A Very Short Story of the German Market

Germany is the fourth largest economy in the world. With over 80 mio. consumers and a GDP per capita of around 45.000 USD, it is Europe’s biggest market and hence an attractive target for foreign companies.

Being successful in Germany is not an easy task. The market differs in many aspects from other larger economies, as the following examples suggest:

Price-level / product range: the price of certain consumables like food is – compared to other countries – very competitive. And German consumers do not necessary value choice over price. Walmart made this experience recently. They could not successfully enter the German market, since their entry was too much dominated by idea valid for the U.S. Also, its German competitors opted for smart strategies to keep Walmart out of the market.

Industry organization: the paper industry in Germany, for example, is very unique in the way that sales channels are dominated by a few large wholesale companies. Without taking into account this sales structure one can hardly sell to the German market.

Legal aspects: Germany’s tax law is famous of being overly complicated – and it certainly is. Germany’s corporate law and part of its administration is partly outdated. For example it is very difficult to track companies when they change their place of registration. Germany’s social legislation and its regulations on worker’s participation are unique – and give workers a great deal of influence on the general management of the company. There is vast amounts of regulations that apply to companies with more than 10 employees.

Sales approach / consumers: German consumers’ decision making process is characterized through a lot more information consuming than it is in other countries. Product presentations need to take this into account.

In case you are planning to enter the German market, please contact us!