Germany, number one Romania’s trading partner


by  Dr. Sonja Kreibich, Economic and Commercial Advisor, Embassy of Germany in Bucharest.

What is the value of the commercial exchanges between Germany and Romania?
Germany continues to be Romania’s trading partner number one and one of the country’s most important foreign investors. The statistic proves that Germany is and will be a very reliable partner for Romania, even in difficult times.
The total trade volume between Romania and Germany for 2012 was 17.88 bn euro which amounts to 17.9 % of the total foreign trade of Romania. Bilateral trade registered an increase by 5 percentage points in 2012. 18.6 % of Romania’s exports goes to Germany. Exports increased by 4.6 % in 2012 compared to 2011, for the values expressed in Lei. (They decreased by 0.5 % for the values expressed in Euro).
There are currently 18,000 companies with German capital involvement registered in Romania. Total FDI from Germany amounted to 6.44 billion euros at the end of 2012. We estimate that the 500 member companies of the German-Romanian Chamber of Commerce alone created 200,000 jobs in Romania.
Which are the main German companies present on the Romanian market and what are their plans for this year?
For many years now, the automotive and automotive supply industries have formed the backbone of Romania’s economy. And if you say automotive, you mean Germany. Numerous automotive suppliers from Germany, among them most of the big names in the market, have invested heavily in Romania and count among the country’s most important employers. Their overall turnover may even surpass the one of automotive producers Dacia and Ford. We have reasons to believe that each German car contains at least one Romanian component. It was largely thanks to this industry that Romania’s exports to Germany continued to increase even during the years of economic crisis.
Last year, the automotive sector started to renew its investment interest in Romania. This April, Daimler announced to expand its Mercedes-Benz powertrain production in Sebes, an investment of 300 mil euros.

Bosch is currently constructing two factories in Jucu (Cluj district) and Blaj (Alba district). Continental completed two investments in 2012 and currently works on a new plant in Brasov district. It is important to note that many of these investments go beyond simple manufacturing. In November 2012, for example, Continental inaugurated a new R & D center with 2000 employees in Timisoara. Another important sector of German involvement is energy, particularly green energy, and green technology. German companies are leading the way world-wide in the development of energy and environmental solutions for the future. As the German government decided in 2011 to phase out the commercial use of nuclear power and to launch the age of renewable energy and energy efficiency, we expect this technological advantage to increase even further. It therefore comes as no surprise that German companies are directly involved in Romania’s current renewable energy boom. For example, German companies dominate the Romanian market for wind turbines. Overall, around one-third of the technology used in Romanian renewable energy projects comes from Germany. By the way: This does not necessarily mean that the added value is created abroad. One example: A very large percentage of the bearing technology that goes into German wind turbines is actually produced at INA Schaeffler in Ghimbav/Brasov. German companies are also increasingly coming to Romania as investors in renewable energy. Approximately 2,000 MW in wind power are in the planning or building phase. In the photovoltaic sector, a German company is ready to connect a solar park with a capacity of 9 MW in Romania, adding to the existing 13 MW; this means an increase of more than 40%. In the biogas sector, German companies are the leader on the Romanian market with connected projects in the field of dump gas (so far the only one in Romania), sewage gas and biogas generation out of agricultural waste.
German companies are also omnipresent in retail, if you think of names such as METRO, Rewe/Billa, Kaufland and Lidl or specialty retailers such as dm Drogeriemarkt and Deichmann.
How is the Embassy of Germany to Bucharest supporting the German investors present in our country?
The role of the German Embassy in Bucharest in supporting German investors is two-fold:
We help whenever a specific problem requires involvement at the political level. In many cases, this means supporting a company’s efforts to claim arrears, even though the Romanian government has already made laudable steps towards improving the public sector’s payment morale.
Beyond this, we see our role in improving the general business and investment climate in Romania. The Embassy maintains a constant dialogue with our business community, both directly and through the German-Romanian Chamber of Industry and Commerce. The Chamber has an official mandate to represent German economic and business interests and is our most important partner.
Let me mention a number of issues that we are working on:
– Investors in manufacturing need engineers, but even more, they need trained workers. Romania has an acute undersupply of trained workers below university level, and the investor’s renewed interest in Romania will aggravate this situation even further. Last year, initially as a measure of self-help, German companies in the Brasov region set up the “Scoala Profesionala Germana Kronstadt”, an official school which follows the German model of dual vocational training. Dual vocational training means that the students receive a significant part of their training (up to 70 %) directly at the workplace; the employers are also involved in developing the theoretic curricula. The school in Brasov turned out to be very successful and will hopefully serve as a model for similar projects across the country. The Embassy, together with the German-Romanian Chamber of Commerce and other partners, has started a very fruitful dialogue with the Romanian government through which we seek to share further information and best practices about vocational training. The German experience shows that a system of vocational training which is industry-driven and practice-oriented is the best protection against youth unemployment. It is also an important factor in improving a country’s competitiveness.
– Investors need legal certainty and predictability. From an EU member state, they rightfully expect a judicial system that is trustworthy and efficient. Over the years, the German Embassy has been consistently supporting legal and judicial reforms in Romania, and we are being perceived as a fair and honest partner. We have also been advising the Romanian government on a number of substantive legal reform initiatives, ranging from de-centralization to the renewable energy support scheme. We are happy to notice a high degree of openness from the current government which is actively reaching out to embassies and the business community. We now hope that this openness will translate into concrete measures.
– Investors expect transparency in their interactions with their business partners, both from the private and from the public sector. Last year, the Embassy and the German-Romanian Chamber hosted a very well-received conference on the topic of “Transparency in Business” which focused on issues such as anti-corruption measures in public administration and intra-company compliance. We continue our work in this area, also in the context of Romania’s efforts to comply with the EU’s Cooperation and Verification Mechanism. A German anti-corruption expert is currently supporting the Ministry of Administration and Regional Development on implementing its own anti-corruption strategy.
What other new German investors could Romania attract in the near future?
Romania’s advantages – its motivated workforce, relatively low labour cost, wide-spread knowledge of foreign languages and geographical location – will keep it attractive in the near future, provided the general macro-economic environment remains stable.
In some sectors, notably the automotive sector, success has lead to the clustering of specific expertise. If this process is now supported by intelligent education and labour-market policies, Romania could easily take one step further on the value creation chain towards even more sophisticated production and research and development. Romania also has a vast amount of untapped renewable energy resources. One example: At the moment, large quantities of raw materials and waste suitable for biogas production are being disposed of unused. Europe-wide, German companies have taken a pioneering role in the field of generation and utilization of biogas and have a market share of more than 50%. As in Germany, the exploitation of renewable energy sources requires some initial public investment. We therefore hope that the support regime will remain attractive for investors.