Tips for expanding your business into Germany
With the largest national economy and population in Europe, it’s hardly surprising that brands look to expand into Das Land der Dichter und Denker. However, the economy is also highly regulated, and establishing a presence here can be complex compared with other countries. Here are some tips to help you get it right.
Expect a language barrier
95% of the German population speaks – you guessed it – German. That said, most Germans tend to be quite proficient in English as a second language. This is especially true in the larger city centres.
But the ability to speak English and the desire to speak English are not the same thing. If you want to win new customers and create meaningful partnerships with local businesses here, it’s still advisable to team up with a translator. It goes without saying that your website and marketing materials should be available in both German and English.
Organisations to get in touch with
Unfortunately, setting up shop in Germany involves jumping through a number of bureaucratic hoops! You’ll need to contact the local divisions of each of the following organisations:
- The Chamber of Industry and Commerce can assist with registration of your business. If done online, the process is free and only takes around 1 working day.
- You can apply for a trading licence (Gewerbeschein) through the local office of Business and Standards / Local Trade Department (Gewerbeamt) in the region you wish to open in.
- Any Public Notary can assist with notarizing your articles of association.
- Depending on the type of business you’re opening, you’ll need to deposit a portion of your startup capital in a German business bank account before you can register.
- You’ll need to register with…
The Germany Trade & Invest website also offers lots of helpful information, including links to their partner websites including Chambers of Craft, Business Development Agencies, and Business Associations.
Germans won’t accept poor quality products
German products and manufacturing are synonymous with quality – and you can’t expect German citizens to accept less than the best from foreign businesses. Make sure you’re able to prove why your product or service is better than competitors.
Exacting standards mean that outstanding customer service is crucial
Once a German has decided to do business with you, they expect excellent customer support. Remember that many of those new customers will want to deal with someone why speaks their language – and this can be a challenge if your existing CS staff don’t. If you want to retain customers, outsourcing your customer support to a multilingual contact center that can assist your new clients 24/7 is a wise investment.
Marketing in Germany
Another interesting quirk of the German market is a preference for some of the more traditional media platforms like print and TV. For a company used to running all their advertising campaigns digitally, this can be a tricky transition.
This preference stems from the fact that Germany has an aging population – couples are having fewer children, while life expectancy is very high – and increasing.
So while it’s still a great idea to be on platforms like Twitter and Instagram if your target audience is young, you’ll need to mix up your marketing efforts to include traditional media if you want to reach as many people as possible.
Expect some tricky taxes…
To say that Germany’s tax system is complex would be an understatement! There are 14 different taxes which may be payable by a business operating in Germany, most broken down into 9 separate payments a year, and there are social security contributions added into the mix too. Bringing a local tax expert on board is therefore essential.
…but remember to take advantage of available funding and incentives
Now for some good news! Germany regularly injects billions of Euros into grants, loans and financial incentives for new businesses – including those run by overseas entrepreneurs. The government places a very strong emphasis on funding research and development, and provides a wide range of financial aid and support for companies, including:
- Direct, non-repayable grants
- Equity capital
- Employment and recruitment support and wage subsidies
- National and federal public loans
For business looking to expand into Germany, especially from outside the EU, there’s a steep learning curve and a lot of bureaucratic boxes to tick! However, there are also huge benefits to be had:
- A prosperous economy and stable political climate
- World class infrastructure
- The largest consumer market in Europe, with the largest purchasing power
- A booming e-commerce sector
- A highly skilled workforce
- Strategic position – Germany shares borders with a whopping 9 other countries, creating opportunities for further European expansion
Go in with the understanding that expanding your business to Germany is going to take patience, planning, and paperwork – but the potential rewards are massive.