GERMANY Trends and Developments Contributed by: Rainer Wilke, Ingo Theusinger and Ralph Schilha, Noerr
Key Considerations for Businesses Regarding Crisis Management in Germany Legal, political and economic changes are chal- lenging for companies looking to enter or expand into the German market. This article provides an overview of the most important trends and developments affecting businesses in Germany today and how crisis management can help con- quer these challenges. Germany’s Current Economic Landscape Germany’s economy is characterised by a strong industrial base, technological innovation and a highly skilled workforce. However, recent global economic challenges – such as inflation, energy costs, and supply chain disruptions – have a major impact on almost any business. Economic growth has been sluggish due to global slow- downs and high energy prices. Inflation remains a concern, though it has slightly stabilised. The country’s ambitious energy transition policy has created both opportunities and challenges for businesses. While subsidies and incentives exist for green energy investments, many companies struggle with rising electricity costs. Supply chain disruptions remain an issue, par- ticularly due to ongoing geopolitical tensions such as the war in Ukraine or the European trade disputes with countries such as China. Raw material shortages and logistic bottlenecks are forcing businesses to adapt by diversifying sup- pliers and increasing local production. In addition to these challenges, businesses are also confronted with national challenges such as the rising costs of labour, production materials, real estate, and construction. The demand for local manufacturing capacity is surging as companies aim to minimise reliance on global supply chains. As businesses consider
realigning their production strategies, proximity to key European markets makes Germany a key choice for setting up manufacturing hubs. The rising operational costs associated with energy, labour and materials in particular sometimes make it difficult to attract investors to the Ger- man market, compared to various alternatives in other European countries. The real estate market in Germany is also under- going significant changes. The rising costs of construction materials and higher interest rates have made property investments more expen- sive. Many businesses face increasing rental costs, especially in major cities such as Berlin, Munich and Frankfurt. Companies must consid- er the financial implications of real estate invest- ments and assess alternative locations where rental prices are lower. Despite economic and regulatory challenges, Germany offers significant investment oppor- tunities across various industries. Companies in Germany are required by law to establish a risk management system. The management of a company is responsible for exercising the due care of a prudent manager, faithfully complying with the relevant duties. Companies are allowed to design and adapt the risk management sys- tem in accordance with their individual needs. Crisis management therefore needs to adapt in line with different regulatory trends and the trends in each industrial sector. Regulatory Trends Foreign investment control While Germany continues to attract foreign investment, regulatory control has increased, particularly in critical sectors such as defence, infrastructure, technology and energy. The Fed- eral Ministry for Economic Affairs and Climate
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