Entering German Market :: essays research papers

During the last decade German economy is stagnating, or even decreasing. One of possible reasons is the lack of entrepreneurship in German companies. Old companies usually are too big and unwilling to change something inside, thus German government decided to support establishment of new small and medium enterprises. New agenda 2010 introduces the strategy for Germany to recover the economy and become even more competitive. In the article â€Å"Starting your business with subsidies† in Invest in Germany magazine is written that there are more than 3000 incentive programs available for investors. The program is financed by the federal government, the states and international organizations, including the European Union. The aid is available for business start-ups in a way of funding and consulting. Additional support is proposed to other investment, research and development, and training, as well as improve and protect the environment. The aid comes in the form of investment pr emiums, additional capital allowances, regional support and special credit programs. Subsidies are the main form of support. Bigger subsidies are applied for new – Eastern states and for other incentive areas. Incentive areas mean that economy there should be encouraged, industry is not as developed and investors need additional incentives to choose these areas but not more developed ones. Distribution of these subsidies is generally subject to approval by the European Union. One of the programs to finance investment is Joint Agreement program. Cash grants approved and paid to investors under this program during 1999 – 2001 were 8.6 billion euros, and the budget for 2002 – 2006 is 8.1 billion Euros (http://www.state.gov/e/eb/ifd/2005/42039.htm). All investors – local and foreign – are treated equally under the program, but financed sum depends on the region. The government has placed particular emphasis on investment promotion in the new states of the former East Germany and has offered a large number of incentives to promote economy in those areas. Business Guide in Invest in Germany (http://www.invest-in-germany.de/en/index.php?redirect=http://www.invest-in-germany.de/en/research/businessguide/index.php?topcat=20&cat=1063656685824246400&lang=en) lists those conditions as the most significant for cash grants under the Joint Agreement program: - Funds from the Joint Agreement are granted at the authorities’ discretion - Applications must be filed before the start of the investment - Investors must make a considerable contribution to the investment project from their own capital as proof of their commitment - Cash grants are subject to taxation - An investment period may take up to 36 months from the start of a project.