How to Do Business in Germany
January 4, 2018
Introduction to Germany
Germany is Europe’s largest economy and second most populous nation. It has the fifth largest economy in the world and is a leading exporter of machinery, vehicles, chemicals and household equipment.
Germany has a very strong technical and engineering history, and is very well known for its cars and computer hardware. The country has a highly skilled labor force and a very stable economy. It is the world’s third largest exporter of goods and is typically considered export-focused.
Germany is part of the EU single market, which represents more than 500 million consumers. Germany itself is the largest consumer market in the EU, making it one of the most valuable markets in Europe for international businesses to enter.
International businesses can more easily access neighbouring markets in Austria, Belgium, the Czech Republic, and nearly anywhere along the Northern Sea. The Port of Hamburg in particular is a great landing spot for importers, and is the perfect holding area for goods destined for markets in the area. France, the UK, and even Poland aren’t far off, making Germany a great entry point as much as a lucrative market in itself.
Germans are generally very well-off, and the country is home to many small and medium sized businesses. More businesses means more opportunity for international companies to find suppliers, buyers, and network in one of the richest, most economically diverse countries in the European Union.
Germany is home to some of Europe’s most beautiful and historically-rich cities.
From Hamburg and Frankfurt to Munich and Cologne, Germany is absolutely riddled with sights to see, history to learn, and businesses to meet with. But, there are some particular standouts, and one area that you may not have even heard about in the land of beer and sausage.
The Ruhr Gebiet
With a population of 5.1 million, the Ruhr Gebiet is the largest agglomeration of cities in Germany and the fifth largest in Europe. The area is formed by several large cities that have grown together.
With a population of 5.1 million, the Ruhr Gebiet is the largest agglomeration of cities in Germany and the fifth largest in Europe. The area is formed by several large cities that have grown together.
It’s an industrial hub. According to a survey, 37 of the 500 largest companies in Germany are headquartered there, of which 16 are industrial and 21 are in the commercial and service sectors.
Unfortunately, this area has seen a lack of international investment, as each smaller city competes for global attention and will fight legislatively in favour of themselves. However, this may be a great opportunity for the adventurous international business. A lack of competition could spell great profits for those who want a challenge.
But, it’s not really that scary. Cologne and Düsseldorf are huge economic centers, and specialize in high-end technologies.
If you’re looking to find a supplier, this megacity may your go-to.
Berlin, the nation’s capital, is characterized by its well-developed infrastructure, an ultramodern telecommunications structure, a large number of affluent consumers, and an excellent science and research community.
Berlin’s economic structure is identified by its diversity: it is home both to industrial firms long in existence and small and medium sized businesses. Berlin is geographically central with a large airport and modern railway service.
Your business meetings will most likely take place in large centers like Berlin, depending on the size of the company or supplier. Many companies are headquartered here, and the service industry is ranked alongside IT and software among the area’s most popular industries.
Though USD doesn’t exchange favourably into euros, trading in the local currency of Germany has its benefits.
The euro is the official currency of 19 EU member states, and helps to establish fluid and fair trade routes between these nations. The euro’s versatility opens international businesses to markets beyond their supplier or buyer’s home country.
In a way, the EU market becomes a one-stop-shop, allowing businesses to trade just about wherever they please.
The official language of Germany is Standard German. But, most Germans learn English as part of the school curriculum.
English is a common language for business and you can generally find someone who speaks English in any community, especially in larger cities like Hamburg and Berlin. But, don’t expect it. Be sure to ask your business partner which language they prefer to communicate in, and do so accordingly. You may need to find a translator, but it’ll be worth it in the long run to cut down on miscommunication.
As well, depending on how rural you are, signage may be hard to decipher. Sometimes they’ll be in English, but, one again, don’t expect it. Translating apps on your phone such as Google Translate and Siri will be helpful in these areas.
Finding a Supplier
iXPOS, The German Business Portal, was initiated by the Federal Ministry of Economic Affairs and Energy. It is a contact platform that makes Germany and its domestic market more transparent to foreign companies. On it you can find a very helpful directory for searching tradeshows by topic in English. You can find a link for it in the Resources section.
Holidays and Traditions
While the US shares major religious holidays with Germany, there are some differences.Some holidays are only celebrated in certain regions, while the majority are celebrated nationally.
In the following table, regional holidays are identified by (*) and designated as follows: BN=Bonn, D=Dusseldorf, F=Frankfurt, M=Munich, L=Leipzig.
We know, it’s a bit confusing. But it’ll be worth it in the end when you aren’t trying to open the locked door of your business partners’ headquarters.
|Jan||01||New Year’s Day|
|May||31||* BN,D,F,M||Corpus Christi Day|
|Aug||15||* M||Assumption Day|
|Oct||03||Day of German Unity|
|Oct||31||* L||Reformation Day|
|Nov||01||* BN,D,M||All Saints Day|
|Nov||21||* L||Repentance Day|
|Dec||26||St. Stephen’s Day|
Communication from the US
Making calls from the US
First dial 011, the US exit code. Next dial 49, the country code for the Germany. Then dial the area code (2-5 digits). And finally the phone number (3-9 digits) to successfully contact a German importer/exporter.
When answering the phone in Germany, it is common to identify yourself by your last name. Don’t be confused. You probably haven’t called the wrong person. It’s probably best to make sure, though.
Promptness is highly valued in Germany, even when it comes to phone calls. If you miss a call from your German business partner, be sure to call back as soon as possible. If you wait too long, you may come off as disinterested, and may even accidentally break off a deal.
In Germany there is a proper form of address Sehr geehrter which translates roughly as “Most esteemed…”. A direct translation sounds strange and stuffy, but this fact will remind you that you should always use “dear” when making initial contact.
Germans like to keep work and private life separate. As a matter of fact, the German government banned work emails outside of working hours. We’re not sure how that’s possible, but they managed it.
So, don’t expect an email reply right away. We know, this can get confusing with the whole telephone promptness thing. Remember: phone, prompt. Email, no worries. We tried our best to make that rhyme, honest.
Try to match-up the time you send an email with German working hours, it’ll give you the best chance to get ahold of your business partner.
Traveling to Germany
US citizens may enter Germany for up to 90 days for tourist or business purposes without a visa. All you’ll need is a valid passport.
But, because Germany is part of the EU and the “Schengen Agreement,” you may want to reconsider getting one.
A “Schengen Visa” allows visitors to travel between the EU nations in the Schengen area without a passport or any other documentation.
For international businesses, this is a great opportunity to see the sights, and to network with neighbouring suppliers and potential business partners. Your best bet is to apply in the consulate or embassy in Germany, and then traveling out from there.
Using a Cell Phone in Germany
In general, it is recommended to buy a SIM card when you arrive in Germany. Roaming can be expensive, and these SIMs don’t cost as much as your phone bill will.
These SIMs can be found in major airports or nearby convenience stores, and generally come preloaded with a data plan, texting, and a certain amount of domestic and international calling minutes.
Simyo is one of the more popular brands, but it all depends on the user. Whatever meets your needs will work just fine.
Internet access in Germany in a bit of an awkward place.
German law currently makes the owner of a wifi signal liable for any illegal or suspicious activity that occurs on the network. Even if the holder isn’t the one using the internet.
It’s called the Störerhaftung law, and has majorly impacted the tourist and business travel industry in Germany. Fortunately, there are rumors of the law being scrapped, but legislation has yet to be tabled.
For now, international businesses are better off getting a SIM with a nice data plan. Or, you could pray on it.
Local Protestant churches in Berlin and Brandenburg are now being equipped with free wifi hotspots known as, wait for it, ‘Godspots.’ Amazing, we know.
You may find the rare high-quality public internet connection, but you’re probably better off getting your work done in your hotel room.
In Germany they love their trade shows just as much as we do in the US. They run all year round, and are the perfect location for you and your business to find that valuable partner. For a more complete listing, you can check out this website. The following events are just a sample of the types of shows that are common in Germany.
|Nortec||Hamburg||Winter||Trade fair for metalworking and plastic processing|
|Bautec||Berlin||Winter||International building trade fair|
|Internet World Germany||Munich||Spring||International exhibition dedicated to internet technologies & e-commerce|
|Invest||Stuttgart||Spring||Trade fair for institutional and private investors.|
|Cebit||Hannover||Summer||World business fair for office automation, information technology, and telecommunications|
|Internationales Berliner Bierfestival||Berlin||Summer||International Berlin beer festival|
German business culture is full of rules. There are regulations and procedures to follow, and processes to go through. Everything has to be just-so.
The culture of business in Germany is very structured and rule-oriented. Business people don’t like to divert from the task at hand, and often face rigid consequences for failing to follow suit.
This may be the most important factor to German business. Don’t push too hard against the plan. Let it play out, and humor your potential partners. But, there’s more to it, and knowing these few cultural aspects will give you an advantage over the competition.
Public and Private
Germans can come off as cold or unfriendly to US business people. Don’t worry, it’s not your fault.
German business people keep work life completely separate from their private lives. They behave strategically, depending on whether you’re part of their personal life or are just someone from work.
For this reason, international businesses may find that they never get on a first name basis with German partners.
If you’re invited to use the first name of a German importer/exporter, it’s an honor, as you are crossing traditional boundaries. Your relationship will last a long time. You did good.
Formal and Hierarchical
Germans are very formal. But, it’s more than nice clothes and being on-time for meetings.
Formality shows up in the rigidity of professional titles, and the importance of including academic credentials on your business cards. Germans will determine your relationship with them depending on your standing and educational background.
It also has to do with how they organize their thoughts and discussions. Logical and convincing reasons to do business are better than flare. Don’t put on a show. Charts, statistics, and any other tangible evidence that your business relationship makes sense is better than anything.
German business people are hierarchical in decision-making. It may take time for an importer/exporter to get back to you, as negotiations and contracts must be approved by upper management.
German business people are thorough, detail-oriented, and cautious when it comes to making deals. Expect a response later rather than sooner, but don’t worry about it. Everybody does it.
German business people don’t like to be pressured. If you give them time to make a decision, you’ll probably get a better deal, and craft a better business relationship.
Though you may feel the negotiation slipping from your grasp, you honestly don’t have much to worry about.
German business people will come up with a compromise that suits both parties if negotiations reach a deadlock. They have a fundamental sense of fairness, and tend not to take advantage.
As long as your position makes rational, monetary sense, you can be sure that your German business partners will do all they can to strike a deal that benefits both sides.
Germans don’t mince words.
They don’t beat around the bush, and can be direct to the point of offending business partners that are unprepared. This can appear rude and threatening to a US importer/exporter, but it’s entirely accidental.
Don’t take it to heart. In many ways, this way is better than the niceness of US business. Making problems or concerns known early on can prevent mistakes and misunderstandings later.
Try to do the same. Your German business partners may not understand the nuances of US-style communication, and what you say maybe interpreted in a way you didn’t mean it to.
Be honest, be clear. Your German business partners will appreciate you for it.
You may want to try out a few German words to show a genuine interest in the culture. German isn’t much different from English, despite what others might say. A quick Hallo (hello) or guten Morgen (good morning), depending on the time of day, will be appreciated.
As mentioned earlier, German business people keep their public and private lives largely separate.
So, it’s best not to ask a German importer/exporter about his or her family or other aspects of their home life. Even if the relationship is highly developed, be cautious. You may turn off your business partner.
Though German business etiquette may seem similar to its neighboring countries, it has its own distinct flavor. There are I’s to dot and T’s to cross and missing them could be costly.
Germans are accommodating but being able to adapt to their etiquette and business processes can be the difference between a good deal and a great deal. It can also help you develop long-lasting relationships and establish a foothold in a major EU power.
To help you out, here are a few do’s and don’ts of German business etiquette.
Think Ahead: Like punctuality, German business people value planning very highly. Meeting structure doesn’t have to be rigid, a bit of flexibility is appreciated. But you’re better to over plan than under plan and stick to the agenda.
Be Predictable: Once again, don’t stray from the plan. German business people like to know what to expect, and have their suspicions confirmed. Surprises aren’t the way to go. Don’t spring anything on your potential partners.
Be Fair: German business people are very accommodating. Their best offer is usually their first, and they don’t mind laying their cards on the table. Follow suit. Don’t haggle too hard, as this may come off as disrespect.
Don’t Bring a Gift: Bringing a gift, even to a less-formal meeting, is generally frowned upon. This can be seen as an intersection of private and work life, or as an influencer in making a good deal. Just avoid the practice and keep your chocolates for later.
Keep Your Hands to Yourself: German business people aren’t very touchy-feely.
Many of the previous notes about German business culture and communication can be used at the negotiating table. But, we understand if you don’t need such an in-depth analysis of the way your buyer or supplier talks.
The negotiation is arguably the most important part of German business, because social and work life doesn’t tend to mix. Nailing the negotiation may even spur an out-of-work friendship that might make business even easier.
So, we’re going to rapid-fire some negotiation tips your way. Here we go.
- Be on time. German business is formal, following rules and regulations to a T. This includes being prompt. Set up meetings well in advance. This will ensure you don’t miss it, and that your business partners aren’t confused about the timing.
- Be patient. Time has a big role in German business. Because the structure is top-down and hierarchical, it can take a long time for your partners to come to a decision. Don’t be disheartened, as it probably isn’t your fault. Let the procedures run their course.
- Be frank. Germans are direct in their communication style. You might find it rude, but it’s the best way they know how to get to the point of a meeting. Follow suit. Be as frank as you can without being rude. They’ll appreciate it, and it’ll speed up the process.
- Bring a chart. Okay, maybe not. But any visual proof of concept will take you further than conversation and compliments. German business is all about results and facts. Give your partners what they want, and you’ll have a better chance of getting what you do.
- Be open. Ultimately, German business is not the same as it is in the US. It takes longer, is more cautious, and definitely more formal. Being open-minded will show your partners that you’re genuinely interested in the deal, and in your relationship with them.
Regulations and Permits
One of the great things about working with Germany for US businesses is its EU membership.
The US and the European Union have a long-standing, strong bilateral trade relationship. Both sides are consistently working to make trade easier and more lucrative to each other’s benefit.
But, the agreement isn’t perfect, and there are a few things that US businesses will need to trade with Germany.
The country’s own trade regulations and bureaucratic procedures can be hard for businesses to navigate. Especially if you’re working with the EU for the first time, there is a little bit of red tape to cut through. But, once you get the hang of it, it’s not too bad.
This generally only applies to those sending goods to Germany, and imports into the US from there don’t see many hiccups. As long as you know what their doing on the US side, you should be alright.
Germany-specific regulations can be very hard to understand. Your best option is to contact the US International Trade Administration, or head to their website for some additional resources.
The EU enforces its own import tariffs on international goods, which varies depending on the good. For more information, you can head to the EU’s website, and look for the TARIC, or the integrated tariff of the European Union.
Importers are also required to send along a few forms with their goods to appease customs. The Single Administrative Document (SAD) is a required form that describes the good and its movement around the world. This document is essential for non-EU goods, as these are subject to special customs considerations.
Technically, the form must be presented by the person who brought the goods into the customs territory of Germany, or by whoever assumes responsibility for the goods. So, generally this is your German buyer. But, it’s good to know what’s required on both sides of the transaction, just in case any hiccups arise.
Germany is often lauded as one of the easiest places in the world, let alone the EU, to do business. Aside from bluntness and a language barrier, many international business people report great experiences with their German partners.
While Germany doesn’t pose any direct threats to US businesses, there is at least one thing to look out for that, if you’ve read the Business Culture section, won’t surprise you. But, it may not even be their fault.
As part of the EU, Germany is forced to comply with the Union’s regulatory procedures for imports and exports. Recent agricultural policies, and certain environmental and safety standards that, while not discriminatory in themselves, make it hard for businesses in the US to operate in Europe.
Especially for small businesses, these regulations complicate processes even more, making it difficult for US products to enter the market. While Germany has pressed the EU Commission to reduce these measures, the process is slow. Many also argue that Germany not only suffers from less international trade, but from a lack of domestic innovation, as regulations hinder access to certain markets and products.
But, things are improving. If EU states want to become more competitive internationally, they’ll have to cut down on the red tape. Germany is spearheading this effort, and other states will certainly follow suit.
Once you’ve done everything necessary to bring you business overseas, you’ll be given the exhausting task of organizing international payments which can be an immense hassle. The traditional banking system is loaded with hidden fees.
Thankfully there’s a quicker, less expensive, and more reliable alternative. By using Veem instead of defaulting to banks, you can elevate your business and impress your partners with expedient and predictable payments.
Gone are the days of crossing your fingers and hoping your payment arrives on time. Veem’s integrated multi-rail technology you can track your payments in real time, giving me the confidence that your money will get where it needs to be, when it needs to be there.