German Industrial Strategy: exporting industry to Germany
The Federal Ministry for Economic Affairs and Energy (BMWi) has published a document entitled “National Industrial Strategy 2030 – Strategic Guidelines for a German and European Industrial Policy”, which contains the draft of a national and European industrial strategy and explains in more detail domestic and global key industrial sectors.
The superior objective of this strategy is to work with economic stakeholders to help securing and regaining economic and technological excellence, competitiveness and industrial leadership at national, European and global levels in all relevant areas. This is the prerequisite for the economic performance of Germany collectively and thus its jobs and the prosperity of its citizens can be secured and expanded in the long term.
- Gradual expansion of industry’s share in gross value added from 23% to 25% in Germany and 20% in the European Union by 2030
- This goal should be achieved market economical, private economical, self-responsible and if possible, without state action. In exceptional cases, action by the state may be justified or even necessary if serious disadvantages for one’s national economy and welfare can be avoided.
- There should be achieve a contributing to the emergence of a Global Social Market Economy that can lead to more market and prosperity for all in the long term.
Central fields of action:
A central field of action of the “National Industrial Strategy 2030” is the strengthening of key technologies, such as digitization, artificial intelligence and battery cell production. Only those who have the new technologies and control them, can compete their position with the competition on the global markets permanently.
Other fields of action:
- Strengthening the industrial middle class
- The mobilization of more venture capital for hazardous investments
- Advocacy for open markets, strengthening of multilateralism (including modernization of the WTO) and for internationally comparable general conditions (“level playing field”)
- The promotion and preservation of technological sovereignty
- Improving the basic conditions (e.g. energy prices, taxes and social contributions)
- The review of state aid and competition law
Key industrial areas where Germany is leading till today and still leading:
- Steel, copper and aluminum industries
- Chemical industry
- Mechanical and plant engineering
- Automotive industry
- Optical industry
- Medical device industry
- GreenTech sector
- Defence industry
- Aerospace industry
- Additive manufacturing (3D printing)
At International Team Consulting we have developed an important know-how in the industrial sector, supporting since 1995 hundreds of Spanish, French, German, English, American, Moroccan, Italian and Portuguese industrial companies in their export processes to international markets. Contact our international trade consultancy for more information regarding our outsourcing and sales outsourcing services for industrial companies in international markets.
HOW TO EXPORT TO GERMANY, 10 KEYS; INDUSTRIAL PRODUCTS AND SERVICES
The Hannover Messe currently hosts around 6,500 exhibitors and receives over 225,000 visitors per edition, it has become a paragon of industrial trade shows. 60% of the exhibitors are from non-German nationalities as well as 30% of the visitors, which confirms that the fair is not only of great importance in Germany but it has also escalated at the international level. The Hannover Messe has its origins in the Hannover Export Fair, which first took place in 1947. In addition to assisting to a top industrial fair, visitors and exhibitors have; exporting to Germany amongst their main goals for the Hannover trade show.
Each year, Hannover becomes the world meeting point for industrial companies, it becomes a space for the promotion of international trade and closes its doors with approximately 5.6 million new commercial contacts. The event’s great renown and rapid growth has brought about the need to produce a Spin-off trade conference: the CeBIT, with the intention of including multiple emerging ICT sectors, and all of those related to the digitalization of business. Despite the creation of this new trade show, new sectors linking emerging technologies to the industrial sector, such as; industry 4.0, cobots, smart supply/smart factory technologies, or the artificial intelligence applied to the industry; can also be found in the Hannover Messe fairground.
The trade show’s success is not surprising, given Germany’s huge industrial capacity in conjunction with its export and import power. It’s the 3rd country in the world ranking in number of exports and imports, as well as the strongest economy in Europe.
In the context of the Hannover Messe 2018; ITC (International Team Consulting) as an International Trade Consultancy, specialized on working with SEMs and helping them extend and consolidate their sales in the German market; would like to present to you 10 keys to commercializing industrial products and services in Germany.
- Market prioritisation: Before taking the plunge into exporting to Germany, you should ask yourself the following: Is Germany the best market for my product? This is a question that will only be answered with almost absolute certainty after having conducted a market prioritisation study. In this document; determine which factors are key in the commercialisation of your product and prioritise the international market which presents better opportunities. If Germany can be found amongst this favourable markets, go ahead!
- Thorough Market Research: complete the prioritisation with market research. The exporting process to Germany presents several distinctive features in the same way your domestic market and all other international markets do. Don’t forget to conduct an extensive market research to confirm if your product or service has real success opportunities in the German market. You must remember that Germany usually asks for specific homologations and certifications to their clients/suppliers; even if you have the appropriate European certification, there might be several more that you have to present that are unique to Germany. Likewise, you should determine how they commercialise their industrial products and services, establish as well their national and international competition which will help you determine the best entry channel (input channel) for your product. Prices and other ways of promotion should also be resolved at this stage.
- International Promotion Plan: it is world-renown that German culture requires order and organization. Establish a clear action plan in the country, and be ready for your German potential clients, agents and distributors to inquire about said document. You only need a brief report presenting your companies objectives and sales strategies in the country from a short, medium and long-term perspective. Elaborate this document for internal distribution, as well as to present to your possible clients. This document is an indicator of you company’s seriousness toward the German market.
- Recognise the German regions with a greater possibility of success for your product: during your market research, market prioritisation and action plan elaboration you should pay special attention to your target regions in order to achieve an organized and satisfactory internationalisation. Germany offers commercial opportunities throughout all its territory, but depending on your specific type of industry, you might find territories which concentrate a greater number of potential clients and some specific clusters. A good example is the Rin Ruhr region (Düsseldorf, Köln, Essen, Dortmund, etc.); which has a very strong metallurgic industry. Bavaria, Dresden, Bremen and Hamburg also have a very powerful industrial sector. But for the most par the potential clients are scattered all over the German territory. When preparing a trip you have to keep in mind that you will be travelling considerable distances and it can be very profitable if you figure out beforehand which regions have a higher concentration of clients from your sector.
- Knowledge of German is important and it conveys trust: many Germans are fluent in English nowadays, but not everyone is; in some regions of former GDR, Russian is still predominant as a second language. Therefore; having a member of your team who speaks good German, and keeping all the promotional and commercial documents translated, will grant you a great advantage. It becomes a new indicator of professionalism and demonstrates the company’s strong bet for the country; as well as instilling the impression that your after-sales support, will be offered with the same ease as if they were to work with a German supplier. Currently we are all able to offer the highest quality at a good price; Fluency in German will set the difference!
- Certifications/Homologation: yet again, if you enter the German market trying to sell a product without acquiring all the necessary certifications, homologations and/or quality guarantees that the market requires; wait until you obtain them. Don’t take the trouble to start making contacts because you will not be prepared for the demands of the market. You must always keep in mind that you will be going up against the most powerful industrial sector in Europe.
- Patience, determination and persistence: the German market requires a lot of work. As a potent market it is also very selective and competitive. When it comes to exporting to Germany, it’s a matter of continuing to try with continuity, even if you may feel defeated at times. Hard work and patience definitely entails a very rewarding outcome in this market. As it was mentioned before; take your time, do a good job, persist, be prepared and you will be successful.
- Choosing the pertinent entrance Channel according to your product: a very important share of the success of a company’s internationalization process is determined by weather a company chooses the appropriate entrance channel to the country or not. It is of vital importance to dedicate time and effort to choose the best option for your enterprise. Some options could be: No matter if the choice is one or more distributors or one or several independent sales agents; it is important to investigate in order to make sure that it is the right channel for your product since not all channels work well for every product.
- Visit an industrial trade show in Germany: there’s nothing of greater importance than having an extended knowledge on the workings of the country you want to export to. Attending industrial trade conferences in Germany will provide you with essential information on de the German modus operandi; the technologies they use and they prefer, the products they have, the products they need the most, etc. Mind you, your first trade show visit should be an evaluation mission, you should go as an observer to be able to bring back with you as much information as possible. On the other hand, making the decision to become an exhibitor at one of these trade conventions, will set you before the international arena, which can be very beneficial for your company, but in this case, you can also not expect to receive visits from German contacts during the first year. It is very common to receive visits from multiple nationalities, except for Germans if you do not already have clients, sales agents, or distributors in Germany. To receive visits from the market; the trade show needs to be planned and arranged a year in advance by conducting research and face to face visits beforehand. Not planning out and preparing for a trade show is a big mistake that can drive your attempt to be unsuccessful.
- Regional and subsector trade conventions: Germany is a very vast country, and it has a very broad industrial sector. Look into regional or smaller size national trade shows and make one of them an obligated appointment before attending the bigger events.
As you may be able to recognize by now, exporting to Germany is not an easy task. Nevertheless, our experience has shown us that following these steps; the return on the investments will be considerably higher to that of other European states.
For further information on how to export to Germany please contact:
Co-Partner and Senior Consultant
Exporting to Germany: The Industries with the best business opportunities for 2015 (II)
In this second part of the chapter highlighting business opportunities for Spanish companies in Germany, we feel that new information technologies need to be featured.
The information technologies industry is one that, by its very nature, is ever-changing and innovating and, in countries like Germany, displays one of the highest growth rates. The industry is traditionally divided into 3 subdivisions: hardware, software and services. Starting from these subdivisions as a basis, we can paint a clear picture of the current situation of the German market for information technologies.
Total hardware sales in the German market in 2014 were € 22,500 million which was a 6’3% increase over 2013. This was followed by software which totalled sales of € 19,100 million which showed an annual growth of 5’4%. Lastly, the most diverse of these subdivisions, that which is listed under “other services”, finished 2014 with total sales of € 36,200 million, an increase of 2’3% over 2013.
German experts claim that expectations in the information technologies industry will remain, overall, the same for 2015; though this will be spread unevenly over the different subdivisions.
Growth in hardware is expected to slow down slightly this year according to published forecasts, with increases estimated at about 1’3%. Experts generally expect the best sales growth in software. These specialists forecast that total German sales in software will grow at around 5’7% which is a slight improvement on growth in 2014.
Lastly, the subdivision into which “other IT services” are classified is also forecast to show robust growth of around 3% year-on-year. These data go to show that the industry in Germany is in great health and offers many opportunities for Spanish companies planning to enter the German market or consolidate their market there.
When planning to enter this market in Germany, the first step is to check that our solutions and services offer some improvement over current products or differential that will attract German buyers. Once we have established this point, we have to move on to the definition of the ideal partner. With this profile in mind, we proceed to the search for and selection of the business partner. If we complete thee stages successfully, we will be in a vary strong position to take on the German market.
Please contact us for further information on how we can help you in the German market.
Consultant in the ITC Office in Berlin.