International companies trying to do business in Germany often wonder why things tend to take what feels like forever. Are Germans really such tough nuts to crack? Let’s have a look at what might be preventing you from making progress, and what questions you should be asking yourself:
1) Does your Offer meet a real Need?
First of all, remember that whatever product or service you are trying to offer, chances are high that it is already here; Germany is a highly developed B2B market. Try to imagine why people would be unhappy with the existing offer, who has or might not yet have access to this kind of offer, and who might be unhappy with their current suppliers.
If you’re adding a special feature or an enhanced service to a standard product (as applicable in your country), to what extent would that extra be appreciated in Germany? Is the infrastructure similar to what you might find in your own country? If, for example, you look at payment methods or internet coverage, Germany might, in some respects, be less developed than other European countries. Trying to answer these questions can help you get a clue about whom to approach in the first place.
2) Are you Looking in the Right Places?
Some of my previous clients who were struggling to conquer the German market had initially done their internet search for potential business partners or buyers only by city: Berlin, Hamburg, Munich…not a great approach!
Sometimes, because of how they experience centralism or the infrastructure in their home countries, foreigners imagine that businesses only flourish within major cities or their exurbs; that is not the case with Germany! Many of the top Mittelstand companies (SMEs) in Germany are located in places like “Fridolfing” (Rosenberger Hochfrequenztechnik; about 4,200 inhabitants) or “Klingenberg am Main” (WIKA; Klingenberg is only slightly bigger than Fridolfing).
However, it is very important to grasp the regional differences when starting to do business or working on business development in Germany. For example, you will still find the highest concentration of (successful) SMEs in the west of Germany; even after almost 30 years of German unification, there continues to be major structural differences.
You should also consider focusing on just one region when entering the German market, depending on the product in question, the industrial competence of the region itself, and other factors. There are regions where specific competences are aggregated and certain skills or industries have been flourishing for centuries, and there are (newer) cluster networks that are often funded by the federal government and federal states to promote certain technologies.
3) Are you Participating in the Right Events?
Please do not visit only the Hannover Messe! Every year, around 150 international trade fairs and exhibitions are hosted in Germany, attended by 180,000 exhibitors and around 10 million visitors. Put some effort into identifying the show(s) that best suits your needs!
For example, when looking (only very generally) at the electronics industry and automation, some world-leading trade shows taking place in Germany are electronica, embedded world, productronica, SPS smart production solutions, and automatica. Although these are international shows, the greatest number of visitors are generally from Germany. And don’t forget to look out for – and participate in – smaller but highly specialized events and congresses such as Sensor+Test, Motec, building IOT (more relevant for IT-companies) or Internet of Things – Vom Sensor bis zur Cloud.
4) Are People Comfortable Talking to You?
Germans, overall, have been socialized in a low-context culture; we are generally interested in facts and procedures. We rely on the professional expertise of the other person and tend to take words literally. We do not rely on contextual elements (i.e., the speaker’s tone of voice or body language) to communicate information and speak clearly about what is important to us. Clear messages are generally expected and appreciated; ambiguity makes us nervous. Nevertheless, I am hesitant to tell you to “just be blunt” because there is a fine line that can be easily overstepped, resulting in you being perceived as rude.
It’s better to consider hiring a local person to help you with setting up appointments and attending meetings; my experience is that Germans are more likely to have a brief conversation if they are called from a local number, and if the person calling knows the language and business culture.
As a case in point; having me on board for meetings with German contacts tremendously helped a recent delegation from Finland to confirm (more) meetings. Without the prospect of a German-speaking person to jump in in case of (potential) language difficulties, some contacts had initially declined to meet the foreign visitors. Since I was a part of the delegation, I was able to help my Finnish clients ask the right questions and keep the conversation going!
5) Are you Talking to the Right People?
Are you (already) talking to the person with the power to say “yes” to your proposal? Or does the decision-maker still have to be brought into the conversation? Better keep in mind that decision-makers can have different titles and functions. They do not necessarily have to be on the executive board of a corporation or be the CEO of a firm; what counts is who controls the budget for your proposal. The person who holds this position can vary from company to company.
In my experience, decision processes in Germany are often hierarchical and, while subject matter expertise is highly valued, top-down decisions (instructions by someone higher on the corporate ladder) are not often challenged or questioned; even when the person giving the instructions is not that knowledgeable (“the German paradox,” as labelled by a friend of mine and described in my book Doing Business in Germany). While it’s a good idea to equip the subject matter expert with all information needed and attend to his / her questions, one should, in parallel, pay special attention to (and sometimes even pamper) the actual decision-maker(s).
6) Have you Answered all the “what if” Questions?
One of the things that you should keep in mind when you want businesspersons to spend money on your products or services is that, first of all, Germans are generally much less risk-inclined than people from many other cultures. Their understanding of the word “risk” may vary considerably from how you and your colleagues define the term.
While you might think that they want to bargain over the price, your German counterparts might be hesitant to close the deal over imponderables not yet sufficiently addressed in the (selling) process. They would very often want to consider and discuss the long-term implications of an investment with you, their team, their superiors, their lawyers, and so on; this takes time. It is therefore important to answer all the “what if” questions to their full satisfaction.
7) Have you Positioned Yourself as an Expert?
Bear in mind that problem-focused Germans are eager to hear about concrete solutions (rather than visionary ideas that we would most readily label “dream castles”). Therefore, you should highlight your expertise in solving problems and try to give examples…and mention references. I recommend that when you talk about reference clients, instead of (or maybe in addition to) displaying the logos of the usual suspects in your presentation (depending on your industry, these can be big market players such as Microsoft, Honeywell, or LinkedIn), you should talk about how you have helped specialized businesses of comparable size (to your target client) solve specific problems. However, don’t forget to ask your reference customer(s) for permission first! And be prepared to be told that your target clients’ problems are not at all comparable, or at least, are much more complex and challenging.
These seven questions can, in very general terms, help you understand why you might be making only a little, if not zero, advancement in the German market. If you are unhappy with the pace at which you are progressing in Germany, please get in touch. I am happy to help you get things going.
You can reach me at: firstname.lastname@example.org