Exporting to Germany is often a logical step for foreign companies: 82 million inhabitants, a high average income and giant retailers. The retail sector is the third largest generator of revenue in Germany after industry and craft and makes Germany the strongest retail market within Europe. It is not surprising that every year foreign corporates and entrepreneurs try the leap into the German market, some with, other ones without success. Worldwide’s number 1 retailer, the US based giant Walmart, failed dramatically in entering Germany and finally withdrew completely in 2006. Walmart underestimated its German competitors but also the mentality of German employees and the mentality of local consumers.
1. Preparation and patience
Successful export to Germany has to do with good preparation. When preparing, it is important to check whether your organization is ready:
- Financial situation?
- Production capacity?
- Manpower needed?
A detailed plan is useful for your approach.
Next step would be an ananalysis of your own organization, the market and competition. Through market research in Germany, your organization learns about expectations of the target group and how these can be achieved. It might also be worthwhile to collect business intelligence of potential competition, ideally from an insider’s perspective. A competitive analysis will help you identify strengths and weaknesses. In addition, such a study enables your organization to take a critical look at its own product or service before exporting to Germany. Finally, it can be useful to gain knowledge about necessary certificates, registrations, permissions, local laws and regulations.
2. Formal manners
Success in Germany will depend on more than just a good product and a reasonable price. Efforts are needed to make the export successful. At least as important is the study of German business culture. Although you might seemingly recognize cultural similarities from a distance, truth is: There are differences!
Differences between business life in Germany and abroad sometimes seem minor, but subtle distinctions can lead to distorted communication, misunderstandings and/or a clouded atmosphere – it already starts when addressing your customer. For example, many Germans maintain a strict separation between professional and private life.
3. Building a network
Building a German network in time is also important. Customers in Germany can be loyal customers. Once you established a trustful relationship between customer and supplier, chances are high that it will last a for long time. Building a network must be done with patience. By building up references and working on the “credibility” of your product or service for example, you prove to the German that you are a solid and reliable business partner. In this way, the generally risk-averse German can be reassured.
Building a network is at least as important for exporting to Germany as finding the right touchpoints. Since the corporate culture in most organizations is still quite hierarchical and decisions are usually made top-down, it is important to have contacts at the right level.
4. Recruiting a German employee
Recruiting a German employee for your organization should be a priority for you. Working with your own staff in Germany may be an investment, but it promises a faster return on investment and a shorter payback period. By working with a German account manager, for example, you will gain knowledge of German business culture, the market and gain a network immediately. The German employee is also usually able to pick up subliminal signals during a sales conversation in his own language, which a non-native speakers might not notice.
5. eCommerce as opportunity
In 2019, German online trade increased to 59.2 billion euros in total. With 11.0 % (+ 5.9 billion euros absolute) the growth rate is against the trend of previous years and significantly higher than expected. The growing importance of e-commerce is changing the rules of trade, may shorten the way to end consumers and thus decrease the cost of entering the market. But do not underestimate the Germans preference for short-term deliveries out of Germany and make sure to offer a suitable payment service provider. Invoice, PayPal and direct debiting are the most popular payment methods among German consumers in B2C. B2B platforms are on the rise as well. A German contact person with a network is also advantageous here.
Source eCommerce: HDE Online-Monitor 2020, Photo: Pexels, Pixabay (Creative Commons)