Cristina Dobreanu, Contributor
The German model
Forbes Romania: Germany is well known for being a model in several areas, especially in the economical field. What could Romania learn from Germany’s experience?
Werner Hans Lauk: It is always difficult to adapt experiences of one country to another. But there are certainly areas of economic policy where Germany is rather successful and where it can possibly be an inspiration for others, and also for Romania. As you know, the backbone of the German economy are SME’s, they account for 80% of our employment and workforce. It has proven necessary to support SME’s because they are normally also those who are specialized and who have developed through their own research new technologies. Then, of course, we have made good experiences with establishing a stable and predictable business environment. German authorities tried to provide such a stable environment through clear cut taxation, regulation and administration, this means, for example, no sudden changes, no retroactive taxation rules. Also, we have made excellent experiences with a professional theoretical education in school, combined with the practical education in a company – learning by doing what is the backbone of the profession – is a successful model.There are already some projects in this regard in Romania, initiated by German companies, for example in Braşov.
Forbes Romania: So, predictability and qualified work force would be the two assets German investors would expect to see in Romania when they come here?
Werner Hans Lauk: German companies, at least those 500 that are members of the German-Romanian Chamber of Commerce, account for more than 300.000 employees. Now we see that availability of qualified work force is more and more a limiting factor for growth of those companies. German businesses, if they go abroad, they don’t come for a short while. They may come a little later than others, but then they decide they are here to stay and to be good corporate citizens. They would like to be part of the society and the business environment. This is why it is so important for investors to have a stable environment meaning transparent administration, all that is necessary to run a business and, of course, a qualified and competent workforce.
Forbes Romania: What would be in this context the economical potential of Romania?
Werner Hans Lauk: Romania is already an attractive and interesting market because it has more than 20 million inhabitants. Due to the lower per capita income there is a great potential when it comes to consumptive demand in the future. Secondly, Romania has a tradition in manufacturing and engineering. It has a motivated, relatively well trained workforce that is also eager to learn foreign languages, for example. Romania has promising natural resources, it has vast areas of arable land, it has certain mineral resources, the location, at least from a German perspective, is attractive because it is close to Germany and Central Europe, it has, as a EU member, in many fields comparable rules and regulations as Germany, there are no tariff barriers between us. This “mixture” is attractive.
Forbes Romania: You said that a priority of your mandate is to increase the number of German investors in Romania. How are you planning to do this?
Werner Hans Lauk: First of all, of course it is not for a public official like an ambassador to decide whether there will be more German investments in Romania or elsewhere. This is purely the companies’ decision. But we can work as a catalyst and I see my task in this regard in two ways. First of all, we are in constant contact with our Romanian counterparts. When it comes to foster a conducive investment climate – transparent public procurement is very important. Also, as I have already said, fair and transparent judicial structures and processes are very important; all these are factors that are conducive to a good investment prospective and climate. The second part depends on Germany, meaning it is important to inform our companies, potential investors in Germany, about their possibilities in Romania – what are the advantages of Romania in comparison with other countries in other regions. For example, I spent the last 9 years in Asia and when labor cost in China went up substantially, quite a few of the small and medium sized German enterprises – but quite effective ones, present in the Chinese production market came back to Europe. One of the places to invest and put their investment in is Romania. Compared to China, at least, Romania has increased its competitiveness as an investment location.
Forbes Romania: How many German companies are in Romania?
Werner Hans Lauk: More than 20.000 German companies invested in Romania. These are either direct investments or in shares or parts. For example, a lot of German companies have invested via their European subsidiaries. The Deutsche Telekom (German Telecom), for example, has invested in Romania through its Greek subsidiary. Still, the German-Romanian Chamber has more than 500 active members that have their own production in goods, services, not only in financial investment.
Forbes Romania: And the 3 biggest companies here?
Werner Hans Lauk: Difficult to say, because you have many big players here – from Siemens, Continental to Dräxlmaier, Schaeffler, and many others. These are big names not only in German industry but also here. Some companies, employment-wise – for example, Dräxlmaier, but also Schaeffler and Continental, have more than 10.000 employees here.
Forbes Romania: You gave a lecture at the Cluj University with the subject of the German-Romanian economic relations – success stories and challenges. What are the success stories and the challenges?
Werner Hans Lauk: One big success story is, for example, the automotive industry. There seems literally no car produced in Europe that does not have parts produced in Romania. So, practically the assembly lines in Europe are supported by deliveries from Romania. Challenges still lie within the environment for investment – administrative background, transparency for public procurement and availability of qualified workforce and not to forget, the infrastructure, especially for logistics. We see, to a certain extent, that foreign investment, at least in production facilities, only comes to a line that practically ends with the eastern part of the Carpathian Bow. The reason for this is very simple – the access in the other regions is simply hampered by the insufficient availability of logistics infrastructure.
Forbes Romania: What are the sectors German investors are interested in?
Werner Hans Lauk: German business interest in Romania is as diverse as the German economy itself: energy, bio production of crops, alternative energy, automotive industry, airline industry, machine tools, and so on. There is a very broad array of sectors that are interesting for the German investors.
Forbes Romania: Germany has special links with Transylvania, where most of the German investments are found, and besides Sibiu, Brasov and Cluj, what would be the “portrait” of the perfect city for German to invest in?
Werner Hans Lauk: There is certainly not a perfect city. I have already mentioned a lot of elements for a conducive investment climate. But of course, in addition to those factors, it is also attractive for German investors to count on people in their workforce who can speak the German language. Today we have around 21.000 pupils in schools of the German minority. In fact, this also means that many Romanian parents are sending their children to the German mother-tongue schools. Being also interested to give their children not only a qualified school education provided by these schools, but also the necessary German language skills.
Forbes Romania: Could you make some recommendations for the Romanian government?
Werner Hans Lauk: We are in constant and close contact and I think they are generally on the right way. We are waiting for the better logistical connections to the Central European network be it railroads or highways.
Forbes Romania: And for the German people?
Werner Hans Lauk: My recommendation to my fellow countrymen is: “come and see with your own eyes! Communicate with the local people”. Romanians are very gifted when it comes to speaking foreign languages – lots of people speak French, English, German, and other languages and this is a good opportunity. When it comes to the perception of the country’s image abroad, there are always some disturbing news and factors, be it the stray dogs issue, or some old features that are in people’s mind. So hopefully, more and more people will inform themselves better about the country’s realities and possibilities – and are informed by Romanian authorities as well.
Forbes Romania: You spent several years in Asia, and now you made a switch back to Europe, what is your first memory about Romania?
Werner Hans Lauk: My first impression is that I drove my own car from Germany to Romania at the beginning of September and I went through a beautiful Olt Valley, I saw all the old cities. Until now I traveled a lot through the country to several cities and wherever I went, I felt hospitality and openness. This felt really positive to find open doors and minds, and a lot of culture. For example, I am personally interested in music and I went to a concert of the Madrigal Choir at the Athenaeum. There is also the Enescu Festival and also other cultural events throughout the country. I knew what kind of high level of culture and tradition I would find here, but to learn by myself about these wonderful possibilities is something very special.
Find out more in the upcoming Forbes Trade&Investment