Selling in Germany is a recurring desire for many foreign entrepreneurs. Germany represents the first commercial partner for most European countries and, in some sectors, the natural end for neighboring countries’ productions. No doubt this market bares many opportunities but also some risk. Let’s check them out together!
Market size and wealth
With over 80 Million inhabitants, Germany is the first market in EU. The GDP per capita is high (€ 40.883 in 2018) and even higher if we consider the two southern Länder of Bavaria (€ 45.810) and Baden-Württemberg (€44.886). These two regions are the richest and among the largest in Germany and make together over ¼ of the German gross domestic product.
Position and stability
Another important aspect is the strategical position in the middle of Europe and the reliable sociopolitical and economic situation. Moreover, the density and efficiency of infrastructures makes Germany attractive also from a logistical point of view. Therefore most of the world-class trade fairs and exhibitions are held in this country. The solidity of the country reflects the general healthy conditions of companies also regarding payments.
Attention to price / quality ratio and flexibility
Made in Germany is strongly appreciated but generally speaking there is no prejudice regarding foreign products as long as they bring a real benefit. Price is important but it’s just one of the variables. It could be easier, compared to other countries, to show your customers your higher level of quality or your better price/quality ratio. Flexibility is a strong plus that can persuade decision makers to choose an alternative source.
Disadvantages / Risks
What is a German buyer looking for in a foreign supplier?
Reliability / Delivery time
One of the most common reasons driving a buyer to search for a new supplier is the delivery time. Especially in mechanical subcontracting, the market is often saturated and local suppliers have no capacity left. Suddenly you receive an inquiry, asking for a certain lead time… NEVER promise a delivery that you cannot guarantee. NEVER call on last day saying “I’ve got a problem”. Germans don’t like surprises.
Mutual trust / Long lasting Partnerships
“Good fences make good neighbors”. Gaining a customer in Germany can be a long process but, once it is done, it is quite simple to keep it. Basically it’s enough to honor the conditions agreed. It would be unusual for a buyer to search for a spot cooperation. If you respect the agreements and manage the relationship in a serious and transparent way, you won’t be replaced by the first competitor offering 5% less.
Sprechen Sie Deutsch? It would be better…
TRUE, English is quite widespread in Germany, especially among youngsters… TRUE, decision makers are quite young compared to the average of the European colleagues…So, can I manage German customers in English? NEIN! So far we have never met a German who preferred to speak English if given the choice to speak German. Moreover, even in bigger corporates, most of the documents (drawings, norms, non-disclosure agreements, reports) are often in German. Sometimes it can be tough to make business without German language.
Dos and Don’ts
-Don’t overcharge prices! Germany is a very competitive market and often the price level is lower than in some neighboring countries.
-Don’t call to often customers on the phone, at least not until you have built a trust relationship. It could be seen as an aggressive behavior, prefer written communication.
-Don’t try to force a meeting. In other countries is more usual to personally meet (and why not, also to have lunch) even on first contact. In Germany you will be summoned only by really interested companies. So it’s good to ask for a meeting, but let’s not insist too much.
-Incoterms: it’s very common to be requested offers including transportation. I know, it’s an additional effort but it’s considered normal in Germany, so you will be evaluated also on this aspect.
-Confidentiality! It is always crucial in relationships, especially in Germany. They will give you discretion and they expect the same treatment. Needless to say, don’t discredit competitors.
-Papers! The bigger the customer, the more forms and papers to be filled-in. Don’t be scared and provide all requested information.
-Objectivity: quality problems happen, it’s normal. The customer doesn’t judge you for this but ma it’s important how you manage and solve the situation. Data, reports and solutions, no excuses!
These are just some simple and general hints. There is so much more and obviously it all depends on the sector you belong to. Get in touch for further specific information.