The German government needs to offer the country's exporters more backing for big international infrastructure bids to avoid losing industrial orders and German jobs, Siemens Chief Executive Joe Kaeser said.
"We see increasingly state-backed offers from China and Japan in international competitions to which we don't really have an answer," Kaeser, whose company makes products from medical imaging machines to wind turbines, told Reuters in an interview. He said reforms to export credit guarantees would help exporters to have a better chance of winning contracts without making painful concessions, such as hiring large numbers of local staff instead of using German workers.
Data from the Economy Ministry on October 07 showed German industrial output fell in August at its fastest pace in a year, suggesting Europe's largest economy may have lost momentum in the third quarter.
Economists have warned that German exports, which drove a second-quarter economic expansion, could falter this year should the economic slowdown in China and an emissions scandal at Volkswagen reduce demand from abroad.
Siemens' Kaeser said German companies, for example, missed out on a big rail project in India recently because they were not able to offer a complete financing package, essentially loans to the government, as part of their bid.
"The first tranche of the three-part project was awarded to a Japanese company because it brought $10 billion of state-backed financing. India's rail minister said clearly: 'Whoever brings the money will get the contract'," Kaeser said.
Especially in emerging markets like India or Egypt the availability of funds helps foreign rivals win bids because governments there need the support in financing investments in their infrastructure.
Germany supports exports, a key driver of growth and accounting for about 40 percent of the economy, by offering guarantees against non-payment, known as Hermes guarantees.
Companies are eligible to receive a Hermes guarantee if more than half of a product's components are made locally, but industry and banking groups have called on the government to extend the scope of the system.
Kaeser welcomed comments from German Chancellor Angela Merkel during a trip to India this week, that Berlin would consider how financial groups could make it easier for companies to invest.
"If the Chancellor says this is an important task, then the groundwork has been laid," Kaeser said.