Four Key Insights into the “Artisan Spirit” Behind German Manufacturing

23 Aug,2019

Four Key Insights into the “Artisan Spirit” Behind German Manufacturing
　　Among the Global 500, while large German corporations may be few in number, Germany boasts at least a thousand “hidden champions” in niche markets. Beyond this, what is most noteworthy is that “Made in Germany” is home to countless century-old enterprises that have steadfastly upheld time-honored traditions, steadily evolving from excellence to outstanding performance and serving as enduring models of long-term success. For example, Zwilling J.A. Henckels, founded in 1731, initially launched its eponymous line of cookware, knives, and fine Western tableware, later expanding into stainless‑steel tabletop products, military‑style knives, and even nail‑care items, ultimately becoming an industry leader and pioneer in the production of high‑quality stainless‑steel goods.
　　So let’s take a look at the “craftsmanship” behind German manufacturing.
　　Revelation One: In the face of China’s booming internet‑centric mindset, why aren’t German companies jumping on the bandwagon?
　　Take Porsche as an example. Its three core philosophies are:
　　First is the spirit of quality. Here, assembling a single vehicle takes just nine hours, but subsequent testing and fine-tuning require five days, and it can take several months before the car leaves the factory. Even for Porsche, orders typically take at least three months to fulfill, with some high‑spec models requiring reservations a year in advance. Despite robust demand, the company is in no hurry to expand. Porsche employs 7,500 assembly workers and 6,500 R&D and service personnel, underscoring the critical importance of research, development, and customer service to the company.
　　To ensure quality, Porsche assembles virtually everything by hand—except for the glass and the engine. Windshields are so heavy that robotic handling offers greater precision and reliability, while tightening the engine’s bolts, a repetitive and labor‑intensive task, is also performed by automated arms. All other assembly steps, however, remain in the hands of skilled workers. The true advantages of Industry 4.0 lie in order processing and production automation. At the Porsche plant, humans handle assembly, robots manage material handling, and the entire facility operates under seamless Wi‑Fi‑based remote control and communication, maintaining strict order and efficiency. After all, even the best human workers will always outperform robots in terms of precision and adaptability. This, in essence, is what sets manufactured goods apart from works of art.
　　Second, Porsche avoids reckless expansion. The company maintains a steady, consistent production pace: it has never experienced a so‑called off‑season, not even during financial crises. According to its representatives, Porsche’s demand remains unaffected by economic downturns, as its customer base is financially well‑off.
　　Due to space constraints at its manufacturing facilities and its location in the city center, Porsche can produce only 200 vehicles per day, with an annual output of just 60,000 units—generating a mere 20 to 30 billion yuan in revenue, a figure that pales in comparison to the hundreds of billions of yuan generated by other automotive giants. The reluctance to expand rapidly or to encourage overtime work is less a hallmark of German family-owned enterprises than a defining characteristic of German companies as a whole.
　　Third is the spirit of lean manufacturing. Although Porsche operates production facilities in other German cities, the most technologically advanced engines and the final assembly of complete vehicles are both carried out at its Stuttgart plant. The expertise—known as “know-how”—of its veteran technicians constitutes the company’s core competitive advantage.
　　The “Made in Germany” label has become a hallmark of quality not only because Germans are highly skilled and committed to lean manufacturing, but also thanks to their robust vocational education system. Germany employs a dual-track education model: students begin to branch out in junior high, with the majority opting for vocational and technical schools. In Germany, skilled workers are in high demand; due to persistent shortages, the country even imports technicians from Southern Europe. Moreover, highly qualified blue-collar workers earn more than many white-collar employees, and company leaders are often promoted from among the blue-collar ranks.
　　For German companies like Porsche, the core competitive advantage lies in a mentor‑apprentice model that emphasizes knowledge transfer and hands‑on guidance, ensuring that expertise is passed down from one generation to the next. Meanwhile, the long-term stability of family‑owned enterprises allows corporate philosophies and cultures to endure. It is this iron triangle—combining artisanal craftsmanship, familial legacy, and cutting‑edge technology—that has kept “Made in Germany” resilient and unshaken, even as the digital age has swept across the globe.
　　So-called internet thinking is merely a means; its ultimate goal is to enable products to reach global markets and ensure the enduring success of the enterprise.
　　Revelation No. 2: Why aren’t German companies eager to go public?
　　Thomas Einsfelder, Head of International Affairs at the German consulting firm Berlin Partner, offered the following explanation: “Because Germany’s stock market is underdeveloped.”
　　Einsfelder explained that 98 percent of German companies are small and medium-sized enterprises. Because Germany’s stock market is underdeveloped—there are only about 800 listed companies nationwide—it is difficult for these firms to go public immediately after building a strong business, raise capital, and exit. As a result, they are compelled to adopt longer-term development strategies. Many of these SMEs are family-owned, and they tend to be steadfast in their approach, adhering to a time-honored management philosophy: “survival” takes precedence over all else. Consequently, they do not pursue profits at all costs, are not adept at financial engineering, and have never even considered going public. This dynamic, in turn, has further hindered the growth of Germany’s stock market. “However, precisely because the capital markets remain underdeveloped, many German companies—especially family businesses—focus on delivering top‑notch products and managing their operations with the utmost care, which in turn has made Germany’s real economy exceptionally robust.”
　　At present, the two models that exert the greatest influence on Chinese enterprises can be broadly categorized as the U.S. model and the Japan–Germany model. The U.S. model is characterized by a chain‑store approach and an internet‑centric strategy, emphasizing rapid scaling, public‑market expansion, and the swift capture of market share—achieved through price wars, aggressive marketing, and sophisticated capital maneuvers. By contrast, the Japan–Germany model is deeply rooted in family‑owned businesses and national cultural traits: a strong sense of duty, unwavering dedication, a tech‑savvy mindset, and a penchant for perfectionism. This contrasts sharply with the U.S. emphasis on breakneck growth and IPOs, which is why the Japan–Germany region has rarely given rise to super‑scale internet giants.
　　The U.S. model has had a profound impact on Chinese enterprises. A concentrated manifestation of this is the “listing‑first” mentality, whose underlying concerns are now turning into real problems. It seems that once a company goes public, its issues are somehow resolved once and for all. In contrast to the current climate of impatience and short‑termism surrounding IPOs, the steady, step‑by‑step approach adopted by Japanese and German family‑owned firms offers far greater lessons.
　　Why are German companies reluctant to go public? Because 92% of them are family‑owned enterprises—some are industry leaders, while others are “hidden champions,” such as well‑known names in the chemical and pharmaceutical sectors like Bayer, Henkel, and Merck. A common trait among these family firms is their strong attachment to tradition.
　　Is going public more important, or is it more crucial to forge a community of shared destiny for the enterprise? Can money sustain such a community over the long term? The phenomenon of money bringing people together while driving them apart is far from uncommon among Chinese companies.
　　Secret #3: Why does “Made in Germany” enjoy global popularity?
　　The foundation of Germany’s Industry 4.0 is its lean manufacturing. In other words, it is “Made in Germany + Internet,” rather than “Internet + Made in Germany.” Industry 4.0 first requires a solid footing in Industry 2.0 and 3.0—strong industrial infrastructure, robust corporate governance, and a skilled workforce.
　　“Made in Germany” has become synonymous with quality and reliability, a model whose approach is well worth emulating—especially by “Made in China,” which too often carries the stigma of being cheap. Until the early 20th century, “Made in Germany” was still associated with imitating foreign products; today, however, German machinery, chemicals, electrical appliances, optics, and even kitchenware and sporting goods are among the highest‑quality offerings worldwide. This remarkable turnaround owes much to a steadfast commitment to quality and an enduring spirit of craftsmanship, underpinned by the indispensable legacy of family‑run enterprises.
　　A frenzied stock market ultimately requires a solid industrial foundation to sustain it. No matter how much the share prices of “speculative stocks” soar, they must eventually revert to the fundamentals of corporate competitiveness. China’s economic transformation and upgrading hinge on fundamental improvements—namely, the intelligent and lean evolution of Chinese manufacturing. At the heart of this transformation lie two enduring principles: a commitment to quality and a spirit of craftsmanship.
　　Revelation Four: What Can Germany Teach Chinese Family Businesses?
　　Germany is dominated by family-owned businesses, yet only 10% of them survive into the fourth generation. It seems that even in Germany, the adage “wealth does not last beyond three generations” holds true. Nevertheless, the cumulative number of those 10% that do achieve succession remains quite substantial.
　　German family-owned enterprises also place great emphasis on the importance of passing down family traditions and values. Many renowned family businesses have established their own museums. Committed, dedicated employees are another key factor in ensuring a company’s longevity. A company’s competitive edge stems from the value it creates for its customers. And who generates that value? The employees. You might as well treat your employees as internal customers—care for them thoughtfully and nurture them with diligence.
　　For China’s relatively young family businesses, the challenge lies in either an insufficient pool of successors or a reluctance among the second generation to take over. Lacking a formal professional‑manager system, these firms typically pass the reins to the next generation—provided, first and foremost, that the family itself is well‑managed, as this serves as the foundation for any enterprise. As long as that “family tree” remains intact, even if the business does not rest with the second generation, there may yet emerge a worthy successor in the third or fourth generation. Of course, safeguarding wealth must come first; without it, nothing else can even begin.
　　“The spirit of craftsmanship” is modest, able to endure solitude, unseeking of public acclaim, quietly observant, and true to one’s inner convictions. At its core, this spirit goes beyond treating work merely as a means of earning a living; it embodies a steadfast dedication to one’s craft, a relentless pursuit of excellence in both the tasks at hand and the products created, and an unwavering commitment to meticulous refinement. Among countless Japanese enterprises, this spirit has fostered a shared cultural and ideological value system between corporate leaders and employees, thereby nurturing the company’s intrinsic drive for sustained growth and innovation.
　　In this era dominated by a “merchant spirit,” both individuals and businesses face immense challenges to survival. For instance, some companies that rely primarily on knock-off products can manage to stay afloat when external conditions are favorable; however, as soon as the environment turns adverse, they can quickly go out of business.
　　The core of any enterprise lies in its people, and the way out of this predicament is to cultivate a “craftsman’s spirit.” Craftsmen tirelessly refine their products and continuously hone their techniques, finding fulfillment in the process of elevating their creations. Meanwhile, many companies are preoccupied with “raising capital—killing off a product—launching a new one—raising more capital.” In contrast, firms that embrace the craftsman’s spirit satisfy their own deeper aspirations by watching their products steadily improve and mature, ultimately taking shape in a form that meets their exacting standards.
　　Artisans earn money through their work, yet they do not work for money. The work one does is a reflection of one’s attitude toward life, and one’s lifelong vocation is an expression of one’s aspirations and the very essence of one’s ideals.

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