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GERMAN CAPITAL HAS FOUND ITS WAY INTO NEARLY EVERY BRANCH OF THE SLOVAK ECONOMY

Germany, the biggest investor in Slovakia

GERMANY is one of the most courageous investors and business partners in Slovakia.
The country was in the vanguard of those who placed their first direct foreign investment in the region only a couple years after the Velvet Revolution in 1989, and even before the establishment of the independent Slovak Republic.
With its volume of direct investment at about Sk80.3 billion (€1.94 billion) as of March 31, 2003, Germany still remains the biggest investor, making 26.4% of all foreign direct investments in Slovakia.

GERMANY is one of the most courageous investors and business partners in Slovakia.

The country was in the vanguard of those who placed their first direct foreign investment in the region only a couple years after the Velvet Revolution in 1989, and even before the establishment of the independent Slovak Republic.

With its volume of direct investment at about Sk80.3 billion (€1.94 billion) as of March 31, 2003, Germany still remains the biggest investor, making 26.4% of all foreign direct investments in Slovakia.

The Germans have injected their investments predominantly into the industrial sector, spending Sk79.5 billion (€1.92 billion), a 32.6% share of all the foreign direct investment into the sector.

The German interest in Slovak industry has resulted in many successful enterprises, mainly oriented at export.

German investors seem less interested in the banking sector, where they have put Sk827 million (€19.96 million) of direct investment (1.4% of the total).

Slovakia conducts a significant part of its foreign trade with Germany - more than 20% of all its trade with European Union countries; the mutual trade is about balanced. Thanks to Slovak exporters that are, in many cases, established by German investors, Slovakia often reaches a slight trade surplus with Germany.

In 2002, Slovakia imported German goods worth Sk169.188 billion (€4.0825 billion), whereas Slovak exports to Germany represented Sk169.200 billion (€4.0828 billion).

One of the most successful German investment projects in Slovakia is Volkswagen. The company was established in 1991 as a joint venture of Volkswagen AG and the former BAZ (Bratislava automotive company) to produce cars and gear boxes. Almost 99% of its production is directed at foreign markets, thus comprising a significant portion of the volume of Slovak export.

Another important exporter, in the engineering industry, is INA Skalica. The German-funded INA has been operating in Skalica since 1991, when INA Herzogenaurach and ZVL Skalica reached an agreement on the joint venture INA - ZVL. INA became a 100% shareholder in 1994, and the company named INA Skalica was created.

Siemens, s.r.o., working in the IT sector, has been operating on the Slovak market since 1993, as a daughter company of Siemens Germany. Apart from Siemens, s.r.o., the German Siemens owns shares in another 13 companies in Slovakia. About 70% of its turnover goes to export.

OSRAM, from the Siemens group, entered into Tesla Nové Zámky, a Slovak lamp and lighting systems producer, in 1995 when it obtained its 100% share.

In the telecommunications industry, German capital comes primarily from Deutsche Telekom (DT), which owns a majority stake in the only Slovak fixed-line operator, Slovenské telekomunikácie (ST). The Slovak government approved DT's acquisition of a 51% share in ST in 2000.

Through its investment in ST, DT is also a shareholder in Slovak mobile operator EuroTel (ST owns a 51% share).

The biggest German investment in the financial sector is the stake of the German insurer Allianz in Slovakia's biggest insurance company, Slovenská poisťovňa.

Allianz has been working on the Slovak market since 1993 through its subsidiary. Allianz decided to further expand within the Slovak market by taking part in a tender for acquiring the majority stake in Slovenská poisťovňa. Allianz signed an agreement to buy a 67% stake in the Slovak insurance company in 2002.

In addition to Allianz, other German insurance companies are represented on the Slovak market by smaller subsidiaries.

R+V, which is a daughter company of Raiffeisen und Volksbank Versicherung AG, took over a portion of the clients of the bankrupted Slovak insurance company Dopravná poisťovna in 2002.

A subsidiary of the Gerling insurance company started its operations in the Slovak Republic in 1994, first in the form of a sales representative office and later in the form of a joint-stock company. It provides insurance for the industrial sector.

German expertise has proven very helpful to Slovakia with respect to bank dealings with private customer savings for flat and housing construction. Two such savings banks in Slovakia have German backing: Bausparkasse Schwäbisch Hall AG has a 32.5% stake in Prvá stavebná sporiteľňa, and Wüstenrot & Württembergische AG holds 20% of Wüstenrot.

Otherwise, in the banking sector there are mostly subsidiaries of German banks, like Commerzbank or HVB Bank Slovakia (with Austrian capital).

We also find successful German capital in the chemical industry.

Fermas, a company producing animal feed, was established in 1993 as a joint venture of the German company Degussa AG, which owns 51%, and Slovak Biotika, with a 49% share. In 1998, Degusa became a full owner of Fermas, an important Slovak exporter.

In the pharmaceutical industry, German investment goes into Hoechst-Biotika. In 1992 the German Hoechst AG and Slovak pharmaceutical company Biotika engaged in a joint venture to produce medicine for the cardiovascular system, metabolism, digestive system, etc. After a merger of Hoechst and the US company Aventis, Hoechst-Biotika indirectly includes American capital as well.

Other German pharmaceutical companies, like Schering, Boehringer, Asta media, and Wörwag Pharma, have their sales representatives' offices in Slovakia.

Germany's last significant investment in Slovakia is in the energy industry.

In 2002, German Ruhrgas and the French Gaz de France took over a 49% stake (each of them owns 24.5%) of the Slovak gas company Slovenský plynárenský priemysel (SPP).

With respect to Slovak energy distribution, EON owns a 49% share in Západoslovenská energetika, and RWE Plus holds 49% in Východoslovenská energetika. RWE Gas owns 41% of the Slovak gas company Nafta Gbely.

New investment projects are evidence of the ongoing interest of German investors.

The German firm LEONI Autokabel wants to create about 1,500 jobs by opening a new branch, which would produce cable sets for the carmaker BMW, in the town of Ilava.

Slovak Hygenic Paper (SHP) Group Harmanec has signed an agreement with the German Mayer - Kuvert on a joint venture in producing envelopes and bags.

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