Doing business in Germany: key insights and overview - Although Germany is a mature market, there are opportunities for Irish companies with a strong product or offering and a focus on innovation, according to Eddie Goodwin, manager Germany, Switzerland and Austria at Enterprise Ireland.
“Germany for example has a deserved reputation for quality engineering, but many customers will respond to innovation from a new supplier where it hasn’t been previously available from incumbents,” he noted.
Just over 50 years since the Irish Government set up a direct trade presence in Germany, total exports from Ireland to that market are now valued at more than €14bn, making it our second-largest market for services exports and fourth largest for merchandise exports.
Kingspan, CRH, Glen Dimplex and Irish Dairy Board have significant operations in Germany and there is also a host of SME companies selling successfully there, such as Combilift, Burnside and Denison Trailers.
“The Irish companies that do best in Germany are those that have an innovative offering plus good quality service, rather than those that try to compete on price,” said Goodwin.
For Enterprise Ireland, Germany is its fourth largest market and the aim is to bring it into third place by 2016.
“There are between 440 and 500 Enterprise Ireland client companies currently selling into Germany, one third of which have some form of market presence, ie sales people or staff on the ground or a permanent distribution channel. There is definitely a trend towards establishing a presence.”
On a yearly basis, Enterprise Ireland client company exports amount to around €700m, and growth has been notable in recent years.
“In 2010, exports grew by 22pc on the back of Germany being first out of the traps out of the recession. This rebounded well on Irish exporters, which refocused more on Germany and away from more troubled countries. Growth was 17pc in 2011, and tapered off a bit in 2012 to 8pc, but overall our client companies recorded 30pc growth over the past three years which is really good for an established market,” Goodwin noted.
“In terms of sectors, Enterprise Ireland client companies active in Germany are mainly in engineering, technical, medical devices, pharmaceutical services and niche areas of software. Construction is making a rebound has Irish firms have increasingly started to look overseas in the past few years.”
Gateway to international markets
An important thing to note about Germany for Irish exporters is that sales into that market earn credibility that carries weight internationally.
Apart from being a large market in its own right, Germany is also the gateway to many other international markets, by virtue of German companies’ strong exporting culture – the country is the world’s second largest exporter after China.
Irish companies that have successfully worked with German multinationals and been accepted into their supply chains have often found that this can be leveraged to enter that customer’s international supply chain.
“One of the reasons the German economy has done so well over the past few years is the fact that a lot of the German ‘Mittlestand’ [SMEs] export into Eastern markets. If an Irish firm can partner with a German SME, for example by providing them with a piece of software, this can potentially give them a free ride around the world,” said Goodwin.
“It can be difficult to get in with German companies at the beginning and decision making can be slower than in English-speaking countries, but if you look at it as a long-term partnership you can grow on the back of their growth. You do also need to respect the language – successful Irish firms have employed local staff or have the language skills on their team.
“Then there is the German focus on attention to detail. Companies need to deliver on what they promise. You’re better off under-promising and over-delivering rather than the opposite in Germany, otherwise you could burn bridges very quickly.”