German Officials Come to Town to Drum Up Business
German officials came to Los Angeles on Monday touting the great opportunities for American investors in their reunified homeland. But judging from their first presentation in the United States, the new Germany is a hard sell.
Dozens of lawyers and accountants came to the Biltmore Hotel to hear a presentation by German Economics Minister Jurgen Mollemann. But most were merely scouting for potential clients, said Daniel Evans, chairman of the German American Chamber of Commerce of Los Angeles, which sponsored the gathering. There were, he acknowledged, relatively few potential investors at the gathering.
The reaction mirrors the lackluster response from American investors since last October’s official reunification, when the German government appealed to foreigners to examine business opportunities in the former communist state of East Germany.
Thus far, however, most investors have been from the former West Germany and parts of Europe. Economists and local business leaders say that is unlikely to change soon.
“Many American companies are undergoing a painful reorganization process to cope with the recession and don’t have the nerve to get involved,” Evans said.
But Mollemann came out pitching nonetheless. “The right conditions are now in place,” he said Monday. “I encourage you not to stand back--but to take a look at the opportunities. . . . I’m concerned about the low level of investment (in eastern Germany) from the United States.”
Monday’s forum was the first stop in a five-city U.S. tour that the Germans are undertaking to be more active in enlisting American partners in the privatization effort.
Germany has sold private investors about 3,000 of some 10,000 assets or enterprises formerly controlled by the East German government. About 148 of those deals involved Europeans--with the French being the leading investors, German officials said. In contrast, only 11 deals involved American investors, they said.
Ongoing uproar in the eastern Germans’ traditional Soviet markets may be discouraging U.S. investors. “People are waiting to see what happens because there is instability in the region,” said David Johnson, an economist at PlanEcon Inc., a Washington-based think tank specializing in Soviet and Eastern European research.
But as tensions recede, investors should be attracted by eastern Germany’s better-educated work force and is assured financial support from western Germany. “The other (East European) states don’t have a rich uncle like eastern Germany,” he said.
Still, some Americans will not invest until certain suspicions are dispelled, said Steven Popper, an economist at the Santa Monica-based RAND Corp.
“According to one conspiracy theory, the best assets are only available to German investors,” Popper said.
However, German officials tried to counter such suspicions during interviews Monday. Mollemann said investors were free to create new ventures--not just buy existing enterprises.
German officials said American firms involved in construction, environmental clean-up projects, tool manufacturing, shipbuilding and electronics have great opportunities in eastern Germany. Among those considering some kind of future presence in eastern Germany is LSI Logic Corp., a Milpitas, Calif.-based maker of semiconductors.
