Electronics gap leaves proud Germans with a crisis of technological confidence

September 26, 1993|By Barbara Demick | Barbara Demick,Knight-Ridder News Service

BERLIN -- Sleek new laptop computers sit side by side on pedestals in this posh store in West Berlin. The name of the store is the Laptop Center, in English, and the computers come from the United States or Asia. In fact, as store manager Peter Henrich explained, "Nothing in the store is made in Germany."

Why not? "The German computers are too expensive for our customers. And besides, they are not as good."

In the land renowned for Mercedes-Benz automobiles and Braun coffee makers, a crisis of confidence is brewing. Many Germans believe the stereotype of German technological superiority is simply wrong, especially when it comes to high technology. While the country traditionally has excelled at mechanical engineering, it has not made the jump into semiconductors, computers and electronics with the dexterity of its Japanese or U.S. competitors.

More simply put: Germany's young professionals might still be driving Mercedeses and BMWs, but they're working on computers made by Toshiba or Apple. Their software is probably by Microsoft, their camcorders by Sony.

This is a country where you can still wait three months to get a telephone line in your apartment. And that's in the west. In eastern Germany, some people have been on the waiting list for 25 years.

"The Germans don't have anymore the standing they did in electronics and telecommunications. You Americans have had your touch-tone telephones for years, but we are just beginning to move in that direction," said Thomas Mayer, an economist with Goldman Sachs & Co. in Frankfurt.

"Here, if you use a mobile telephone, people think you're a paratrooper on a mission."

Recession intensifies debate

With Germany mired in its most severe recession since World War II, the country's shortcomings in high technology have become a matter of spirited public debate. The ambassador to Italy, Konrad Seitz, raised eyebrows earlier this year with an article in which he described Germany as making "the best 19th-century goods."

More recently, Chancellor Helmut Kohl has joined in the national flogging. In a 110-page economic report released earlier this month, Mr. Kohl's administration acknowledged that Germany was in danger of losing its technological edge and called for government reforms to revive competitiveness.

"Bureaucracy, complicated administrative procedures and overlong planning and approval periods are making it more difficult to establish a modern, high-technology industry in Germany," Mr. Kohl said.

Like Americans, Germans are quick to blame over-regulation for impeding economic growth. But the problem is more acute here, where the most oft-used word is "verboten."

Many types of cordless telephones are illegal in Germany because of a belief that they interfere with television transmissions and emergency broadcasts. Conference calls are also illegal, for reasons that no one seems quite sure of.

"They are still trying to protect consumers from dangers that don't exist," said Johannes Unbehauen, manager of the AT&T Deutschland consumer-products unit.

Telecommunications experts rank the German telephone system substantially behind that of the United States, the United Kingdom and -- much to the chagrin of the Germans -- even France.

"It is a perfectly adequate telephone system -- for the 1980s," said Bill Coleman, a technology analyst with James Capel & Co. in London.

Cumbersome monopoly

The phone system here is a unit of the Bundespost, or post office. Despite partial deregulation of the system in 1990, the Bundespost still has a monopoly over telecommunications.

Until three years ago, telephones were not widely available for sale, only for rent. Even today, telephones, fax machines and modems -- the devices used to transmit computer data by telephone -- must be licensed by the Bundespost through a slow and expensive procedure that can easily double consumer prices.

Alfons Schrader, editor of Highscreen, a popular computer magazine, said the growth of electronic mail and on-line computer services in Germany has been hindered by cumbersome government licensing. "Approved modems may be four times as expensive as nonapproved comparable products on the world market."

Meanwhile, the popularity of personal computers has been held in check by high tariffs. For example, the least expensive Toshiba laptop -- a model that can be purchased for $1,200 or less in the United States -- costs $2,200 or more here. The difference is almost entirely due to import tariffs.

Government interference isn't the only problem. Extraordinarily high labor costs make manufacturing prohibitively expensive for many German companies trying to compete on a world market.

Furthermore, critics say the very structure of Germany industry -- and perhaps even the character of the German people -- isn't conducive to the entrepreneurial nature of the high-tech business.

"This is the kind of country where you have to get permission from headquarters to buy a pencil," said George Verghese, technology analyst with Deutsche Bank Group.

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