The 35mm rangefinder and SLR business was all Germany's before the war, and mostly through the 1950s, too. But by 1960 photographers wanted SLRs, and that part of the business was taken over by Japan. By 1970 Germany hardly had a camera industry at all.

As good a way as any to see this shift while it was happening it to look at the comparison chart of SLRs printed by Popular Photography in its 1961 Directory issue (click on it to see it bigger):

Click image to zoom

There are 56 SLRs listed: 34 European, 21 Japanese, and one that I can't identify (the Colorflex Deluxe). Of the 21 Japanese SLRs, 16 had instant-return mirrors, including all of the newest models from the major Japanese manufacturers. Only 5 European cameras had instant-return mirrors, and 4 of those were Swiss Alpas. The only German SLR with an instant-return mirror was the Zeiss Ikon Contarex. It sold for $450, far more than even a Nikon F. (Even at that price, the Contarex lacked an instant-reopening diaphragm.) Arguably the leading German 35mm maker, Leica, didn't even have an SLR in 1961 (not until 1964).

Think of it this way: The instant-return mirror first showed up in a widely-marketed camera in the Asahiflex IIb/Tower 23 of 1954, and 6 years later only one German camera had this essential feature, and at a ridiculously high price.

I emphasize the instant-return mirror only because it's such a dramatic differentiator. The Japanese were doing a lot of other things right, too: Reasonable prices, extensive choice of lenses, widespread distribution, outstanding quality, and heavy advertising.

The Germans lost the camera business simply because they were unable to, or refused to, compete for it.