Considering Taking your Business to the German market? – Take These Factors into Account!
At the ’What’s up DACH’ event by Boardman Grow, Finnish growth entrepreneurs explored the market opportunities and differences in business cultures between Finland and Germany.
Although Germans share some similarities with Finns by nature, there are cultural differences that are important to understand when expanding into the German market.
The event featured an in-depth discussion led by top specialist Jan Feller, CEO of the German-Finnish Chamber of Commerce, and insights from Mika Setälä, Senior Advisor at Business Finland.
Additionally, Ulla Kruhse-Lehtonen, CEO of Dain Studios Finland, provided concrete examples of what it’s like to do business with Germans.
Economic Trends and Growth Opportunities in Germany
In the exploration of economic trends and growth opportunities in Germany, Jan Feller, offered valuable insights into the current market situation.
He highlighted a unique aspect of the German approach, stating, ”They have a lot of cash they’re ready to invest but they’re waiting for the market situation to improve in order to make those investments.”
Germany is actively diversifying its companies’ supply chains, seeking alternative suppliers, and reducing strategic dependence on countries like China and Russia.
Simultaneously, the nation is undergoing a trifold energy transition, marked by a comprehensive climate package worth €212 billion.
This substantial investment encompasses various sectors, such as €24 billion into rail transport buildings for energy efficiency, €27 billion for hydrogen, €18 billion for renewable energy, and an initial €12 billion this year. Of particular interest to Finnish companies is the allocation of about €2 billion to attract foreign investors bringing transformation technologies.
Despite being a decade behind Finland in certain technology areas, Germany is witnessing a surge in awareness and investment in digitalization. While Germany boasts a robust industrial heritage and remains Finland’s largest business partner, it is not typically recognized as a pioneer in developing disruptive technologies.
As an illustrative example, traditional technologies like faxes are still prevalent in Germany. However, this characteristic presents a significant opportunity for Finnish companies to fill this technological gap.
Germany’s energy transition: opportunities and investments
Mika Setälä from Business Finland emphasized the potential for Finnish businesses, noting that the German market, with its unique technological landscape, offers an ideal environment for innovative solutions and advancements.
Germany is undergoing a significant energy transition, abandoning nuclear power, coal, and Russian gas. Mika Setälä sheds light on the ambitious goals of the German coalition, stating, ”The German coalition aims to accelerate strongly the expansion of renewable energies.”
To achieve this objective, Germany has outlined a series of steps, including plans for a substantial expansion of photovoltaic (PV) capacity to 200 GW, achieving 30 GW of offshore wind power by 2030, allocating 2% of land mass for onshore wind power, and revitalizing the biomass strategy.
An essential aspect of this transition is the mandate that new gas-fired power plants must be H2-ready, positioning them for a full conversion to green hydrogen as a fuel by 2045.
The magnitude of this shift necessitates significant investments in various infrastructure components, including grids, smart grids, transmission networks, and hydrogen infrastructure.
The German government’s commitment to this transition is evident in its €212 billion climate package, which allocates funds to various critical areas such as transport, buildings, energy efficiency, hydrogen, and renewable energy.
For Finnish companies, this presents a lot of opportunities in the energy technology sector.
Key areas include green hydrogen production, wind park technologies, solar technologies, and energy storage solutions. As Germany experiences a surge in demand for electric vehicles (EVs), there are additional openings in battery manufacturing, including opportunities in recycling and the development of charging infrastructure and technologies.
Finnish companies, with their expertise in clean energy solutions, are well-positioned to play a pivotal role in Germany’s evolving energy landscape. The synergies between Germany’s energy transition goals and Finnish technological innovations create a fertile ground for collaboration and investment.
Opportunities for Finland: Photonics, Cleanrooms, and XR Industry
Germans trust Scandinavians, and Finland is perceived as a role model in technology, particularly leading in immersive technologies. While Germany excels in engineering, there is both a need and readiness for disruptive yet solid tech-based industry applications, especially in the field of XR (extended reality).
Mika Setälä emphasized that Finnish companies can explore opportunities in Germany across various sectors:
- Photonics: Collaboration in photonics technologies and applications is encouraged, considering the broad use of photonics across German industries.
- Cleanrooms: Providing applications, systems, and technologies for cleanrooms is crucial for various industries such as medical, electronics, and semiconductors.
- XR Industry: Germany, with its strong industrial heritage, is open to disruptive tech applications, particularly in XR. Finnish companies can leverage their technological leadership in XR applications.
Setälä highlighted that major companies in the automotive industry, such as Bosch and Siemens, are actively seeking XR solutions for various applications, including manufacturing processes, design, and prototyping.
“Finland is seen as a role model in technology and is also leading in immersive technologies”, he stated.
Understanding the business culture in Germany
Jan Feller provided valuable insights into what Finnish leaders should understand when engaging in business with Germans:
- Control-based society: Germany operates as a control-based society, emphasizing structure and organization in both professional and personal spheres.
- Written communication: Germans place a high value on written communication. This includes justifying decisions and meticulously recording discussions and outcomes. This written documentation serves as a foundation for future reference.
- Detailed planning: Detailed planning is a cornerstone of both professional and personal life in Germany. This emphasis on planning provides individuals with a sense of security and predictability.
- Quantitative elements in strategic planning: Strategic planning in Germany incorporates strong quantitative elements. Decision-making processes often involve a thorough analysis of numerical data.
- Regulated life: Many aspects of German life, including business, are defined and regulated by laws, rules, and procedures. This structured framework allows individuals to understand expectations and plan their lives accordingly.
- Dislike of surprises: Germans, in both personal and business contexts, are not fond of surprises. Sudden changes, even if financially beneficial, may not be well-received. Stability and predictability are highly valued.
- Building trust: Trust is not assumed but must be earned. Germans typically operate with little pre-existing trust, and establishing credibility and reliability is a key aspect of successful collaboration.
Ulla Kruhse-Lehtonen shared personal observations about doing business in Germany, noting that while Finland’s positive reputation for digitalization, engineering skills, and innovation is advantageous, building connections through networking is crucial in Germany’s diverse business centres.
Additionally, Germans prefer established connections over cold calling, emphasizing the importance of industry events for effective customer acquisition, where a detailed and planned approach is expected, and gender roles are more defined.
In summary, expanding into the German market presents exciting opportunities for Finnish companies. However, success hinges on understanding the local business culture, building networks, and offering innovative solutions that align with Germany’s evolving needs.