Marc Jarrett

Marc Jarrett

Friday, 21 February 2014

Expanding into Europe's largest market, Germany

With a population of just over 80 million people, Germany is Europe’s most populous country and has the largest and most powerful national economy in the Eurozone and is poised to overtake the USA and become the world’s second largest exporter after China. This, combined with the fact that Germany is the UK's biggest European export market and second largest worldwide, makes it a particularly attractive market for UK companies looking to expand internationally.

Translating your website into German is often a good start if you are serious about expanding into this attractive yet demanding market. For this, it is best to engage in the services of a native speaker instead of relying on google translate and other translation automation tools which sometimes do more harm than good.

In tandem with this, check if your company’s domain is available with Germany’s .de TLD and if so, have someone already located in Germany acquire this for you, not least since .de domain registrants must be physically present in Germany itself.

A German SEO specialist can then help you increase the visibility of your website, so that it is more likely to be found by prospective German customers who are actively seeking out your particular goods or services. You can then link your new German site to and from your UK version.

You will then need to focus on creating the impression that you are already operating from inside Germany itself. This is now easier than ever before, with a range of ‘virtual’ office solutions that can provide you with an address, together with call centre staff that can then deal with inbound sales enquiries in German on your behalf, and then forward you any incoming enquiries translated into English. Prospective customers will then dial a local number as opposed to an international one, which still remains a psychological barrier for many consumers in both Germany and the UK alike.

If you need a ‘real’ office within Germany itself to meet prospective clients without the costs associated with renting or acquiring premises yourself, then work with a partner that can offer you representational offices that can be hired on an ad-hoc basis. Given its geographical proximity to the UK, such meetings can easily be conducted within a working day, and travelling to and from Germany will soon become even easier now that Deutsche Bahn has been given the go-ahead to use the Channel Tunnel, thus allowing Business travellers from the UK to travel from London’s St. Pancras to central Cologne in under 4 hours on their comfortable and work-friendly ICE high speed trains.

For larger companies seeking a permanent presence in Germany or more advanced services such as company formation, business, personnel and organisational planning together with the sourcing of possible strategic partners to help grow your business in Germany, then it is best to work with a partner that have the necessary resources and contacts without having to deal with several parties. Doing so will allow you to focus on developing your core business, without getting swamped with the administrative and legal complexities associated with overseas expansion.

The most common legal framework for new companies is to create a Limited Liability Company or ‘GmbH’ which is made available to conduct business by a small and relatively stable number of shareholders. However, there is neither limitation of the size of the company nor to the number of its shareholders. Consequently, a GmbH may also have only one shareholder. One or more founders who may be individuals, corporations or partnerships can set up GmbH. There is no need for the founder(s) to be resident in Germany or have German citizenship.

Although English is widely spoken in Germany, it cannot and should not automatically be assumed that this is the case, particularly in dealings with smaller companies or municipal and government authorities. Whenever important contractual matters are being discussed it is better to have an interpreter available. When sending information to potential contacts the introductory letter should preferably be in German and your company brochures should either be in German or contain an insert with a German translation. Good presentation is essential.

It is important to send the most senior manager in the first instance since whoever is present must be in a position to speak for the company in all matters and have the authority to take decisions on the spot.

The German market is extremely competitive. Companies need to be patient and persistent. Breaking into the market will not happen overnight. Some German companies and consumers have a “buy local” attitude and for this reason British companies must offer something special, a niche product, in order to get attention. But the rewards for persisting and cracking the German market can be enormous.

An additional beneficial side-effect of expanding to the German market will be that it will be far easier for you to reach out to the markets of Austria and Switzerland, instantly giving you access to some 16m additional potential customers who share the same language as their larger neighbour next door. Furthermore, having a German presence will help you when expanding eastwards into the growth markets of the former Soviet Bloc.

Finally, by aligning yourself with a company that can provide all the services previously mentioned, you will be in a position to capitalize on Germany’s economic strength relatively quickly, allowing you to start generating revenues that are ‘made in Germany’ both now and for years to come.

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