Top Tips for Trade in Germany
Fri 09 Jan 2015
In November 2014 the Wakefield Business Support Programme led an introductory trade mission to Berlin, helping a number of local businesses understand how to enter and manage the German market. The trip was a great success and much was learned about German and Business Culture!
The delegates and Wakefield First gained so much from this trip we felt it was only fair we share this knowledge with the Wakefield’s Business community, providing you with some useful tips on doing trade with Germany.
There are a number of factors that you need to consider, we’ve listed what we thought were the top tips here!
• Is there a market for you?
•Knowledge is Key!
•Agents and Distributors
•Why your business in Germany?
•Exhibitions are King!
•Communication and marketing
•Speaking the language
Is there a market for you?
Sounds obvious we know, but before taking the step to promoting your business in Germany, take the time to conduct some research to identify whether there is a market for your products. Just because your product sells in the UK, this doesn’t mean it will sell in Germany. This trip gave those who came along a chance to investigate where their products and services could sell and what steps they would need to take to enter the German market. For many of the delegates it was their first time making links to overseas exporting, but by teaming up with UK Trade & Investment before the trip everyone was able to identify new markets for their products. With research and support anyone can have the potential for export success!!
For David Jones of distributor Bier Huis and Mark Seaman of local brewery, Revolutions Brewing the experience gave them an overview of the kind of UK products currently on the market and the potential for the sale of specialist British Beer’s in Germany. It turns out the craft brewing market in the UK is well ahead of its German counterpart and our local businesses could be at the forefront of providing unique British brands that are not available, yet are highly fashionable!
GMP Consultants were able to see that there is a prospective market for managed print services in hospitality and plan to work with UKTI doing further research on how they can successfully connect into Germany.
UK Trade & Investment (UKTI) is the Government Department that helps UK-based companies succeed in the global economy, if you want help to explore your overseas market opportunities you can find out more by visiting www.gov.uk/ukti
Knowledge is Key!
Delegates were given some intense presentations by organisations involved in a range of services from PR through to tax advice. All of them emphasised the importance of knowing your market and knowing you have the right product. Knowledge of German law will give any aspiring exporter the strongest basis for success. Did you know Germany is governed federally and each state can set different taxes? This is usually based on high and low population statistics with taxes reflecting the variation. You should investigate where your products will sell to determine the local variance. Learning about any types of taxation system may not be a highlight for those who attended the mission but this knowledge is vital to ensure businesses are compliant and trade safely with the knowledge they know the rules!
Agents and Distributors
We learnt a popular way to enter the German market initially is through use of agents and distributors. Murray Angus of Proton Group is starting discussions with a German distributor who will help him with the information needed to distribute their specialist hygiene chemicals to the German food and drink industry.
Where a business is deemed to have a permanent establishment (The term PE means a fixed place of business through which the business of an enterprise is wholly or partly carried on) they would be subject to German taxation. If you don’t have a PE and use an independent agent then you would be subject to British taxation.
The term PE includes:
•a place of management
•a construction if it lasts for more than twelve months.
Interestingly the PE status doesn’t apply to the following:
•the use of facilities solely for the purpose of storage, display, or delivery of goods
•a fixed place of business solely for the purpose of purchasing goods or of collecting information
•a fixed place of business solely for the purpose of advertising , of the supply of information, of scientific
•activities, that have a preparatory or auxiliary character for the enterprise
In the case of using a broker, general commission agent, or any other agent of an independent status – the business would not be deemed to have a PE, as you are using an agent. The agent’s status must be independent so that you are not the only business they work with and they are not reliant on you for their employment; they would actually be self-employed, so pay German tax on their earnings.
Be cautious however! Where a person is acting on behalf of a business and has authority to conclude contracts in the name of the business, then the business would be considered as having a permanent establishment in the base of operations of the agent.
Why your business in Germany?
Do you understand why your products sell or whether they would sell in the German market?
Delegates who had limited experience with trade in Germany gained a fuller picture as to why they their businesses were chosen by German customers. Graham Howarth, CEO of Sarcophagus is planning to investigate which of their range of products has the best appeal for the German market. Understanding what attracted his current German customers will be a great gauge for how to proceed. With the help of a German based agent there are plans for Sarcophagus to measure the interest in his range of products and services within this growth market.
Overview Studios also gained a better understanding of their German customers which means they can reach a huge and receptive market. They hadn’t previously questioned why German companies had used them before for their studio photography, but after speaking to Miriam, a consumer and creative sector specialist at the British Embassy in Berlin, they learned this was because the German producers prefer a British company to design marketing concepts for a British audience, as what makes our marketing effective in the UK is different to what works in Germany. For Overview Studios this means building partnerships with large design agencies in Germany and collaborating with local businesses to get their products selling in British catalogues. A trip back to Germany is already planned for early 2015 – Keep us posted Overview!!
Exhibitions are King!
German trade shows are internationally recognised as leaders across all sectors, attracting a staggering 2.7 million international visitors with over 130,000 visitors attending the shows from the UK. Almost 100,000 international exhibitors took part in German shows in 2013 with 5,000 of these coming from the UK. Karen Cartwright and Mark Lambert for Bags & Covers Direct, who provide bespoke covers made and manufactured in Wakefield using British materials, trade shows would provide excellent entry to a huge market in Germany. Karen and Mark are already planning a trip to Dusseldorf to attend a trade show as delegates, expanding their knowledge of the requirements of German consumers and buyers before they look to deliver their own exhibition stand in Germany!
Harold Kotter from Auma gave a fantastic presentation to delegates giving insight into the importance of trade exhibitions in Germany. AUMA, the Association of the German Trade Fair Industry, represents the interests of exhibitors, organisers and visitors to trade fairs. This is where you can find out about the products and services at trade fairs in Germany and abroad, tips to assist with your trade fair preparations and useful information on the industry. To learn more visit www.auma.de
We all know Germany has a fantastic reputation for quality, we purchase electrical goods and cars manufactured in Germany because we trust their reputation and appreciate the fantastic workmanship they deliver. Well did you know Germany feels the same about us Brits!! High quality is essential for the German Market and the UK has a well-deserved reputation as a leader in excellence for goods and services. If you are selling British products then it’s generally assumed you are selling quality! The UK should not undersell itself and brand Britain is a major selling point. If you trade in Germany then you must be prepared to sell a top quality product and service, as quality is a basic expectation to the German market. Bear in mind, if you feel quality is your USP, you need to be thinking of another reason the German market should take your product, as quality is not a word or concept Germans use to promote their products and services.
Britain is also very fashionable in Germany, so don’t be afraid to market your product as British and be proud. We love Germany for their standard of excellence and they love our quirkiness and trust our integrity – A great combination for successful business partnerships!
Communication and marketing
All businesses appreciate that communication is vital and if you can build up a network of personal contacts in the press and media locally then you will have the best chance of exploiting any opportunities out there for you. When exhibiting at trade fairs 88% of the exhibitors said that businesses having their own website was vital for engaging in business to business sales. The British are highly regarded in Germany, and have a good reputation for business, but we can’t assume just because many German people speak our language that we don’t need to translate our promotional material!
Planning your media and press strategy is very important and having someone with local knowledge will improve the perception of your business. PR must be delivered in German – Translation should be done professionally to avoid any sloppy wording or embarrassing mishaps!
German press prefer a journalistic approach with press releases. If you can send them something that already looks like an article – Including images and layout, you’ll have a much greater chance of that being included. The use of expertise marketing is really popular in Germany – Rather than selling yourself or product directly, create an article that describes a challenge and finds a solution, with only subtle references to your product or business. There is a much greater chance this would be included in trade magazines or editorials.
Speaking the language
If you are holding a conference or delivering an event, presenting in English is very much acceptable. Any material for websites, promotions, publicity and product information must be in German. Accurate translation is vital to get your message across and to get access to the market. If you can’t speak German or have only a little knowledge of the language it’s a must to get professional assistance. If you want to get ahead and do well then your customers need to understand what you are selling. Proper translation will facilitate effective communication and help you to get ahead.
On the final day of our trip we met with Andrew Wells, who works for British company Enesco Limited, renowned worldwide for their innovative and humorous gifts, stylish home décor and desirable collectables. Andrew is married to Yvonne Gericke, a German agent who he met through work. With strong business connections and the assistance of his wonderful German wife, Andrew was well placed to talk us through the importance of understanding and embracing our cultural differences.
Andrew told us that Germans like their sales information to be direct and prefer technical information over the lifestyle marketing we would usually favour. This links back to what Plümer Communication’s advised us on German PR. Direct pricing is preferable and your initial price is usually accepted. It’s very rare for Germans to haggle and they accept prices as they are presented. Watch out though - they would be aware if your products were overpriced will simply not engage with you.
When working with a German customer, you should always greet straight away – If you leave someone to peruse your trade stand without introduction, they would feel snubbed and probably will not do business with you.
Andrew gave these key points to consider when doing business with German companies:
•Be reliable – No missed deadlines or false promises
•Be upfront and honest – If something goes wrong, say so immediately and hold your hands up!
•Keep dialogue open – If you know there may be an issue, with a delivery for example, notify your German customer straight away and they will usually be OK
•Go visit your customer if there is a problem. Issues are dealt with best face to face
•The German people are proud, they don’t like to lose face so will not let you down
•Germans are generally candid, frank people. Don’t be offended by their directness as this would not be their intention.
•Pricing is fair, price isn’t quibbled and you should reflect this with your pricing
•Chit chat is unusual at early meetings – Brits like to chat about themselves, family hobbies – The Germans usually don’t enter into chit chat until a string relationship is established
We learnt that Germans don’t really believe the British all wear bowler hats and carry brollies in the rain, at least not all the time anyway! They love the British sense of humour and have a particular fondness for Mr Bean and Blackadder! The German sense of humour is very dry and witty – Our brilliant German colleague Kerstin Rath proved this to us on many occasions through the trip with some hilarious comments and use of quite a few British witticisms for good measure!
In summary – We had an amazing and productive time and were welcomed wholeheartedly by the German people. We learned that Germany is a very friendly and supportive place to do business with and is a place of great beauty and culture.
The whole experience has been a real treat and we hope that the information and insight we’ve brought back from the trip will help you to achieve export success!
Contact email@example.com to find out how we can support your business.