German Industrial History-Innovation Is The Way To Develop SMEs

The history of German industry tells us two truths: First, without own property rights and core competitiveness, there is no future in imitation and low prices alone. Second, if you do not innovate, you will really die. This is the lesson of the German enterprise's blood. Innovation requires awareness, an environment, and institutional guarantees.

From 1870 to the beginning of the 20th century, "Made in Germany" was low-quality and cheap. At that time, the golden sign of global manufacturing was Britain. In order to draw a line from German manufacturing, the UK requires all products to be marked with the country of origin.

After that, the Germans spent decades "learning from the British", from simply copying to trying to do product research and development to improve product quality. At the beginning of the 20th century, "Made in Germany" has won a good reputation. By now, many people don't remember that period of history.

"After that, the Japanese followed a path that was basically similar to the Germans. Starting from copying and bargaining, they began to have their own R&D, technology, and products. In the 1970s and 1980s, they attacked many European and American companies.

Many years later, China's manufacturing industry is still following the rules.

In the past 100 years, Germans have invented many things, from aspirin, contact lenses, car airbags, to MP3 and SIM cards. Many German companies are still enjoying the dividends brought about by these older generation inventions. This kind of patent dividend that has benefited several generations is precisely the "patent barrier" that many people in the Chinese business community hate the most. Unfortunately, this is the rule of the game in modern society.

In 2012, Germany's investment in new technology development and innovation reached 79.4 billion euros, which is 2.98% of GDP, and the target is 3%. The European Union’s average is 1.97%, and China’s figure for the same period is 1.98%. The difference is that venture capital is not popular in Germany, and angel investment funds are rarer, so the government and private companies have invested heavily in innovation.

German Bosch is not a listed company. Their strategy that has remained unchanged for more than 100 years is to invest heavily in research and development: about 10% of overall sales.

Many of the hottest inventions in German companies nowadays come from small and medium-sized enterprises. To give a small example, only the small field of 3D printing technology has gathered a group of small and medium-sized technology companies in the United States and Germany, so many Chinese entrepreneurs have gone to Germany to buy small companies with independent intellectual property rights in 3D printing. As a result, these small and medium-sized enterprises, which do not seem to be wealthy, are not willing to sell at all.

According to Wharton Business School professor Christian Terwiesch, the trick to German-style innovation is to have strong technical expertise in a very narrow professional field, so even in a small sector can become a market leader.

German companies, from large companies to small and medium-sized enterprises, compete fiercely for innovation and product quality improvement, but they never squeeze each other with price wars. German companies are closely connected and exchange what is needed. They call this close communication clusters, sharing the dividends of innovation and technology. Especially in Germany's most competitive chemical, automotive and electronic equipment and engineering fields. They will not dismantle each other, but will work together.

"German products took decades to complete the transformation, and Chinese manufacturing is also possible. As for when'Made in China' can be proud, I think it will be 10 years. It will take about 20 to 30 years to be at the forefront of technology." Commented by Roland Berger, Corporate Strategy Consultant.

Mr. Berger’s optimistic estimation of China’s manufacturing has a prerequisite: “The prerequisite is that China’s manufacturing industry must step out of the imitation stage and begin to innovate its own production processes, technologies and products. The world is now transparent, and one end of the world With a new technology, the other end will know it in a few seconds. So the learning process must be accelerated."

At present, China’s Internet economy is surging. The development of Internet technology is an accelerator of China’s economy. Consumer Internet is in the ascendant, and industrial Internet is beginning to emerge~ unprecedented opportunities. Specialization, networking, and small manufacturing will be our current survival and development Road, every industry and every company must adopt a model of refined management, entertainment marketing, and upgrading and innovation; no matter how weak an individual or how subdivided the field, we should achieve the ultimate.

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By Minghe Die Casting Manufacturer |Categories: Helpful Articles |Material Tags: Aluminum Casting, Zinc Casting, Magnesium Casting, Titanium Casting, Stainless Steel Casting, Brass Casting,Bronze Casting,Casting Video,Company History,Aluminum Die Casting |Comments Off