Historically, Germany has been quite fragmented in recent centuries. This has resulted in a number of different cultures, dialects and traditions. This means you will find different ways of doing business in each of Germany’s 16 federal states. The most marked contrasts can be found between Northern and Southern Germany and Eastern and Western Germany. Access to the market, state subsidies and business contacts might vary across regions. When doing business, please keep in mind that there is no such thing as a “typical” German.
Understanding the market
The necessity to customize your product or service is not specific only to Germany and applies to every international market you want to address. Adapting your product to the German market means keeping in mind that it is a mature economy with a long history. This means investigating whether your product is in a saturated or a growth segment. Looking at factors such as market development, technological trends, competitive landscape, and potential partners will help you narrow down and customize your product for the German market. The German market is generally considered to be quite demanding. This means that it will also require a fair amount of preparation and a full understanding of German habits before selling in Germany. Businesses and consumers alike are typically well informed about quality standards and sales cycles are often long.
Just a “tiny bit” of bureaucracy
Germany’s different company regulations, tax system and employment law can often seem overwhelming. Nevertheless, understanding these aspects is crucial to starting your business. Make sure you get help from specialists when entering the German market. Regional economic development agencies are usually a good starting point for start-ups as most of the services are provided free of charge.
Language and communication
You can get quite far with English in Germany. But the traditional German Mittelstand (SME) company still prefers doing certain aspects of business in German. This is especially the case for smaller SMEs located in the more rural areas of the country. In general, German communication is very functional and getting straight to the point of a conversation or business meeting is not considered rude.
The “Honorable Businessman”
This rather old-fashioned concept still applies to many aspects of doing business in Germany. In the Middle Ages the concept of trust was key as one did not always know business partners well. That is why values such as trust, loyalty and reliability still play an important role. This is best evidenced by contemporary concepts including compliance, good governance, fair play, and corporate social responsibility that are implemented in SMEs and start-ups.
A good way for start-ups to get in touch with international stakeholder are international Tech events. The Digital Hub Initiative participates regularly at international fairs such as Web Summit, Slush or SXSW with an own booth and offers the start-ups of it’s network the possibility to co-exhibit. Besides that, they can attend side events to meet international VCs, ecosystem enablers, clients and other start-ups.
Watch our video – produced in collaboration with the Smart Infrastructure Hub Leipzig – where Dr. Kim J. Zietlow, Director Trend & Innovation Scouting, outlines the various pitfalls to be considered when entering the German market.