With a GDP of more than €2.7 trillion, Germany remains Europe’s largest economy and is second only to the USA on the global stage. The UK’s market share of German imports is about 4.7 per cent and since 2009 UK exports to Germany have increased by 21 per cent (source: GOV.UK). So, why should your business consider exporting to Germany?
Founded in 1971, the London-based German-British Chamber of Industry & Commerce is a business-to-business organisation with more than 750 British and German member firms. It is part of a wider German Chamber network that is active in 80 countries. Head of marketing, Sven Riemann (above right), explains what opportunities exist for British firms in Germany.
Historically, has the UK enjoyed a good trade relationship with Germany?
Sven Riemann (SR): “Germany and the UK have always had close economic ties, as trade and investment have grown from strength to strength. Today, Britain imports more from Germany than any other country. In 2014, UK exports to Germany were worth more than £31bn.”
What shape is the German economy in?
SR: “Germany’s overall economy recovered quickly after the global downturn and it’s currently one of the Eurozone’s strongest economies, with gross domestic product expected to grow by about 1.9 per cent this year (source: Confederation of German Employers’ Associations. Germany exports more than any other country in the world. Although within Germany regional economies differ, the national trend is falling unemployment and greater economic activity.”
Are there still good opportunities for UK firms in Germany?
SR: “Yes there are and because industry sectors are very similar in both countries, there are no problems for British companies wishing to export to Germany. Good sectors for UK firms include components for machines or the automotive sector, robotics, renewables, food and drink as well as information technology, more specifically gaming and security. Because the British excel at good service, this also offers plenty of opportunities in Germany.”
Why should a UK firm choose Germany instead of another European market for international business?
SR: “Germany is Europe’s biggest country. It has more than 80 million consumers and more than three million companies. The commercial potential is huge and many companies use the stability of Germany’s political and economic environment as a base to expand into neighbouring countries, including those in Eastern Europe.”
What reputation do UK products enjoy in Germany?
SR: “German consumers really admire British design and trends. The top British goods exported to Germany include machinery, automotive products, pharmaceuticals and chemicals. British companies do have to consider localising products as, for example, the taste of chocolate and tea in Germany is quite different, while beer is subject to the Reinheitsgebot [a beer purity law]. Financial services and information technology are the biggest services exported to Germany.”
Any other potential obstacles UK firms should be aware of?
SR: “British companies should do their market research, because many German regulations are different to those in the UK. Products often need to have a DIN standard, packaging must be registered for recycling, companies may need to register with the German tax authority and standard contracts might need to be rewritten. The delivery of products requires planning due to the tolls for trucks, low emission charges and the banning of HGVs on Sundays and bank holidays.”
Is English widely spoken in Germany?
SR: “English is often spoken as a second language, while the older generation in the new federal states will often speak Russian as their second language. However, as [former Chancellor of West Germany] Willy Brandt once said – ‘If I am selling to you, I speak your language. If I’m buying, dann müssen Sie Deutsch sprechen’.”
What about business culture and etiquette, how does that compare?
SR: “It differs within Germany’s 16 federal states, let alone when compared to the UK. British exporters need to adapt to regional differences, which are often minor, but still important. For example, punctuality is a must; you use a formal greeting and handshake and address your German counterparts by their title and surname until you’re given permission to do otherwise. Keep small talk to a minimum and expect to be asked technical questions by your German contact. Meetings are formal; conversations are often fact-driven; and Germans like to make and follow meticulous plans and procedures.”
What are the typical routes to market for a UK firm wanting to sell to customers in Germany?
SR: “About 800 British companies have a subsidiary or branch in Germany; about 800 have a joint venture; while about 7,000 companies have an agent or a distributor/wholesaler, and about 200 run a license or franchise in Germany. Many consumer companies now use ecommerce to sell and we are seeing a rise in sales via social media.”
What can a small UK firm do if they want to find out more about exporting to Germany?
SR: “British companies should first carry out lots of research. A good place to start is by visiting trade fairs in Germany, which are the world’s biggest and offer the opportunity to meet potential B2B clients, partners, suppliers and even competitors. My organisation, the German-British Chamber of Industry & Commerce, often holds events across the UK, but if British firms have any questions, they are welcome to contact us for help.”
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