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2001 - German Companies to Increase Internet Budgets

[Berlin, GERMANY] Contrary to the current trend in the United States, leading German companies want to continue to invest heavily in the Internet. According to a survey by the German business newspaper "Handelsblatt", the economic downturn has not caused any of the 30 companies listed on the DAX to question their e-business budgets. Despite the supposed negative trend, some companies are going to increase their spending. Since many firms built up their investment plans in the course of the last year, they will spend more money on e-commerce projects this year than they did in 2000. The "Handelsblatt" said over the weekend that, according to the survey, the 30 DAX companies alone will spend several billion Euro this year to organize their business activities on the Internet.

The "Handelsblatt" also reports that a Europe-wide study by Morgan Stanley Dean Witter leads to the conclusion that the dot-com crisis is having very little influence on the investment behavior of big companies. "In the coming years, by far the largest portion of the e-commerce budget of German companies will be applied to the area of B2B - that is, business between companies on the Internet," says Ross MacMillan of Morgan Stanley Dean Witter.

Financial institutes are especially heavily involved with e-business. Deutsche Bank alone will spend around 500 million Euro (US $479 million) on e-commerce projects this year. Commerzbank also plans to spend around one billion Euro (US $0.95 bllion) by 2002.

It is also clear in other branches of industry that e-commerce is not just a passing trend. All the companies questioned view their IT projects on the Internet as key investments for the future. The importance lies in "strategic policies, not economic fluctuations." The corresponding budget of a chemical company allows for a total of 75 million Euro (US $72 million) up to 2002. The possibility of an imminent economic weakening is driving many companies to invest more heavily in e-commerce because they are counting on increased efficiency.

The automobile industry also wants to use the Internet anticyclically. Daimler-Chrysler alone is initially spending 550 million Euro (US $527 millionen) to organize the company on the Internet, primarily through B2B projects such as Covisint. Deutsche Telekom wants to optimize their buying by building an electronic marketplace. In the future, the telecommunications giant wants about half of their yearly buying volume transactions of around 10 billion euro to take place on the T-Mart online platform.

The "Handelsblatt" reports that retailers are investing more heavily in the B2C (Business to Consumer) area. The Karstadt-Quelle company will invest around 250 million Euro (US $239 million) by 2004 in business activities over the Internet.