When talking about “the German economy”, we should always keep in mind the family businesses – because they account for 91 percent of all companies in Germany. Family businesses include small and medium-sized enterprises (SMEs), but also nearly 200 companies with sales worth billions of euros. This mixture of large and small, regionally rooted and internationally oriented family businesses coin Germany’s distinctive economic structure, and the diverse landscape of family entrepreneurs is one of the reasons for the strength of the German economy.

But what exactly is a family business? We define a company of any size as a family business if

1. the majority of the decision-making powers rest with the individual(s) who founded the company, with the individual(s) who acquired the company’s share capital, or if that share capital is owned by a spouse, parents, child or a direct heir of a child；

2. the majority of the decision-making powers are exercised either directly or indirectly；

3. at least one representative of the family or relative of the family is officially involved in the management or control of the company.

   
   

(Definition: Foundation for Family Businesses)

34 percent of all companies with 250–499 employees, and 29 percent of those with more than 500 employees, are family businesses. Many of them are international market leaders in their particular technological niches, e.g. in the mechanical engineering and automotive industries.

Although in public perception, family businesses are often associated with private ownership, this is not necessarily true. Many family businesses are successful players on the stock market. A stock-listed company is considered a family business if the person who founded the company or acquired its share capital, or their family or descendants, hold 25 percent of the decision-making rights due to their stake in the company. Among the DAX 30 companies, there are three family businesses: Beiersdorf AG, Henkel AG & Co. KGaA, and Merck KGaA.

If you are interested in finding out just how successful family businesses are on the stock market, check out the DAXplus® Family Index. It comprises German and international companies listed in the Prime Standard of the Frankfurt Stock Exchange in which the founding family either holds at least a 25 percent share of the voting rights or sits on the Management Board or Supervisory Board with at least 5 percent of the voting rights.

Compared to the DAX companies with a growth of 17.8 percent over the last three years, the DAXplus Family Index achieved a growth of 21.6 percent and had a lower volatility. 

In our article series, we will tell you more about the reasons why German family businesses are so successful, what their strategic and operative challenges are, and how Chinese family businesses can learn from the German experience.

The Entrepreneur Elite (International) Club

German Branch was established in 2019 and is currently located in the German capital city Berlin. Soon the Munich office will also be opened. The main responsibility of the German branch is to provide the club members - entrepreneurs - with a full range of business services for the EU, especially the German-speaking region, including investment, strategic consulting, human resource development, legal and finance service, training and many other fields. On the club's public wechat platform, we will regularly publish information on German technology, economy, politics, and business management to help members understand Germany more deeply.