Germany’s business model in danger: the editor-in-chief’s weekly review

Good morning dear readers,

Conversations with economists are no fun these days. At best, they go like this: “Mood largely stable at a lousy level,” is how Deka’s experts describe the current situation. The signs, I can’t spare you this morning, point to a crisis – and Germany is hit particularly hard. The German business model, I argue in the editorial of our weekend issue, is in crisis. No other EU country grew so slowly in the second quarter.

There are no easy solutions for this. But there are solutions. The great opportunity for Germany is the next phase of digitization, which is just beginning. In the first phase, communication and entertainment were digitized. Business processes and industrial plants are now being automated.

The best example of this is Celonis, the most valuable start-up in Germany. At a time when the signs of the crisis can hardly be overlooked, the Munich-based company raised a billion dollars from investors and banks this week. Celonis evaluates data from companies and helps them to automate their processes. A large corporation, for example, saved 100 million euros because the software revealed that the corporation was paying masses of invoices twice.

I spoke to Celonis co-founder Alexander Rinke about the fascinating story and how it all began for my podcast Disrupt this week. Because he needed money after his semester abroad in Paris, he was hired by a student management consultancy. The idea for the billion-dollar company was born in the kitchen of a student shack. Today, Telekom, Siemens and Deutsche Bank are among his customers. And he still has a lot planned: “If we reach our goal, we didn’t think big enough.”

Celonis is now worth $13 billion. For comparison: Commerzbank comes to almost seven billion euros.

What else kept us busy this week:

1: It was a long week for Economics Minister Robert Habeck. Together with Chancellor Olaf Scholz, he first flew to Canada to agree on new energy partnerships. Then the debate about the gas surcharge got in the way of him and the entire federal government when word got around that energy companies that make billions in profits would also benefit from the surcharge. The Handelsblatt made this a topic a few days ago. And at the end of the week, Habeck then set an important accent for many electricity customers when it came out that his ministry wanted to fundamentally restructure the electricity market so that prices for consumers and industry fell again. Our Berlin office has the details of the explosive plan.

2: Companies have been in the energy price trap for a long time. Industrial companies in Germany are currently paying nine times more for gas than their US competitors, as the latest figures show. Every eighth grader understands that things can’t always go well on the world market.

3: In the Federal Ministry of Economics, another plan with serious consequences is being drawn up: Habeck’s officials want to reduce the German economy’s dependence on China. Therefore, they initiate a remarkable change of course. For years, Berlin had secured investments by German companies in other countries with guarantees, especially investments in China. The Ministry of Economic Affairs now wants to limit these investment guarantees. Our Berlin office found out that Habeck’s officials went even further: an instrument for controlling investments on foreign soil is also under discussion.

4: Habeck drives the debates. Chancellor Olaf Scholz, on the other hand, seems driven. And the relationship between the two has long been the most exciting duel in German politics. This became abundantly clear on their joint trip to Canada, as Julian Olk and Martin Greive describe. It should be about the future of energy. But it was also the competition between two completely different types of politicians.

5: These figures should worry Vladimir Putin: Between January and May, the population shrank by 86,000 people – per month. Vladimir Putin is trying to increase the birth rate with money and marketing. But that won’t help much. Above all, young, well-trained specialists are leaving the country. You could also put it this way: Russia’s future is on the run.

6: The Ukrainian President Volodymyr Zelenskiy is celebrated as a hero worldwide. But he’s coming under increasing pressure in his own country, my colleague Mathias Brüggmann observes. Has Zelensky carelessly ignored US warnings of a Russian war of aggression? His critics see it that way. The country is now threatened with an internal political crisis.

7: Handelsblatt reporters have examined the consequences of the Wirecard scandal down to many small details. This week they had big news again: The auditor oversight (APAS) apparently came to the conclusion that EY’s auditors have violated their professional duties for years. That’s what my colleagues learned from insiders. In order to avoid the now foreseeable penalties, some examiners are now considering returning their licenses. Difficult years ahead for EY.

8: The departure of Adidas CEO Kasper Rorsted is the personnel of the week. In a Handelsblatt interview a few weeks ago, he had already admitted mistakes: weaknesses in China business. Lowered forecasts. The self-criticism didn’t help in the end – he had to vacate his post. Axel Höpner and Michael Scheppe have researched what has been going on behind the scenes at Adidas in recent months.

9: After 13 years of hype, the real estate market is slipping into crisis. Apartments that were bought almost blindly just a few months ago are no longer going away. Financing does not come about, construction projects are stopped.

In a big analysis over the weekend, our real estate team describes what all this means for owners, investors and real estate companies; what questions you should ask yourself before buying a property and where the highest returns can be achieved with rents.

I wish you a relaxing weekend.

Sincerely,
Her

Sebastian Mathes

Editor-in-Chief of the Handelsblatt

PS: One of the most beautiful places in Düsseldorf is the roof terrace of our publishing house, and one of the most beautiful events is our terrace talk. This week we had almost 100 guests in glorious weather to discuss the future of our country. The evening started with a conversation with Rafael Laguna de la Vera, Director of the Federal Agency for Breakthrough Innovation, Zoé Fabian, Head of Germany at the investment company Eurazeo, and Alexander Rinke, co-founder of Celonis. The conclusion of the round: Europe has the best chance of becoming one of the key tech hotspots of the future. But we have a lot of work ahead of us.

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