German Companies Struggle with Digitalization, DIHK Survey Finds

A survey by the German Chamber of Industry and Commerce (DIHK) finds that digitalization in German companies is progressing slowly. The survey of over 5,000 companies reveals that the main motivations for digitalization are to make processes more efficient and to reduce costs. The biggest challenges cited are lack of time, complexity, and security risks. DIHK expert Volker Treier calls for better conditions, including a dedicated digital ministry, reduced bureaucracy, and a more aggressive rollout of fiber-optic networks.

The German economy is bracing for a potential third consecutive year of recession, with businesses grappling with a myriad of challenges. According to a recent survey by the German Chamber of Industry and Commerce (DIHK), digitalization in German companies is progressing at a snail's pace [1]. The survey, which polled over 5,000 companies, revealed that the main motivations for digitalization were to make processes more efficient and reduce costs. However, lack of time, complexity, and security risks were cited as the biggest challenges.

The DIHK expert, Volker Treier, called for better conditions to accelerate digitalization efforts. He advocated for a dedicated digital ministry, reduced bureaucracy, and a more aggressive rollout of fiber-optic networks [1]. Treier emphasized the urgency of these measures, stating that the German business model was facing a test due to declining competitiveness and increasing protectionism.

The survey results revealed that over 60% of companies viewed the economic policy framework conditions as their greatest business risk [1]. This negative record is a cause for concern, especially given the lack of indicators for an economic upturn. Investments and exports, in particular, are falling, and reluctance is high, with only 22% of companies planning more investment and almost 40% cutting back [1].

The export-oriented German industry, which has historically driven economic growth, is also facing challenges. According to the survey, 28% of companies expect exports to decline over the next twelve months, while only 20% anticipate sales to other countries to rise [1]. This trend is concerning, as it highlights the potential impact of declining competitiveness and increasing protectionism on Germany's economic prospects.

Despite these challenges, the business situation remains unchanged compared to last autumn. Only 26% of companies report a good situation, while 25% report a bad one [1]. The situation in industry remains particularly gloomy, with many companies focusing solely on replacement investments instead of investing in innovation and growth.

In conclusion, the slow progress in digitalization and the challenges faced by German companies amidst economic uncertainty are cause for concern. The urgent need for action is evident, and the German government must take steps to accelerate digitalization efforts, reduce bureaucracy, and improve economic conditions to ensure the long-term competitiveness of the German economy.

References:
[1] DIHK. (2023, February 13). German Economic Survey: Third Consecutive Year of Crisis Looms in 2025. https://www.dihk.de/en/german-economy/dihk-economic-survey-third-consecutive-year-of-crisis-looms-in-2025-128546