be­co­me al­most to­tal, es­pe­cial­ly fol­lo­wing the see­mingly un­stopp­able growth of Ame­ri­ca’s big­gest In­ter­net and IT com­pa­nies, such as App­le, Ama­zon and Al­pha­bet, the hol­ding com­pa­ny that owns Goog­le. The top 10 spots are all Ame­ri­can. The first non-U.S. firm is In­dus­tri­al and Com­mer­ci­al Bank of Chi­na in 11th place. Fif­ty-four of Han­dels­blatt’s Top 100 are head­quar­te­red in the U. S., whi­le on­ly 26 are ba­sed in Eu­ro­pe. On­ly six of the lat­ter are Ger­man.

Cor­po­ra­te Ame­ri­ca has not do­mi­na­ted the rest of the world to this extent sin­ce the ear­ly 1970s. With a com­bi­ned va­lue of €1.4 tril­li­on ($1.54 tril­li­on), on­ly th­ree com­pa­nies — App­le, Al­pha­bet and Mi­cro­soft – are worth so­me €300 bil­li­on mo­re than Ger­ma­ny’s 30 lar­gest lis­ted com­pa­nies all to­ge­ther. The­se 30 ma­ke up the ent­i­re DAX stock in­dex.

Cor­po­ra­te Gerr­ma­ny’s re­la­ti­ve shrin­ka­ge is no short-term ab­er­ra­ti­on. All of Eu­ro­pe has strugg­led to pro­du­ce suc­cess­ful, fast-gro­wing com­pa­nies in the di­gi­tal eco­no­my. Ger­man bu­si­ness soft­ware ma­ker SAP, num­ber 73 on the list, is the one ex­cep­ti­on that pro­ves the ru­le. Among the Eu­ro­pean cor­po­ra­te gi­ants on the list, the Old Eco­no­my still pre­vails — in­clu­ding com­pa­nies li­ke oil ma­jors Roy­al Dutch Shell and To­tal, drug ma­kers Ro­che and No­var­tis and food pro­ducts group Nest­lé.

The list shows that the U.S. has ree­sta­blis­hed its­elf as an eco­no­mic su­per­power by har­n­es­sing the di­gi­tal re­vo­lu­ti­on bet­ter than others. U.S. com­pa­nies now do­mi­na­te the ent­i­re supp­ly chain, from net­work gi­ant Cis­co to tele­com­mu­ni­ca­ti­ons com­pa­ny AT&T, from chip­ma­ker In­tel to on­li­ne re­tailer Ama­zon.

Ame­ri­ca’s do­mi­nan­ce in the In­ter­net eco­no­my seems to grow by the day. Par­ti­cu­lar­ly worri­so­me for Ger­m­ans is the mas­si­ve tre­a­su­re chest of cash that com­pa­nies li­ke Al­pha­bet are now spen­ding on things li­ke dri­ver­less cars, which could be bad news for the Ger­man eco­no­my’s most im­portant in­dus­tri­al sec­tor. Volks­wa­gen, the Wolfs­burg­ba­sed au­to­ma­ker that brief­ly sur­pas­sed To­yo­ta to le­ad glo­bal sa­les fi­gu­res in ear­ly 2015 but fell back to se­cond place la­ter that ye­ar, has drop­ped out of the list al­to­ge­ther. Hit by a mas­si­ve emis­si­ons scan­dal in ad­di­ti­on to mo­re ge­ne­ral worries over the fu­ture of Ger­ma­ny’s all-im­portant car in­dus­try, the ma­ker of VW, Au­di and Por­sche cars has lost a fifth of its mar­ket va­lue.

Ger­ma­ny’s ban­king sec­tor li­ke much of Eu­ro­pe’s still ree­ling from the dou­ble wham­my of the fi­nan­ci­al and euro cri­ses — is al­so shrin­king back down to si­ze. Alt­hough Deut­sche Bank is still one of the glo­be’s big­gest ban­king be­he­moths by to­tal as­sets, in­ves­tors seem not to trust the bank to trans­la­te its out­si­zed ba­lan­ce sheet in­to sta­ble pro­fits. Deut­sche is now worth just €31 bil­li­on, a small frac­tion of the €255 bil­li­on va­lua­ti­on that ma­kes Wells Far­go the world’s lar­gest bank by mar­ket cap. Ot­her worries weig­hing down on cor­po­ra­te Ger­ma­ny in­clu­de the slow­down in Chi­na and ot­her emer­ging mar­kets. With al­most 50 per­cent of Ger­man GDP ge­ne­ra­ted by ex­ports and a lar­ge Ger­man cor­po­ra­te foot­print in Chi­na, Ger­man com­pa­nies are mo­re ex­po­sed than ma­ny others to de­ve­lop­ments around the glo­be.

Han­dels­blatt’s ran­king does not in­clu­de un­lis­ted fa­mi­ly-ow­ned busi­nes­ses, which are es­pe­cial­ly pre­va­lent in Ger­ma­ny. Lea­ding fa­mi­ly com­pa­nies in­clu­de car parts ma­ker Bosch, re­tailer Al­di and pu­blis­hing firm Ber­tels­mann, which owns Pen­gu­in Ran­dom Hou­se. But though they count among the glo­bal le­a­ders in their fiel­ds, no­ne of them can com­pe­te in si­ze with the world’s lar­gest lis­ted corporations.

Ulf Som­mer co­vers fi­nan­ce and bu­si­ness for Han­dels­blatt.

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