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Germany and Slovenia: unequal, yet strong partners

Germany has been traditionally Slovenia’s number one trade partner. Slovenia is an important trade partner to Germany despite its small size. Its volume of trade with Slovenia is bigger than that with some much larger states like Greece, Ukraine or Indonesia. And there are numerous success stories among German investments in Slovenia due to a highly skilled work force and the compatibility of the two cultures.

Strolling Berlin's Kurfurstendamm these days you can enjoy a display of art photographs featuring some of Slovenia's most stunning landscapes: the exhibition is held in honor of Slovenia's 25 years of independence and is symbolic of the strong ties between the two nations. 25 years ago, German support was essential for the young nation. To some extent this support reflected strong economic ties between Germany and Slovenia which used to be a major exporter among the republics of the Yugoslav federation and to a large extent served as a bridge between Germany and the rest of Yugoslavia. 

 

Following independence the economic ties between the two partners have only strengthened. For Slovenia, Germany remains to be the most important export market. The German foreign trade statistics published this spring show that Slovenia is on 38th place among German trade partners with 10 billion euros of trade. That's ahead of bigger countries like Greece or trade superpowers like Hongkong. German exports to Slovenia exceed in value that of their exports to the Ukraine, one of Europe's largest nations. 

 

The mutual interdependence between the two nations could especially be observed in the automotive industry where Slovenia plays an important role as a supplier of high quality automotive parts. The Day of Slovenian suppliers jointly organized by BMW and SPIRIT Slovenia - Public Agency for Entrepreneurship, Internationalization, Foreign Investments and Technology - this spring in Munich, has already become a traditional event.  Which is no wonder, as there’s practically no German car without at least one element produced, if not even developed, in the young Alpine republic.

 

Surprisingly enough, Germany is not the number one foreign investor in Slovenia. With a total value of investment at  around 1.5 billion euros, Germany only ranks  4th. The number of investments is rising, however. According to the latest figures there are some 750 companies in German ownership operating in Slovenia. Together these companies employed around 50.000 people, 8 percent of the total workforce. As a survey published by the German Chamber of Commerce and Industry shows, these companies create 15 percent of the total revenues in Slovenia and 20 percent of Slovenian exports.

 

In recent times German investors seem to be focusing especially on logistics, trying to profit from the country’s key position between Mediterranean and Central Europe. DB's Arriva has taken over most of Slovenia's large bus companies and has already won a major market share in bus transport. Frankfurt's Fraport took over airport operator Aerodrom Ljubljana in late 2014. The new operator plans to invest 7 million euros this year into the modernization of the terminal and plans to build a logistics and business center in the following years.

 

Companies like Knauf Insulation or Bosch Siemens are building their competence centers in Slovenia, with narrowly focused production and strong local R&D units. Just in 2016 and 2017 Knauf Insulation plans to invest an additional 40 million euros in its Slovenian subsidiary. 

 

Many mid-size German companies, like luxury mobile home producer Carthago, choose Slovenia as its production destination because of a skilled and relatively competitive work force. Another strong reason is the culture: work ethics, values and culture in Slovenia are much closer to theirs than in any other part of southeastern Europe - a legacy of being a part of the Austrian empire for almost a millennium. The German Slovenian trade and industry chamber, which publishes a survey among its members, also points out relatively good infrastructure and availability of quality local suppliers as some of Slovenia’s advantages. The latest survey shows a growing confidence and optimism among investors – yet also comes with a clear warning. Slovenia must speed up political and administrative reforms in order to become truly attractive to foreign capital, not only Germany. 

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