- New proALPHA study shows effects of national and European regulations on German SMEs; two thirds feel under pressure
- International competitiveness also suffers due to legal regulations
Weilerbach, 25. April 2024 – According to the latest study "Deutscher Mittelstand im Regulierungskorsett" (roughly: German SMEs in the Regulatory Stranglehold) by proALPHA, one of the leading providers of ERP+ software solutions for the mid-market manufacturing industry, German SMEs are faced with strong to very strong challenges due to national and European regulations. Almost two thirds feel under pressure, especially in view of the General Data Protection Regulation (62 percent), the upcoming Climate Change Act (61 percent) and the existing German Supply Chain Act (60 percent). The consequences are dire: More than half (57 percent) of the surveyed German SMEs are planning to relocate production abroad due to legal regulations. Especially ESG reporting (33 percent), the KRITIS umbrella law (32 percent) and the German Supply Chain Act (27 percent) are the driving factors here.
The study also shows that national and European regulations are a burden on the German economy. According to 37 percent of the German SMEs surveyed, ESG reporting and the EU Resilience Act have a negative impact on global competitiveness. Although the EU Data Act is intended to form the basis for a strong digital European economy, one in three SMEs (34 percent) are currently afraid that the law will cause Germany to lose its leading position in international competition – a concern that also applies to the German Climate Change Act, with 34 percent of respondents sharing the same sentiment.
Sustainability and supply chain: SMEs suffer from indirect reporting obligations
"The EU Data Act is a double-edged sword. While politicians aim to advance the foundation for data spaces and new digital business models in Europe, companies in Germany primarily fear negative impacts on their international competitiveness," says Michael Finkler, Head of Business Development at proALPHA.
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"Politicians – including those in Germany – should make every effort to continue supporting initiatives such as Manufacturing-X, Gaia-X or Catena-X in a way that companies can recognize the added value of digital business models and data sharing – including for reporting – through federated data spaces in order to strengthen their position in international competition." Michael Finkler, Head of Business Develpment, proALPHA |
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71 percent of the surveyed companies with up to 500 employees struggle with documentation obligations, such as ESG reporting or supply chain requirements, being passed down to them by larger corporations. The problem for small enterprises becomes evident, for example, in the supply chain regulations: According to the proALPHA study, 70 percent of German SMEs lack the means and resources to control their upstream and downstream supply chains.
Security-Regularien belasten vor allem die kleineren Unternehmen
The study also shows that security regulations pose challenges for smaller companies in particular (up to 100 employees). Compared to larger companies (up to 500 employees), they are more likely to agree with the statement of relocating their production abroad due to the EU Resilience Act (27% versus 17%). With regard to the KRITIS umbrella law, where security issues also play a role, more smaller than larger companies state that they are planning to relocate production abroad due to the law (40 versus 25 percent).
"The results show that both existing and upcoming regulations at national and European levels challenge German SMEs in many respects, especially with regard to growth, innovation and international competitiveness," says Michael Finkler, Head of Business Development at proALPHA, summarizing the key findings of the study.
The complete proALPHA study "Deutscher Mittelstand im Regulierungskorsett" (roughly: "German SMEs in the Regulatory Stranglehold") can be requested here (available in German only).
