Looking to do business in Germany? Allie Renison, the IoD’s head of Europe and trade policy, offers five tips on the pros and cons of doing business in the EU’s largest economy (plus the UK’s second largest export market)
1 Do consider Germany for business
“There are several reasons why Germany is such a magnet for IoD members and business. Germans are well-regarded for their rigorous and precision-orientated work ethic, which is a big draw for any businesses setting up or importing there. Germany also routinely tops the list of European countries for inward investment. Domestic demand has shot up there in recent years, with its high-quality transport, skills, logistics and telecoms infrastructure making it a very attractive place to do business. The supply chain element is also important – British suppliers and manufacturers are deeply integrated into the German industrial machine. Many UK manufacturers often export component, specialised parts to Germany for further assembly.”
2 Don’t ignore German bureaucracy
“For a county renowned for its efficiency, Germany remains a bureaucratic place to set up a new business, at least compared to the UK. Its system is designed for heavy industry rather than lean start-ups. However, the country is fast turning its attention to reducing red tape. British businesses could do the following:
- Contacting the Business Immigration Service can help foreign businesses and investors – even if its target audience is more non-EU firms who have visa issues.
- Clear your company name at the local chamber of commerce and industry and have your particular type of work classified (i.e. recognition of professional qualifications). However, be aware that work on speeding this up at a pan-European level is still painfully slow.
- Other bureaucratic bugbears? The delightful process of getting documents notarised still remains in Germany. Also, freelancers have to jump through a few hoops of their own when it comes to taxes and social security, but there are plenty of courses and workshops in Berlin catering to this growing trend.
- Germany wants to make life easy for start-ups. If you’re a small tech business just starting out you probably don’t have enough people to worry about the issues above. Bureaucracy issues tends to affect traditional businesses from established sectors.
3 Do think about the registered co-operative route
“The 2006 Cooperatives Act reduced the number of founding members required to set one up from seven [members] to three, meaning little-to startup capital is required. While written statutes are required, certification by a notary isn’t necessary. Your regional cooperative association is involved in ensuring your company is viable, but that leads to easy accessibility for loans and you will be treated as a safe bet in the community. So, if your team is looking for a binding organizational structure with a low risk of insolvency (not to mention the support that comes from being part of a collective), this might be one way of going.”
4 Don’t assume Berlin is a start-up nirvana
“At present, Berlin poses more of an attraction as an investment destination. It fast developed a reputation as one of Europe’s most potent places for startups and entrepreneurship on the basis of its young and tech-oriented talent pool and low costs (low rents for office space etc). However, in recent years, Berlin has struggled to cement its reputation as a sustainable startup location. Its startups tend to attract significant initial rounds of venture capital, but sometimes struggle to secure follow-up financing. But the high concentration of a mobile and tech-savvy young population in Berlin ensures that demand continues.
5. Do look at these incubators and accelerators
“Berlin has some big incubators and accelerators at the moment, including…
- Axel Springer’s Plug & Play
- Berlin Startup Academy
- The Factory
- Initiatives also available from Mozilla, Microsoft and Google
Got some time to spare while in Germany? Check out our Berlin city guide