There are advantages and also potential challenges for Northern Ireland companies doing business in Germany.

Germany is an attractive market for investors as well as new business owners. It is the largest economy in Europe and ranks as the fourth-largest global economy.

Advantages of exporting to Germany

Germany can offers numerous benefits to companies looking to do business in the region including:

• one of the world’s largest and most stable trading economies
• is among the top ten most innovative countries worldwide
• largest consumer market in the European Union
• offers a variety of incentive programs and public funding options

Challenges of exporting to Germany

You should also be aware of some challenges you could face when exporting to Germany including:

• it can be challenging to form a business due to complex bureaucratic requirements
• tax laws can be complicated

Opportunities exist for UK companies across a wide range of sectors, including technology, automotive, health and life sciences, food and drink and renewable energy.

There are a number of sectors that could potentially offer some opportunities to Northern Ireland companies.

Technology

The convergence of manufacturing and tech along with the Internet of things (IOT) evolution, are presenting significant new opportunities for ICT companies.  COVID-19 has accelerated the demand for digital solutions. New growth areas are expected to be in Artificial Intelligence (AI), supply chain automation, IoT, cyber security, fintech and health tech.

Automotive

The automotive sector remains the strongest and most export-driven industry in Germany with a total turnover of €379.3 billion and an export volume of €243 billion in 2020. It’s transition towards connected and autonomous vehicles, and clean mobility creates excellent opportunities for UK companies providing solutions in vehicle connectivity, mobility management, sustainable mobility, and battery technology development.

Health and life sciences

Germany is at the forefront of healthcare innovation. In this sophisticated and demanding market, the opportunity for companies providing innovative products and services is substantial.

Germany offers one of Europe’s largest markets for healthcare and life sciences products. Health expenditure accounted for 11.9% of GDP in 2019 (German Federal Statistics Office, 2020). High market demand and Germany’s strategic location make it a preferred choice for many international healthcare and life sciences companies preparing to expand.

Food and drink

There are significant growth opportunities in spirits, including low and non-alcoholic spirits, confectionery, sweet and savoury snacks, vegan, organic, free from and international products produced in the UK.

The German food and drink industry is highly competitive, but until now has also been relatively conservative in its operating models. The introduction of new technology and digitalisation has helped to change this and resulted in the number of imports from the UK increasing.

Consumer goods

Germany is the largest consumer market in Europe, with a low unemployment rate and an affluent population. With an excellent logistics infrastructure both domestically and extending into neighbouring countries, Germany is well-located for distribution to Western, Central and Eastern Europe.

E-commerce is growing fast in Germany, especially among consumers aged 50 plus; a major group with strong purchasing power. Demand is also increasing in mobile commerce, social media shopping and innovative omnichannel sales solutions.

Renewable energy

Germany is the EU’s largest market contributing 21% to GDP. The new government will increase the target for renewables from 65% to 80% by 2030 with impressive growth trajectories for offshore wind, hydrogen and solar. This is fertile ground for UK exporters.

Offshore wind will increase from 20GW to 30GW by 2030, 40GW in 2035, and 70GW in 2045. Upcoming opportunities include marine geophysical, geotechnical and environmental survey services, design planning and engineering services, CTVs, SOVs, logistic and transport services. There will also be opportunities in remote and autonomous technological solutions enabling condition monitoring and maintenance and blade recycling.

There are a lot of things to consider before you start exporting to Germany. It's essential to find out about local rules and regulations on tax and duty in your intended market.

VAT

The standard rate of VAT in Germany is 19%. Convenience goods and day-to-day services are charged at 7%. Some services including banking, healthcare and non-profit work are VAT exempt.

Packaging and labelling

Packaging has a strong influence on German consumers and informs how they choose products. It is important to check that your packaging is to German tastes. Please also see the German Packaging Act for guidance.

EU standards apply to packaging. Check how to export goods.

Labelling should be translated into German. Certain products, such as food and textiles, have specific labelling requirements.

Payment terms

Standard payment terms for business-to-business transactions are 60 days and 30 days for public authorities. You can claim late payment interest when terms are not met.

Services regulations

If you’re a UK business offering services in Germany, you need to follow regulations about:

• getting an authorisation or a licence to provide a service
• complying with local business regulations
• EEA nationality requirements which could prevent you from providing services in some sectors

Information on rules for selling services and business travel to Germany.

Trade barriers

Trade barriers, such as tariffs or taxes, can raise costs, cause delays, or even stop you from exporting. You should check for any issues that may impact your business when exporting.

Check for any reported barriers to trading with Germany.

Report any trade barriers that are affecting your business.

Routes to market

In a stable and secure market, there's a wide range of routes to market.

Options which may work well for you are:

• agents and distributors - using local agents or distributors is an effective way to develop a presence in Germany due to the size of the market. German is the language of business and fluency is a major advantage for your company when using local partners.
• direct sales - due to the relative closeness of the market, direct sales are possible. However, the need for German language skills should be considered. Ensuring full coverage of the whole market could be a challenge.
• e-commerce - selling online or through e-marketplaces may be a good option for your company. It’s relatively cheap and easy to deliver products into Germany. The Department for Business and Trade (DBT) can suggest online marketplaces to help you get started. DBT’s E-Exporting Programme can also help. The British Chamber of Commerce in Germany is a useful source of further information on routes to market in Germany. You can find more useful information on the Germany Trade and Invest and German-British Chamber of Industry & Commerce websites.

Business culture

German firms are often family-owned and take a longer-term view. They value personal relationships highly.

Often businesses will not necessarily go for best price, but for long-term shared vision or relationship.

Business people will be well prepared for meetings, and will have carefully researched your products and services.

Intellectual property

Intellectual property (IP) rights are territorial and rights granted in the UK do not provide protection elsewhere. You should consider getting IP protection abroad if you want to trade overseas or sell to overseas customers via the internet.

The Intellectual Property Office provides practical information to help you protect, manage and enforce your IP abroad. Further support for British businesses can be found through a network of IP attachés, based in key UK export markets.

Developing exports to Germany could be a part of growing your business. But breaking into the market can be challenging. The right support and advice can significantly improve your prospects.

Invest NI offers a range of advice, plus additional support services for businesses trading with Germany.

• The selling outside Northern Ireland schemes includes support with market research and market visits.
• Invest NI sector specialists can help you assess the opportunities for your business and advise on the best way forward.
• Invest NI can advise on how to use technology to support your exports.
• Invest NI can advise on financing your export business and may be able to provide financial support directly to businesses.

As well as Invest NI, there are other sources of support to assist with trading with Germany.

• The Northern Ireland Chamber of Commerce (NICC) provides trade support services and networking opportunities.
• Department for Business and Trade (DBT) in-market support - eligible UK businesses can access trade expertise and knowledge on exporting to specific countries from the DBT global network of international market hubs.
• UK Tradeshow Programme - UK businesses exporting, or thinking about exporting, can apply for support to exhibit at, or attend, approved overseas trade shows and conferences; potentially receive grants to offset some costs.
• A freight forwarder can organise delivery and customs clearance, minimising the logistical problems you deal with directly.
• Your bank can advise you on the most appropriate form of financing and how to protect yourself against foreign exchange risks and non-payment.