As many economies in Europe are staggering against the backdrop of a lingering debt crisis, Germany has emerged even stronger with its gross domestic product (GDP) registering a 3.1-percent growth in 2011.

The manufacturing industry plays a crucial role in shoring up the German economy.

What makes the German-made goods envied and embraced by people across the globe? Recent interviews conducted by Xinhua with some insiders and economists provide a glimpse into the success story of the manufacturing industry in Germany.

"DO WHAT THEY ARE GOOD AT"

As financial services and high-tech sectors steal the limelight from manufacturing industry in many developed countries during the recent years, the contribution of manufacturing to GDP has been dropping.

However, the situation in Germany is different. The manufacturing industry has been the largest contributor for years in Germany. In 2011, the production of manufacturing industry reached 504.2 billion euros (670.4 billion U.S. dollars), accounting for about 20 percent of the GDP.

Philipp Boeing, an economist and researcher with Frankfurt School of Finance and Management, said Germany has a long tradition in engineering cutting-edge inventions.

A lot of German companies maintain their business model although the economic situation has changed, he said. "They just do what they are good at."

Although the traditional business models in Germany might not create fat margins as top-notch business models such as finance and IT businesses, they always offer a decent return over the years, Boeing said. These business models are less volatile in times of crisis, he added.

SME LEADING IN HIGH-END SEGMENTS

Unlike companies in other places of the world that tend to expand and grow bigger, the small-and medium-sized enterprises (SME) play a significant role in Germany and they tend to compete in the high-end segment of the market.

Oliver Wack, area manager of the German Machinery and Plant Manufacturers' Association (VDMA), which comprises over 3,000 member companies, pointed out that there is a difference between the structure of the manufacturing industry in Germany and that in other countries.

Wack said the SMEs are actually the "backbone" of the machinery and plant manufacturing industry and other industries. "The success is not related to the size of the company," he said.

He noted that many of the companies have developed for a long time and some family-owned companies have lasted for five or six generations, so they have got an advantage in terms of the technological level.

Boeing said that the SMEs in the manufacturing industry, often family-owned, prefer to keep a distance from the stock market. "They are decoupled from the stock markets, and they are not that strongly affected by international trends of the capital markets."

He also mentioned that many of the companies in the manufacturing industry specialize on niche products and hence a lot of SMEs have become global leaders with regard to very specific technologies.

When they become niche players and market leaders in a segment, they keep on maintaining their position and improving their products so as to be always ahead of their competitors, he said.

"It might be that their products will not be the cheapest, but they definitely have the best quality," said Boeing.

LONG-TERM THINKING

In sharp contrast to companies in other areas whose success has been defined in a short-term way, German companies generally have a long-term strategy, Wack pointed out.

Boeing noted that German companies usually have to plan in a long-term perspective because the companies were founded by family members and many of them will be passed on from generation to generation.

In order to survive and excel in the long term, the companies spend a lot on research and development (R&D) to maintain their technological edge in the long run.

According to Wack, 4 percent of the companies' turnover in the machinery industry was reinvested in R&D on average in 2010. That makes the companies become innovative and be able to make better products and become more competitive, said Wack.

Boeing pointed out that the style of management in Germany has also played a role in encouraging people to become creative. Employees were allowed to work on their own ideas and there are quite a lot of programs and campaigns to support innovation in Germany, he said.

Germany has also got a sound education system in support of the manufacturing industry.

Unlike many other countries, it is very respectable to become an engineer in Germany, Boeing said. But to become an engineer doesn't mean that one will be limited to the technical scope of the business, he added.

"An engineer in Germany can very easily become member of the board or even CEO of a company," he said. "So there is a strong incentive for students in Germany to study technical disciplines."

According to Boeing, education from the university level down to vocational schools in Germany can provide very consistent quality, which will enable students to get to understand the newest technologies, methodologies and the newest insight from research.

EXPORT-ORIENTED

The manufacturing industry of Germany depends heavily on the overseas markets, which can partly explain how the country managed to keep its manufacturing activities prosperous even when the demand in Europe is dwindling.

Take the machine tool industry as an example. According to the Machine Tool Builders' Association, a strong growth of 33 percent was seen in the exports of machine tools in 2011.

Ten years ago the sector was selling 61 percent of its exports in Europe, a quarter in America and a mere 11 percent in Asia, but the proportions today are quite the reverse. In 2011, 42 percent went to Europe, another 42 percent to Asia, and just 15 percent to America, according to the Association.

Lower labor cost growth rate is considered as one of the main reasons for Germany's strong exports. Since the wages remain at a relatively moderate level, the price competitiveness of German-made products on the overseas markets will be enhanced.

The strong growth of exports could also be attributed to the weak euro, Boeing said.

He said the German companies are doing quite well while the global economic situation is changing.

"It was only because they kept on doing what they always did well," he said. (1 euro = 1.33 U.S. dollars)