“The optimism of Americans is unbroken”
An interview with Dr Andreas Eckstein - the representative for the state of Niedersachsen in the US gives an insight into his work and the local economic situation: the American market still offers huge potential for Niedersachsen companies, despite all the current challenges.
Dr Eckstein, you are the representative for the state of Niedersachsen in the United States. Can you please tell us a bit more about your work and about you personally?
I’ve been fascinated by the US for over 30 years, since I spent my first holidays here and visited the various national parks. Besides the country and its people, I developed an interest in German-American trade relations during my studies in South Carolina.
I was curious to know why German SMEs are so successful here, even though there are similar local products. I undertook an empirical study of this subject on both sides of the Atlantic in my thesis “Intra-industrial trade of SMEs with the US”. What I learned from that has helped me in my career in planning and implementing companies’ overseas activities, and continues to be valuable to me today as representative for the state of Niedersachsen in the US.
I believe economic success in the US is a combination of business factors and the right mindset.
The purpose of the overseas trade mission is to allow the state of Niedersachsen to offer SMEs in particular a local point of contact. That’s why I'm here in the USA: as an expert who knows the market, has the right contacts and can help with market development and growth.
In particular, my many contacts - some of whom I’ve known since my PhD days and from my time working for previous employers - are a huge advantage in my role as representative. Earlier in my career I organically developed the US business in the Midwest and on the east coast and steadily expanded business on the west coast through start-up partnerships and investments in Silicon Valley.
In 2019 I jumped at the chance to move from Hannover to Chicago with my family to take on my trade mission responsibilities. I’ve been passionate about issues such as international growth strategies, supporting market entry and practical local implementation for 15 years now. Representing Niedersachsen, my home state, while creating jobs in Niedersachsen through international expansion is what motivates me.
How challenging was the period of severe restrictions during the corona pandemic?
The corona crisis totally paralysed social and economic life for some time and turned the usually bustling city of Chicago into a ghost town. The streets were dead, the trains were empty, and most people only left the house to buy groceries. Many Germans living here left the city just before the transatlantic flights were grounded, for fear of not being able to get back across the Atlantic for many months.
We stayed and self-isolated. It was particularly difficult for our son who missed his nursery friends. But it was also a nice time for us as a family. As I normally travel a lot to represent Niedersachsen at trade fairs, conferences and events in the US or to accompany business delegations, I was around more because I was working from home, to the delight of my family.
But what corona has also shown, and this strikes me time and again:
No matter how bad things are, the optimism of Americans is unbroken along with the firm belief that things will pick up again soon.
Thankfully the restrictions had very little impact on my work as representative. Much of my work involves attending trade shows, and even though they’re not happening physically at the moment, they’re taking place as virtual live events. Thanks to digital technology, we can showcase Niedersachsen in a wonderful way virtually. New contacts have already been made, possibly even faster than in the hustle and bustle of a physical show.
In normal circumstances, what interests you most about your work as representative?
In order to be successful internationally, it is important to develop strategies for the respective markets, establish contacts and build networks, speak to business developers and decisionmakers as well as attend trade shows and visit local partners. I’m passionate about targeted networking to enable growth abroad and this stands me in good stead for my work. It is these networks that allow me as representative to effectively help companies become even more successful.
Niedersachsen-based companies are particularly strong in the fields of mobility, energy, foodstuff and life science. Where do you see special opportunities for our companies in the US?
When consumer confidence and the investment climate pick up again after corona, we expect a growing demand for German products. This is because German cars, chemical products, machinery and medical devices are still very much favoured by American buyers.
The consumerism of the American people, combined with a growing trend away from Chinese products, will also present opportunities for Niedersachsen companies in the future. There is a particularly high demand for medical devices and life science products at the moment. But Niedersachsen companies are also world leaders in offshore wind and agricultural technology, which will also open up opportunities.
What special economic and cultural aspects of the US does a company from Niedersachsen need to adapt to at the moment?
Germany still has a good reputation and Americans appreciate the quality of German products. To make the most of this positive image, it’s important to embrace the directness and communication style of the American people.
Even when the quality is good, products must be well sold and come with excellent service.
Even though business partners are very quick to address each other by their first name and are invited into each other’s homes for the first talks, it’s important to realise that in spite of this quick personal rapport, Americans drive a hard bargain and demand the maximum in their sales negotiations. But even after tough negotiations, their farewell to their new friends from Germany will be very sincere.
What are the challenges you see facing companies from Niedersachsen and how can you help them specifically?
The first and most important decision is where to locate your sales organisation or business premises. To make the right choice, you need to examine the framework conditions, which is very difficult to do from Germany. These range from suppliers, qualified staff, distributors and partners to potential customers and economic incentives.
Often the right location isn’t in Silicon Valley, but rather in regional clusters between the east and west coast.
And this is exactly where I can offer support, because I have local contacts with business developers from the various states and the right partners. These resources help tremendously to accelerate potential growth or to quickly launch an activity in the US, from exports to establishing a subsidiary.
The corona pandemic has had a negative impact on economic development in all countries. What is your assessment of the economic situation?
Plummeting economic output has affected almost every sector, from the automotive industry, to service providers and retail to tourism. Many companies have brought in reduced hours or made staff redundant. But the upward trend we have seen over the past few weeks, which is having a positive impact on consumer confidence and the willingness to invest, is good news.
Since one-third of economic output in the US is based on internal consumption, there are already signs of improvement. In the hope that there won’t be further setbacks from the corona pandemic, 2021 really could be a very promising year.
American companies are increasingly interested in becoming active in Niedersachsen, be it by setting up a sales unit or an actual new business. How can you help interested American companies?
Again, the main issue for American companies considering setting up a new business is finding the right region. One the one hand, it has to offer the necessary framework conditions, on the other it also has to be suitable for tapping the EU market.
The trade mission helps by providing information on logistics, regulations, funding and local conditions.
But the trade mission is also the right point of contact for investment projects. It helps foreign businesses find the best location and arranges financial assistance and contacts with potential staff or the right partners for fiscal and legal problems. We work closely with the responsible bodies in Niedersachsen, for example with the Niedersachsen Ministry for Economic Affairs, the Niedersachsen Innovation Centre and the state development bank, NBank. But it’s also important to provide American companies access to the strong industry-specific clusters and networks in Niedersachsen.
And in addition, the trade mission is increasingly assisting American companies who want to sell their products locally with a joint venture partner. Once again here, the trade mission helps companies find the right partner.
What impact have the trade disputes between the US and the European Union/Germany had on the trade and investment climate?
We shouldn’t be too hoodwinked by the political differences between the US and Europe. In spite of the punitive tariffs imposed by Washington and the EU’s retaliatory duties, there has still been a high flow of goods and services between the US and Germany over the past year.
Transatlantic relations remain very close.
German companies export goods to the value of € 118 billion to the US. The US is, therefore, still Germany’s biggest market. The recovery of the US market is extremely important for Germany’s export economy. It therefore can only be in the interest of both countries to resolve the conflicts and not to further jeopardise the recovery of trade.
However, it’s also interesting to note in this respect that the trade disputes are prompting German companies to change their way of thinking. Some companies are now looking at whether it might make sense to relocate entire production parts to the US to avoid tariffs and take advantage of the favourable investment conditions and greater customer proximity.
When you look back at your work so far, what are your favourite success stories?
I love to see the success of start-ups and the growth of young companies in particular. Companies with a good product often want to rush into the US market, but they need targeted support. Through contacts and partnerships with incubators and accelerators, for example in the fields of agriculture, automotive and life science, in the respective German states, Niedersachsen start-ups can now receive initial feedback much more quickly as to whether their solutions are suitable for the US market. We have found the right local partners for suitable products, be it an agricultural accelerator in Iowa, a mobility accelerator in Silicon Valley or in South Carolina or a life science accelerator in Boston.
This year we brought about a joint venture between a major American corporation and a Braunschweig-based SME in the chemical industry as part of a start-up in Niedersachsen. The joint venture is expanding and has created new jobs on both sides of the Atlantic, which is hugely gratifying for me.
But I also remember an established SME in the field of biotech, which was sceptical at the start about whether it had any prospects on the American market. After we visited a trade fair together and introduced potential partners, it opened a branch in the US. When the delighted director called me just over a year later to tell me that their turnover in the US after one year was already higher than in the past 15 years in Europe, that was a moment of joy for me too. Happiness for the success of the company, but also happiness for the fruits of my labour here on the ground.
This success is an example of the huge potential of the American market – in spite of all the trade disputes and political disagreements.