6 essential recommendations before settling in Germany
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Close, easy to access, powerful, Germany is resolutely attractive for French companies wishing to develop in Europe. Its status as the leading European economy, the dynamism of its exports, the industry’s share of GDP above 20% and its global reach make it a destination of choice for SMEs and mid-cap companies seeking growth. This country has one of the most successful industrial sectors in the world. The industry is indeed driven by its model of Mittelstand, these SMEs and ETI independent and distributed throughout the territory that carry as much as large groups innovation and image quality made in Germany. The French are aware of this: in 2018, there are no less than 5,342 subsidiaries * in Germany controlled by French companies. However, Germany remains a country that must be known. So, how to get established in Germany? Despite similar operations with France, there are nevertheless many different subtleties that must be understood in order to avoid pitfalls. Here are 6 essential recommendations before settling in Germany.
1- Choose a location that is relevant to your sector of activity
By its history, the Federal Republic of Germany is a decentralized country with a very strong regional dimension. Local companies are geographically divided into business units: for example, the main financial industry in Frankfurt is finance – today the start-ups of fintech are the largest, while Düsseldorf is home to the telecom sectors. and services. The automobile, which is the driving force of the German industry, which employs more than 280,000 people **, is strongly represented in Munich, Stuttgart and Wolfsburg. In order to be credible and considered, the French company must imperatively choose a localization location in agreement with its sector of activity and with major accounts or other companies in the value chain that it wishes to integrate. To be relevant, this choice of localization must show both proximity to the ecosystem of the company, a good general accessibility and an attractive position for employees, the recruitment and retention of employees being one of the major issues in Germany today.
2- Adapt your value proposition
The conquest of Germany requires a rethinking of the commercial and marketing approach of French companies: to penetrate effectively the German market, it is essential to offer a value offer in line with its expectations, “Germanized”, with as main features:
The Germans demand precision and rigor at all levels. They are attentive to the ecological dimension of the products and services they buy and have performance and reliability criteria more than price.
The technical dimension
The technical characteristics and the product performances are the resources of a successful communication on the German market. For example, presentations are considered “less sexy” than in France, in other words, more factual, without artifice. To add credibility to its value proposition, it is necessary to be able to provide a maximum of detailed descriptions of the products and services offered, based on concrete and quantitative data.
To convince, French companies must be able to provide solid references. These can be international if not German at first. They must be supported by precise and quantified examples, which alone can give a sense of security to German customers.
3- Adopt local business practices
Doing business in Germany can be doomed because of differences in the commercial approach. The Germans are very committed to rigorous procedures and favor professional, clear and long-term business relationships. In order to comply with it, it is necessary to adopt some codes:
The German language
The business is conducted primarily in German, especially in industry. It is essential to translate your communication tools (website, documentation) and surround yourself with native speakers or speakers who speak the language perfectly.
The recruitment of experts
It is wise to recruit profiles with experience and a network of local contacts. Employees recognized in their industry allow upstream to ensure a serious image and “rooted” of his company. However, companies face a shortage of skilled labor and, as a result, high hiring times and costs.
Trade shows in Germany
Trade fairs are essential business events in Germany (more than in other countries), where it is essential to be present, whether exhibitor or visitor. “Two-thirds of leading trade fairs take place in Germany” according to the Franco-German Chamber of Commerce and Industry. These traditional German meetings make it possible to get acquainted with the evolutions of the business sector of the company, to know more precisely the competition and to do business. It is also a stepping stone for export to third countries, as foreign visitors are generally numerous at these fairs.
4- To conform to cultural differences
The cultural differences are more marked than they seem between France and Germany. In order not to offend employees and customers from across the Rhine, it is essential to follow a few rules:
This is an important value strongly anchored in German culture. Being punctual and more widely meet its commitments (schedules, appointments, delivery dates …) is essential to build trusting relationships with professionals in the area.
Germans refuse improvisation and work by minimizing risks. They have a model of decision making different from the French model, based on consensus, the long term and not on an idea of the Leader not validated in committee. Only the respect of protocols and rules can develop in them the feeling of security.
An explicit communication
It is better to limit the doubts and uncertainties of the German counterparts by approaching a direct communication, without artifice and devoid of personal emotions. Writing is very important in the German professional culture: it allows to engage or not in a formal way. There is no implied “yes” and “no” in German communication.
5- Take your time
The installation on the German territory requires patience, perseverance and long-term vision, from the creation of the legal structure to the loyalty of the customers. The deadlines for setting up structures can be relatively high: it can take up to 6 months to obtain the necessary banking authorizations to set up a business in Germany. Time management is globally different in Germany. The reaction time to commercial proposals may seem particularly slow and the time required to record rather lengthy results. It is essential to build your reputation step by step by ensuring a continuous commercial presence and learning to convince in the long term
6- Well anticipate the costs of setting up in Germany
The creation of a company in Germany is certainly relatively accessible. In most cases, the legal and tax framework is also more advantageous for companies than in France: German employers’ contributions are on average half as much as those in force in France. Germany is not a country of “quick wins”. Establishing a long-term presence in Germany requires budgeted financial resources over time to cope with a late return on investment and significant operating costs (infrastructure, hiring, miscellaneous expenses). With good products and services adapted to the German market, perseverance is then very widely rewarded. Germany is a leading European development destination, because of its size, the maturity of its market and its global reach. In order to take advantage of this first market in Europe, it is important to understand precisely the business culture, its codes, its rules and the marked differences that may exist with French business practices.