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Doing Business in Berlin

Foreign Investors

First and foremost, tap into social networks. Germany's leading Business Network is XING with 10m+ members, mostly in Germany, Austria and Switzerland. If you need business contacts you will need to be present and active on XING. LinkedIn by contrast, has only just started to enter the German market with some 1m members in 2011 and it is questionable whether it will succede in convincing XINGs loyal and comfortable German user-base to migrate to LinkedIn. XING is much more of a bridge between offline and online networking, with strong historical roots in offline networking at events. LinkedIn by contrast is perceived by Germans as an international CV database and does not offer any events in Germany, and fails to cultivate a strong network of trust through physical meetings.

Since the fall of the Wall and its designation as the capital, Berlin has undergone a transformation as a location for international business. More recently, 2011, Berlin has emerged, next to London, as THE entrepreneurial hotspot in Europe, and one of the top cities in the world for starting new business, especially in the IT/Internet, Bio-Tech and Green sectors. Numerous recent articles in TechCrunch, Wired and elsewhere attest to the flourishing start-up scene. Low rents, great universities, highly trained and skilled engineers and its central location within Europe, all contribute to its growing attractiveness.

Foreign Investors:
Foreign investors will continue to find the German market, Europe´s largest, to be extremely attractive in a variety of sectors. Successful market entrants will be those having innovative products featuring high quality and modern styling. Particularly in the consumer goods sectors, Germans appreciate innovation and high technology. Quality, and the assurance that the manufacturer is committed to providing a superior product and maintaining a reliable service are as important as price for the German consumer.

A common mistake foreign businesses make is servicing their clients from a single European location or even directly from the US or UK. Germans often perceive foreign companies as being unreliable and too quick to favor domestic orders over export orders. Distance from the market is no excuse to a customer with a problem. Success in the marketplace can be achieved by countering this comparative disadvantage with high quality products and service.

High marginal tax rates, inflexible labor laws and burdensome regulations are cited by foreign firms as the main obstacles to investing in Germany. While not discriminatory in the classic sense, government regulation is often complex and may offer a degree of protection to already-established local suppliers. Safety or environmental standards, not inherently discriminatory but sometimes zealously applied, can complicate access to the market for foreign products. Foreign companies interested in exporting to Germany should make sure they know precisely which standards apply to their product, and how to obtain timely testing and certification. This is doubly important because German standards may well form the basis for planned EU-wide standards.

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