Doing Business in Germany

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1 Doing Business in Germany An Executive Summary of Strategic Success Factors Liverpool & Glasgow, September 2013 Stefan Peikert, AHP International GmbH & Co. KG Member of the AHP Group Berlin Münster Heidelberg COBCOE - 1

the German / European market (Clients e.g.

2 Your German Business Hub International Business Development specialist based in Berlin, Münster & Heidelberg Focus B2B markets! 20+ years in business, 15 team members Areas of Service Corporate Desk - Business Development for companies entering the German / European market (Clients e.g. USA, NL, Italy, UK, France, Singapore, Thailand)» Market Research & Strategy» Client & Partner Search» Business Set-Up Public Trade Development» Trade Missions to Germany / Germany+ & Representation in Germany (Virginia, Estonia, Pennsylvania, Tennessee, Netherlands, ) Investment Promotion» Attraction of German direct investment (Pennsylvania, Moscow, Ventspils) COBCOE - 2

3 Regional Coverage Incoming Services COBCOE - 3

4 AHP International & the United Kingdom AHP International in the UK UK has been focus market from day one Sustaining member of bccg part of the UK network in Germany Major interests of UK clients & Contacts: Strategy and Approach to Market Distribution Set-Up Key Account Development Business Set-Up / Team & Recruitment M&A (medium scale, in-sector projects) Germany PLUS (+ AUT, CH, PL) Simon Preston Senior In-Market Advisor UK Mobile preston@ahpkg.de COBCOE - 4

5 Do you know Germany? Five biggest companies by turnover? Largest Porsche plant? Largest Aerospace cluster? Which automotive OEM is to a large extent state owned? Largest State by population? How many DAX companies are headquartered in Berlin? Most expensive cities to live in? Largest Foreign Direct Investor 2012 which country? Financial Center? Fastest growing cargo airport? Investment support in East Germany - tax credits or cash? Does Germany have a national standard for school exams? In which five neighbouring Countries is German accepted as official language? Most visited touristical site and its relation to the UK? Largest in-land port of the world? Strongest Start-up Community? COBCOE - 5

Understand the Regions - There is no Centre of Germany! Germany is a decentralised regional market Different sectors different regions Industry is networked at state level There is no centre!

6 Understand the Regions - There is no Centre of Germany! Germany is a decentralised regional market Different sectors different regions Industry is networked at state level There is no centre! Economically strongest states 1. Bavaria 2. Baden-Württemberg 3. Nordrhein-Westfalen 4. Hessia 5. Lower Saxony Value Chain: East & West share tasks Golden Rule: Know the Landscape of your Sector! COBCOE - 6

7 An Example R&D Landscape / Competence Centers COBCOE - 7

8 Germany Market Drivers Where to fit in? Germany is built on exports - Machine Engineering, Automotive and the Chemical Industry are the top three export sectors Key Challenges for German exports: Growing competition in emerging markets A Shortage of skilled workforce in Germany Supply from low cost countries is often too slow and does not match the German quality strategy So Efficient Supply is one key to Germany s export success! There is strong competition in all areas of business. Golden Rule: Know & understand the strategy of your local competitors it is different to the UK. Make sure you know how you make your German customers perform even bettter in a unique way. COBCOE - 8

9 German Customers My advice Quality oriented - quality is good for the customer - price follows quality Process driven attitude - rather formal ( Sie ), keep it professional Pedigree - A company needs to show a detailed company information, positive track record, infrastructure, the right resources Customers expect a very technical company presentation as an introduction Hierarchy matters a lot Germans not historically traders, they are natural engineers, who can be interested in a technical detail more than marketing spin Target markets with the same technical outlook: Switzerland, Austria, parts of Norhern Italy, Flemish Belgium Golden Rule: When introducing yourself talk about hard facts only! No smart & elaborate marketing, empty content talk. There are no bonus points for a great looking, flashy presentation. If it is boring for you it is just right! COBCOE - 9

10 Agents & Distributors? Industrial Suppply In order to supply tailored parts & solutions into the value chain of a German OEM you need constant and direct interaction with the customer An OEM expects to discuss technical details directly with the supplier The purchasing department tries to avoid agent fees on the supply side Commercial agents can open doors but become a key gatekeeper between you and the customer later on Golden Rule: You have to be ready to supply your German key accounts directly COBCOE - 10

11 Agents & Distributors? Products & Systems German distribution landscape has developed hand in hand with industry Distributors & Agents act regionally Typically Germany consists of a minimum of five to six sales regions West (NRW) Central (Hessia towards France and in the East towards Chemnitz) South sometimes Southwest (Stuttgart) & Southeast (Munich) North West Hannover / Hamburg North East: Berlin, Brandenburg, Baltic Coast, parts of Saxony It is highly unusual to have a national distribution partner or agent so consider the costs and the time to find develop relationships with up to 6 Golden Rule: Be prepared to co-ordinate three to five regional partners and as a consequence to lead on national marketing, logistics, service infrastructure. COBCOE - 11

12 Services in Germany An opportunity! (Professional) Services are a major UK strength! Services are not a German weakness BUT service companies are smaller and again more regionally oriented so no economies of scale. Key opportunity for nationally integrated service concepts from the UK! The typical strategy should be the strategic acquisition and integration of key local professionals in to one German operation Key challenges: Mentality, User-Competence, UK process oriented approaches do not usually work > integrate a German management team Very often the best location is not the nearest to the clients: e.g. Berlin as hub for digital media & marketing services (operating cost, availability of talent) Golden Rule: As service business be ready to Be German and buy in! COBCOE - 12

13 Language Sprechen Sie Deutsch? Global players source in English but when dealing with SMEs (largest share of the market) you need to speak German! If you are sourced in English this means that you are acting in an area of global competition this is not always good Language is more than technology it is small talk, humour, stories of daily life connecting, regional dialect Network yourself with German friends English is spoken widely in the cities don t expect in the more rural areas In General Germany as Europe s largest single economy should be large enough to justify the investment in a German area manager on the ground! Goldene Regel: Sprechen Sie Deutsch! Werden Sie Deutsch! COBCOE - 13

14 Germany from Scratch 7 Steps Approach 1. Understand potential - Competition, Buyer Behaviour, Regional Landscapes 2. Identify Key Accounts and if appropriate door-openers / partners 3. Develop your partner network 4. Launch the market from UK 5. Grow business - implement area management on the ground in Germany 6. Develop your presence become part of the sector family 7. Use German international networks to grow your business Alternative: M&A in mid-cap SME high tech Golden Rule: Willkommen in Deutschland Arbeiten Sie effizient COBCOE - 14

Thank you for your attention and we will see you in Germany Your German Business Partner for Europe Berlin Münster Heidelberg Your contacts: COBCOE Special: Send us an e-mail with your

15 Thank you for your attention and we will see you in Germany Your German Business Partner for Europe Berlin Münster Heidelberg Your contacts: COBCOE Special: Send us an with your product/activity, how you would want to add value to the German market and what kind of distribution channel you are considering. Stefan Peikert Simon Preston Partner Senior In-Market Advisor Corporate Projects United Kingdom Phone Mobile We will reply with our expert comment on your approach and a recommendation on the best regional focus for you in Germany at no cost. COBCOE - 15

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