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Numerous Small and Medium Enterprises Cease International Business Activities
Going Global? Not So Fast: The Struggles of Medium-Sized German Businesses
Things aren't looking smooth for medium-sized German enterprises in the global market. Over the years, these businesses have been steadily scaling their operations abroad, but that trend might be coming to a halt. Recently, the number of these businesses active internationally dropped from around 23% to 20%, according to research by KfW, a state-owned development bank in Germany.
"The conditions for foreign trade have taken a dive," says Dirk Schumacher, the KfW chief economist. He points to geopolitical tensions, rough export competition, and protectionist trade policies as the primary culprits. As a result, many medium-sized businesses are finding it tough to survive in the international arena.
Even in 2025, the picture remained grim. A survey conducted by KfW revealed that just 21% of these businesses saw an increase in their foreign sales, while 25% reported a decrease. The outlook for the coming years is uncertain.
The Looming Specter of Tariffs
Businesses with ties to the USA – a significant 16% of German medium-sized enterprises – are particularly concerned. Before the announcement of U.S. President Donald Trump's tariff package, a survey found that 34% feared some degree of negative outcomes for their company. With global economic uncertainty and trade tensions, it's no wonder that these businesses are skittish.
That said, Europe remains the most crucial sales market for German businesses. In 2023, they sold their products most frequently in Austria and Switzerland, followed by the Benelux countries and France. Even with the withdrawal of many companies, their total foreign sales slightly shrank to 698 billion euros.
Navigating the Global Market Maze
The challenges facing medium-sized German businesses are not just limited to trade tensions and tariffs. They must also deal with fierce competition, especially in the face of technological advancements and changing consumer demands. Adapting quickly is crucial for their survival.
In addition, economic and geopolitical uncertainties can impact transaction activities, potentially slowing the recovery of the M&A market. Meanwhile, adopting digital technologies, AI, and streamlined outsourcing strategies can help these businesses optimize their operations and enhance their competitiveness in the global market.
The road ahead isn't easy, but these businesses must be resilient to succeed on the world stage. As they forge ahead, they'll need to strike the right balance between adaptation and effective strategic positioning.
- As the global market presents various challenges, such as geopolitical tensions, rough export competition, and protectionist trade policies, medium-sized German businesses are reevaluating their economic and social policy regarding foreign trade and are seeking ways to improve their finance strategies, particularly in industry, to thrive without being hindered by tariffs.
- With the pressure of competition from technological advancements and evolving consumer demands, medium-sized German businesses must find digital solutions, like adopting AI, to optimize their operations, streamline outsourcing, and maintain a competitive edge in the industry, thereby increasing their business efficiency and fostering growth in the global market.
