Target small firms in Germany, envoy tells India Inc

July 7th, 2008 - 4:12 pm ICT by IANS  


Ahmedabad, July 7 (IANS) Indian business can expand its footprint in Germany through buying out small and mid-sized German enterprises, the country’s consul general in Mumbai Walter Stechel said here. “The German turf is not a tough one,” Stechel said in an address last week to members of the Ahmedabad Management Association, a management training institute.

“Buyouts of existing units could be a better option than going for a greenfield project,” he said, adding that the buyout model has been successfully adopted by Reliance Industries, the Mahindras and Kalyani Forge.

Stechel said small and medium companies, that are basically family-owned, technologically sound and possessed a strong customer base, could be targeted for the buyouts.

He said many such enterprises faced problems arising out of succession or an unwillingness on the part of next generation of the family to move forward.

“They (the heirs) seem to be more inclined to writing books or playing golf” rather than run the enterprises founded by their parents, the consul general said.

“Family-owned companies in India and Germany may find it much easier to interact with each other,” he said.

Stechel said Indian business could scout for those German enterprises which urgently needed an “injection of capital” or which wanted to restructure their business model.

Buyouts would also ensure instance access to technology, he added.

Stechel said currently Germany faced the problem of “workforce shrinkage”, and had to rely on migration to fill jobs.

This could also lead German companies to come to India, not in manufacturing but beyond it, as India has the youngest workforce worldwide.

Stechel said German investment in India is estimated at 1.4 billion euros ($2.18 billion or Rs.94.5 billion).

While German firms have generally invested in the manufacturing sector, Stechel said indications are that the second wave of investments would be in services.

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