Germany and Latin America: a Lot of air to the top

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In the past decades, German companies have invested preferably in China. However, given the strong occurrence of China in Latin America, Germany appears to want his reluctance to give up. Too late?

The port of Cartagena in Colombia: little exports from Germany

“Latin America and the Caribbean offer today for German companies, the world’s best opportunities”, the McKinsey convinced. “The markets across the Region are open for German products, services, investments and Know-how.” But then, the caveat: Unfortunately, Germany did not use the “economic potential of the Region”. This is the Central message of a recent study by the consulting company McKinsey.

“This can and must change,” says Simon Kaesler, Co-author of the study and a McKinsey consultant for German and European companies in Frankfurt am Main. In his view, the brand “Made in Germany” in Latin America remains a high priority.

As proof of this, Kaesler, indicates that many Latin Americans use the terms “Germany” and “German” are often to an extraordinary quality of pretending. So you see in the streets of almost every Latin American city, “German” pharmacies, or “German “bakeries, although neither the products nor the owner had any connection to Germany.

Germany’s good Image

If the brand of “Germany” has in Latin America, so a good sound, why not use the German advantage of this, then? “It was not always so,” says the financial consultant of McKinsey. But while China and the US have engaged in recent years in the Region, is Germany, with only 2.6 percent of its direct investment in Latin America.

The end of VW beetle production in Mexico (2003): Good sound of the brand “Germany” in Latin America

“Even Spain, Italy and the Netherlands are represented in Latin America more than Germany, says Kaesler. And, although “German companies are well positioned to expand in the Region,” according to the McKinsey study.

Political instability deters continue to

Germany has invested very little in Latin America, but “exported only between 2 and 3 per cent of its products in the Region”, adds the expert. The great attraction of Asian markets and the volatility of some Latin American markets due to political uncertainties would deter many German companies. From the point of view of German companies, there is a lack of political stability and legal security. “However, these are factors that have improved in Latin America,” said Kaesler.

“The German foreign Minister Heiko Maas has been initiated in the Latin America Initiative of the German Federal government is important, because it finds that German companies have skills that would make a major contribution to the economic development of Latin America,” says the Co-author of the study, which was commissioned by the Latin America Committee of the German economy (LADW).

Increase productivity

Latin America owe 80 percent of its economic growth in recent years, the growth in population, and only 20 percent of the increase in productivity. The corresponding Figures for Asia are exactly the opposite.

Given this Situation, the key to successful economic development in Latin America seems to be the increase in productivity. An area on the Germany highlights.

“If the countries of Latin America want to increase your prosperity, increase your productivity, develop new technologies, the logistics, the automation increase and a real digitization to implement,” warns the McKinsey expert and adds that could cooperate in these areas, Germany and Latin America very well.