Market Entry in Germany

>> Advice for Market Entry to Germany

The European market is a highly fragmented and Germany represents the largest market place but also has the most competitive environment for almost all industries and markets. Before considering entering this very interesting and lucrative market place it is essential to do your homework and to find a local partner to assist you in avoiding costly mistakes.

The points below offer you good starting points and advice to start your exciting journey of entering Europe’s largest and most interesting economy.

  1. Networking

Networking is essential for entrepreneurs that are considering expansion to Germany. Research by the Economist Intelligence Unit indicates that informal professional networks and communities are more important for entrepreneurial success than formal structures such as incubators and accelerators.

Business networking events organized in Germany bring together extraordinary groups of highly-skilled and talented entrepreneurs who are focused on communication, sharing, creating and developing ideas.

Main Business networks in Germany

  • STARTUP NETWORK – UK GERMANY connects startups, investors and talent from the UK with representatives from Germany’s tech and startup hubs.
  • THE GERMAN STARTUPS ASSOCIATION. Founded in 2012 it is the representative of startups in Germany. Headquartered in Berlin with fourteen regional offices. Contact them here.
  • Association of German Chambers of Commerce and Industry (Deutscher Industrie- und Handelskammer, DIHK) – an organisation which coordinates the 80 local Chambers of Commerce and Industry across the country. Contact them here.
  • Marketing Club (Deutscher Marketingverband)– association with more than 14,000 members (mostly based in Germany) dedicated to marketing and sharing knowledge. Contact them here.

You can also join our Expand to Europe Executive Network on LinkedIn.

  1. Consider Legal Aspects first

  • German law does not distinguish between Germans and foreigners in the establishment of companies and with no restrictions on the repatriation of profits.
  • Nationals from outside the EU/EEA/Switzerland will need a visa or work permit in order to legally reside and work in Germany.

Several options for establishing a company exist. German company law distinguishes between limited liability companies, joint stock companies, and various forms of partnerships including individual trading forms. It is essential to get an expert to assist you selecting the most suitable form for your needs and to guide you through the official process.

  1. Prepare a Business-plan specifically for Germany

It is crucial that before any steps are taken to enter the Germany market, the possible opportunities and risks for the business must be considered. A detailed business plan including financial aspects is also mandatory when liaising with banks or applying for benefits or grants at German authorities.

  1. Seek expert advise

Individuals or companies that are interested in expanding to Germany are advised to seek expert advice regarding legal, accounting and tax matters. An advisor will advise you if it is necessary to hire a notary and how to register the business at the local court (amtsgericht). The Make it in Germany website (in English) provides information for professionals and entrepreneurs. You can also get advice about setting up your business from one of the dozens of Chambers of Commerce and Industry (Industrie- und Handelskammer, IHK) that are located throughout the country.

  1. Business coaching

You may qualify for funding for coaching or consulting support. The criteria for each programme varies from state to state, so contact the regional organisations directly. Regional banks and chambers of commerce usually have all the necessary forms and information on their websites. You can also apply online as part of the Gründercoaching Deutschland (GCD) scheme, offered by the KfW bank.

  1. Consultancy services

Those who have already made the first steps and got their startup up and running can apply for business consultancy services via the GCD scheme, which offers generous subsidies (covering as much as 90 percent of your fees). Your application should be made with the local IHK (Chamber of Commerce) or Handwerkskammer (Chamber of Trade); every federal district has one. If you decide to consult an independent specialist, ensure that they are accredited by the KfW bank as this guarantees they are properly qualified and regulated.

  1. Startup loans

For those not entitled to startup grants, startup loans are the next best option. Interesting loans are available from both the central KfW bank and the regional state banks. For further research, the funding database is recommended and establishing a relationship with a local partner to support you.

  1. Find a local partner

Experienced representation is an important strategy to any market entry strategy. The primary competitors for foreign products are domestic firms with an established presence but foreign businesses can overcome this competition by offering high-quality products and differentiated services at competitive prices with locally based sales and after-sales support to be successful.

  1. Trade Shows

The perfect way to promote your business is at trade shows.  Germany hosts some of the biggest trade fairs and exhibitions in the world. It is a good idea to visit a fair related to your business as a visitor before you start any activities in Germany. Some examples of excellent trade fairs are: CeBIT – the largest IT fair in the world, hosted in Hannover, IAA – the largest automobile fair, hosted in Frankfurt, Bauma – the largest fair of all fairs worldwide for building, mining and building engineering goods, Agritechnica – the largest agricultural fair,  Gamescom – games and entertainment fair, IFA – a huge fair for electronic and entertainment products and another example is the ITB in Berlin – the largest trade fair for travel and trade.

Many more examples in virtually all industries exist and if you are thinking of expanding to Europe, it is a good idea to visit a fair in Germany related to your business to develop an idea of the market place and the competition you will be up against.

Latest version updated 6th December 2017

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