Germany dominates globally among the so-called Hidden Champions – those medium-sized companies that are world leaders in their niche markets, yet remain almost unknown publicly. With an estimated 1,500-1,600 of the roughly 3,500 Hidden Champions in the world, Germany accounts for about 42-46% of all such covert world market leaders. For entrepreneurs in the German Mittelstand, especially in North Rhine-Westphalia, these success stories offer a proven framework for sustainable competitive advantage.
The Hidden Champion concept, developed by Professor Hermann Simon, describes companies that meet three criteria: they are among the top 3 in the global market (or a European industry leader), have annual revenue under €5 billion, and are publicly hardly known. This combination of market leadership, international orientation and deliberate discretion makes them ideal role models for medium-sized companies seeking to strengthen their market position.
Germany as a Hidden Champion stronghold
Germany leads the global Hidden Champion list with approximately 1,500-1,600 companies – that corresponds to about 42-46% of all Hidden Champions worldwide. This dominance reflects the strength of the German Mittelstand, which traditionally emphasizes quality, innovation and long-term customer relationships.
In North Rhine-Westphalia alone there are 690 Hidden Champions, representing 29% of all German Hidden Champions. For companies in the Oberbergischer Kreis and its surrounding region, this means an exceptional density of success role models right on their doorstep.
In terms of industry distribution: mechanical engineering dominates with about 23% of all Hidden Champions, followed by electronics and metal processing. This industry breakdown shows special relevance for manufacturing companies in the region, which traditionally possess strong competencies in these areas.
Key economic data at a glance:
These figures show: Hidden Champions are not accidents, but the result of systematic strategies that other medium-sized companies can also apply.
Hidden Champions consistently focus on profitable niche markets in which they can build and defend a leading position. This strategic focus allows them to shape prices in a high-margin segment and at the same time create high barriers for competitors.
The successful niche strategy is based on three factors: existing core competencies, unmet market needs and scaling potential. Hidden Champions then expand strategically from niche to niche and use their specialization as leverage for international expansion.
Practical implementation steps for medium-sized companies:
“In order for a company to reach the world’s top and succeed there, a consistent focus on quality, extensive internationalization, very close customer proximity and strong employee relations are indispensable,” states an official statement of the NRW Ministry of Economics.
Hidden Champions invest an average of 6% of their revenue in R&D—significantly more than the industry average. These above-average R&D investments are visible in impressive innovation results: Hidden Champions show significantly higher patent application rates per employee than large companies.
The innovation strategy is systematic and customer-oriented. Hidden Champions do not develop in an ivory-tower but in close cooperation with their customers. They use their deep market knowledge to create innovations that solve real problems and at the same time open up new revenue sources.
Successful innovation strategies at a glance:
Digitization plays an increasingly important role. Hidden Champions use digital technologies not as an end in themselves, but as amplifiers of their existing competitive advantages. Sensors in machines enable new service models, digital twins optimise maintenance cycles and data-based services generate continuous customer relationships.
Hidden Champions combine successful global reach with regional roots. Their average export quota lies significantly above the Mittelstand average, often at 60-80% of total revenue. At the same time, they retain their regional roots and use these as a stability anchor.
The internationalisation strategy usually follows a proven pattern: starting from a strong home base, Hidden Champions systematically conquer international markets. They rely on local presence via their own branches or strong partner networks, in order to guarantee the critical customer proximity also internationally.
Successful internationalisation strategies:
The regional anchoring in the Oberbergischer Kreis or other North Rhine-Westphalia locations presents decisive advantages: short distances to customers and suppliers, access to qualified specialists and stability of long-established networks.
Hidden Champions maintain intensive, long-term customer relationships that go far beyond normal supplier-customer relationships. A significantly higher proportion of employees at Hidden Champions have direct customer contact compared to large corporations. This exceptional customer proximity enables co-development projects and leads to solutions that are precisely tailored to customer needs.
The close customer linkage creates high switching barriers and allows for premium prices. Customers are willing to pay more because they don’t just receive a product but a comprehensive problem-solving solution.
Practical approaches to strengthen customer proximity:
This customer proximity pays off directly: Hidden Champions achieve higher margins, have more stable revenues and earlier insights into market developments.
Hidden Champions are characterised by exceptionally low turnover rates and long management cycles. Employee retention is significantly above the German average, and leadership continuity is substantially higher than in large companies. This stability builds trust and enables long-term strategies.
The corporate culture is strategically patriarchal, operationally team-oriented, performance-focused and intolerant of under-performance. Long-term orientation and value-orientation shape success and create strong identification of employees with the company.
Characteristics of successful Hidden Champion leadership:
Hidden Champions don’t use digitisation as a fashion topic but as a strategic lever to strengthen their existing competitive advantages. They clearly distinguish between superficial digitisation of processes and real digital transformation of their business models.
Successful Hidden Champions focus on customer-benefit-oriented digitisation areas: IoT sensors in machines enable new service models, digital twins optimise life-cycle costs for customers and data-based services generate continuous revenue streams beyond one-time product sales.
Proven step-by-step digitisation process:
Concrete digitisation approaches for Hidden Champions:
The digitisation strategy always takes place with a focus on the core business: How can digital technologies strengthen the competitive position in the defined niche?
Transformation into a Hidden Champion requires systematic approaches and clear priorities. Start with an honest self-assessment of your current position and develop a realistic roadmap for the next 3-5 years.
Checklist Hidden Champion Potential:
Development of a Hidden Champion Roadmap:
The successful implementation follows a systematic 5-phase model, which considers both strategic and operational aspects:
Phase 1: Analysis and Goal Setting (Months 1-3)
Conduct a comprehensive assessment of your market position. Define realistic niche markets in which a TOP-3 position is achievable. Evaluate your core competencies and identify investment needs.
Phase 2: Strategic Alignment (Months 4-6)
Develop clear focus strategies for your defined target markets. Plan the necessary investments in R&D and market development. Set the organizational foundations for long-term growth.
Phase 3: Operational Implementation (Months 7-18)
Implement systematic customer development programmes. Strengthen your innovation processes and build up international presence. Invest strategically in technological leadership.
Phase 4: Scaling and Optimisation (Months 19-36)
Expand successfully tested concepts into additional markets. Optimise your business processes for international scaling. Systematically build up market barriers.
Phase 5: Continuous Leadership (From Month 37 onward)
Establish mechanisms to defend your market position. Continuously develop new growth fields and strengthen your competitive advantages.
Critical success factors and typical stumbling blocks:
Measurable KPIs and milestones:
Hidden Champions are companies that are among the top 3 globally in their market (or industry leaders in Europe), have annual revenue under €5 billion, and are publicly hardly known. The decisive factor is the combination of market leadership, international orientation and deliberate discretion.
Absolutely. Almost a quarter of Hidden Champions are SMEs with up to 250 employees. The principles – niche focus, customer proximity and innovation – work independently of the company size. What’s important is consistent specialization on profitable niche markets.
Digitalisation is at the centre of future development. As innovation or industry leaders these companies aim to play a pioneering role in this field as well. Digitalisation amplifies existing competitive advantages through new service models and increased customer proximity.
Successful niche identification is based on three factors: existing core competencies, unmet market needs and scaling potential. Hidden Champions expand strategically from niche to niche and can set prices in the high-margin segment through their specialization.
The corporate culture is strategically patriarchal, operationally team-oriented, performance-focused and intolerant of under-performance. Acceptance of this culture is the basis for motivation and employee identification. Long-term orientation and value orientation shape success.
Development into a Hidden Champion is a long-term process, typically taking 5-10 years. What’s crucial is consistent strategy implementation, continuous investment in core competencies and patient build-up of international market positions. Short-term successes are possible, but sustainable market leadership takes time.
North Rhine-Westphalia offers ideal conditions for Hidden Champions. With 690 Hidden Champions, the state not only leads quantitatively but also benefits from unique location advantages: proximity to important European sales markets, excellent infrastructure and high density of research institutions.
The Oberbergischer Kreis and adjacent regions benefit from established industrial clusters, especially in mechanical engineering and metal processing. These regional networks enable short distances to suppliers, customers and cooperation partners.
Regional success factors at a glance:
Industry focus in the region:
The region around the Oberbergischer Kreis shows clear industry focuses that are ideally suited for Hidden Champion strategies: mechanical engineering and plant engineering dominate, supplemented by metal processing, plastics technology and automation technology.
This industry distribution mirrors global Hidden Champion patterns and offers local companies ideal conditions to develop into world market leaders in their niches.
Hidden Champions face new challenges that put their proven success models to the test. Digital change, geopolitical uncertainties and demographic shifts require adjustments to traditional strategies without weakening core strengths.
The biggest challenges:
Strategies for the next generation:
Hidden Champions that also want to be successful in the future must combine their proven strengths with new approaches. Digitisation becomes a strategic imperative, sustainability moves from cost factor to competitive advantage.
The most successful Hidden Champions of the future will be those who reinforce their core strengths – niche focus, customer proximity and innovation capability – with digital opportunities and at the same time use their regional anchoring as a stability anchor.
Start your Hidden Champion transformation with a systematic analysis of your current position. Use the available regional networks and consulting resources to develop a realistic roadmap.
The transformation into a Hidden Champion is not a sprint, but a marathon – yet the success stories in North Rhine-Westphalia show: it’s worth it. Companies that set the right strategic course today can become tomorrow’s quiet world market leaders.
[S1] Hermann Simon – Hidden Champions (various years): Fundamental concept and definition of Hidden Champions
[S2] University of Trier – Study commissioned by the NRW Ministry of Economics (2019): 690 Hidden Champions in NRW, 29% of all German Hidden Champions
[S3] Centre for European Economic Research (ZEW) – Hidden Champions studies: 22-23% of Hidden Champions in mechanical engineering
[S4] TechZeitgeist & finanzierung.com – Hidden Champions R&D studies: 6% R&D quota of Hidden Champions
[S5] Hermann Simon Research – Innovation performance and patent activities of Hidden Champions
[S6] Various studies on employee retention and leadership continuity of Hidden Champions
[S7] NRW Ministry of Economics – Official statements on Hidden Champion success factors
Copyright © 2025 Peter Littau
Copyright © 2025 Peter Littau
