We do research on trust in country brands as part of our main Edelman Trust Barometer. We also look at specific countries during the year, especially when there have been issues for important companies. We will be releasing a special report on trust in Brand Germany in two weeks, with data from eight countries collected in late summer 2019. Here’s the headline: Brand Germany, once the global powerhouse among country brands, has faded significantly in the face of a series of blunders by German companies. This can be recovered in the coming years through greater transparency, CEO visibility and an open embrace of the stakeholder model of business, which commits to improving society while delivering shareholder return.
Trust in Brand Germany has plummeted in the past five years by 19 points in developed markets (UK, U.S. and France), by 16 points in Germany, and by only a small amount (four points) in emerging markets (China, India, Brazil, Mexico). There had been a steady recovery until the revelation of further issues in the car business in summer 2018, then the massive downsizing at Deutsche Bank and controversial Bayer-Monsanto deal. The trust declines are across all industrial sectors, from financial services to chemicals to automotive. This decline in trust has a tangible aspect, with 41 percent of respondents in both developed and emerging markets saying that because of recent scandals, they are buying fewer German products.
The key to the devolution of Brand Germany is values or lack thereof. Only 35 percent of respondents in developed markets feel that the values and views of most German companies match their own. Under half of respondents in developed markets believe that German companies have sufficient internal controls and policies to uncover or prevent corruption (37 percent in the U.S.). Most shocking of all our findings is that only 22 percent of respondents in developed markets trust CEOs of German companies to do what is right (only 17 percent in Germany).
The plethora of industry scandals has undermined the traditional German advantage in corporate citizenship. For example, there is a big decline in belief in German leadership in sustainability; under half in developed markets believe that German companies protect and improve the environment. Again, under half of respondents in developed markets see German companies creating programs that positively impact their local communities. It is stunning to see that under half of developed market respondents believe that German companies treat their employees well. German companies were among the earliest leaders in sustainability and community action. But as that image has diminished, they must now lean in strongly in areas like the retraining of employees and making commitments to the betterment of society akin to Unilever’s recent announcement of its pledge to halve its use of new plastics by 2025.
The other cornerstones of the Brand Germany advantage—high-quality products and services and top-class engineering—remain relatively unaffected, with nearly two-thirds of those in developed markets and 84 percent of those in emerging markets believing in German excellence. German products are also seen as offering good value for money.
It is time for game change for “Made in Germany.” This is a wake-up call for German CEOs: It is no longer enough to perform well for shareholders; you need to lead beyond your four walls, to be visible and vocal on issues of the day and to step in where government is failing. Companies should explain how and why they are acting, with public reporting on supply chain, product testing and diversity. The most visible manifestation of commitment to change has been at Siemens, buffeted by scandal a decade ago, now back to aggressive competitor with a visible CEO unafraid to buck convention in advocating for his agenda. The former World Cup champions can regain their historic first place position; no better time than the present to get a move on.
Richard Edelman is CEO.