Skip to main content
Global trade partner

The power of SMEs

SMEs form the heart of the German economy, and the segment has also given rise to countless global market leaders.
Innovativer Mittelstand
© stock.adobe.com/Gorodenkoff

Despite the numerous global players and large flagship businesses, the German economy is characterised by 3.6 million small and medium-sized enterprises (SMEs), as well as countless self-employed persons and freelancers. The SME segment includes more than 99 percent of companies, whereby SMEs are defined as firms with annual sales of less than 50 million euros and fewer than 500 employees. Numerous companies founded by entrepreneurially minded migrants now also enjoy SME status. More than 800,000 people with a migrant background own a company, hence migrants in Germany are an important economic factor.

World leaders in niche markets

According to studies by the KfW Banking Group, there is a decline overall in the number of innovative companies, with only 19 percent of SMEs investing in innovative products and processes. It is above all a few larger medium-sized companies that are responsible for innovation efforts, while in numerous niche market segments German SMEs are frequently hidden champions, with leaders offering highly innovative products in European and global markets. Meanwhile, the creative industry has become firmly established in the fabric of the economy. Frequently in small, under-capitalised companies it plays a pioneering role on the way to a digital, knowledge-based economy, and is regarded as a significant source of ideas for innovative products. In 2018 there were around 256,600 companies operating in the area of the creative economy, and the Berlin-Brandenburg area is considered to be an international seedbed for creative industries and start-ups.