German SMEs more active on world markets than expected

In recent years small and medium-sized entities (SMEs) have been more active on international markets than thought so far. Furthermore, in the period from 2002 to 2006 they increased their average equity ratio from 19.0% to 23.9% thereby improving their credit worthiness. These are the most important findings of the “KfW-Mittelstandspanel 2008” by the KfW banking group which also analyzed data provided by micro enterprises employing less than 5 people.

Apart from activities on foreign markets and improved equity ratio investments by SMEs are noteworthy too: German small and medium-sized entities invested 204 billion Euros in 2007 which is 5.7% more than in 2006. Thus, their propensity to invest contributed significantly to the good economic situation over recent years.

German small and medium-sized entities generate a major part of their turnover on international markets: more than 800,000 companies operate on foreign markets which amounts to almost one quarter of all SMEs. Many of these are micro companies employing less than 5 people. SMEs operating on foreign markets distinguish themselves by higher productivity and innovation as well as higher investment propensity and employment. These characteristics underline the important economic role of small and medium-sized entities. The more equity capital a company has, the bigger the role it can play on international markets.

According to the KfW-Mittelstandspanel, German SMEs should even make more use of opportunities provided by foreign markets. In the current economic situation, however, this is quite difficult a task. Nevertheless, SMEs should concentrate on this objective in the medium term.

The “KfW-Mittelstandspanel 2008“ study is available for free-of-charge download as a long version (107 pages) and short version (12 pages). Also available online for free is a small presentation containing interesting charts. GERMAN

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