Europe's companies consider themselves disadvantaged compared to Asia

Asia's emerging economic powers are challenging "Made in Europe". But for Europe's entrepreneurs the competition is more and more unbalanced - and they wish for  greater support from governments and fair framework conditions. These are the key findings from our new study. It is based on a survey of top-level executives at major European businesses.

Of the European executives surveyed, 61 percent say that they have received little or no support from their government. Only 31 percent feel they have received considerable support. At the same time, the managers have a significantly different view of the assistance their new Asian competitors are receiving from their own governments: Some 70 percent say that they are at a disadvantage in view of the policy support Asian companies are receiving. One-third of the respondents even say they are at a "considerable disadvantage." And 27 percent believe that their rising Asian competitors could cause them financial difficulties.

Our study shows: European governments must quickly introduce comprehensive measures that can strengthen Europe as a center of innovation and protect companies from unfair competition. The key building blocks for a European innovation initiative would be active promotion of research and development together with efforts to ensure open markets, fair competitive conditions and effective protection of intellectual property, as well as a migration policy that makes Europe a more attractive location for international researchers and developers.

The survey's respondents say that expanding businesses in China and India are currently the biggest competitors they face, although pressure to innovate is also increasingly coming from Malaysia, Indonesia, Taiwan and the Philippines. Asia's most innovative industry is IT, followed by electronic equipment, medical equipment, heavy machinery and automotive. The reasons for the rise in innovation in Asia's newly industrialized countries: In addition to government support, there has to be namend the considerable expansion of educational systems and the rapid adoption of new technologies.

Most of Europe's business players still feel they are up to the competitive challenge. At the same time, almost all say they are planning more targeted strategies and measures so they can keep pace with their Asian rivals. More than half of the executives surveyed say they intend to expand their R&D activities in the future. Approximately one-quarter will seek partnerships in Asia to a greater degree than in the past. Only 11 percent say that developments in Asia will have no impact on their corporate strategy over the next three years.

"Asia’s rise is confronting Europe's midsized companies, traditionally the drivers of innovation, with a fundamental cultural change. If we do not start taking these developments more seriously than we have in the past, then Germany and Europe could find themselves left behind," says Bernhard Bartsch, Asia Expert at the Bertelsmann Stiftung. "What is important is having the same framework conditions in place for all market players", Bartsch underlines.

Please find the complete study with charts here.