Overtaking the competition: US and Asian corporations leap ahead of German companies
U.S. and Asian firms rely on German collaboration for their operations
A sobering revelation: a recent EY study indicates that major American and Asian companies are soaring past their European counterparts, particularly German firms, in both revenue and profit. The tumultuous times faced by German companies have management consultants ringing the alarm bells.
In this international race, the largest US and Asian companies have surpassed their European equivalents in sales growth, with an average increase of 4.5% for US companies and 3.2% for Asian firms, compared to a 1.1% decline for Europe as a whole. As for profits, Asian corporations have shown the most vigorous growth, with an operating profit increase of nearly 19.5%, US companies following closely behind with 8.2%, and European profits plummeting by 6.5%. Among European nations, German companies are hit the hardest in both categories: sales falling by 3.1% and profits dropping by 8.5%.
The face of the world's largest public companies is dominated by the USA, with a whopping 317 companies taking the top slots, followed by China (137) and Japan (110). Germany trails in fourth place, with just 43 representing companies.
A grim context
According to EY expert Jan Brorhilker, the future for European companies in global competition is precarious. Europe's challenges include struggling industrial sectors, escalating geopolitical tensions, and trade barriers—all of which make the corrective measures imperative to bridge the profitability gap. "The situation requires immediate action, as US companies have thrived in recent years while Europe's languish, leading to further difficulties in the competitive landscape," says Brorhilker.
Indeed, the standard strength of traditional German industries, such as the automotive sector, is met with stiff opposition as US and Chinese companies leverage technological advancements, creating an overwhelmingly competitive environment. The recent tumultuous US trade policy further complicates the matter, exacerbating European companies’ capital concerns and breeding uncertainty.
Meanwhile, technological powerhouses from the US continue to dominate the global market. Out of the top 10 most profitable companies worldwide, none are European entities. Seven tech powerhouses hail from the US—including Apple, Google's Alphabet, software giant Microsoft, and chipmaker Nvidia.
Europe possesses limited counterpowers in this sector. Brorhilker laments that only a handful of European companies are competitive in the technology arena, leaving the continent vulnerable to US market dominance. "While industrial companies bear the brunt of tariffs, trade restrictions, and supply chain disruptions, digital companies reap huge profits and invest billions in innovation," says Brorhilker.
In 2024, the Saudi Arabian oil conglomerate Saudi Aramco emerged as the world's most profitable company, earning an operational profit of approximately $191 billion. The most profitable European company was the oil and gas firm Shell, ranked 13th. The first German company in the global profit ranking was Deutsche Telekom, with a profit of around €26 billion (19th place).
The largest public companies in 2024 included retail titans Walmart and Amazon, as well as Saudi Aramco. Germany's top performers in the sales ranking were automakers Volkswagen (9th), Mercedes-Benz (35th), and BMW (36th), followed by Deutsche Telekom (50th).
Sources: ntv.de, chl/dpa
- USA
- Germany
- Amid the global competition, the surge in profits for US technology giants, such as Apple, Google's Alphabet, Microsoft, and Nvidia, reinforces the precarious position of European companies, particularly German firms, in countering US market dominance.
- As lifestyle trends shift towards digital consumption, European companies are grappling with the implications of dated industrial policies and antiquated employment policies that fail to keep pace with the fast-evolving technology sector, exacerbating the yawning gap between US and European corporate performance.
