Friday, 8 July 2016

DIHK survey: Brexit will damage German economy

I’ve just been looking at some interesting results from a survey of over 5,600 German companies conducted by the Association of German Chambers (DIHK) at the end of June 2016. The results are only available in German but here are the main points:

German-British trade

27% of those questioned expect their exports to the UK to decrease during the Brexit negotiations. And long-term, around half expect exports to drop. German companies see the biggest risks to trade with Britain as the increasing number of tariff and non-tariff barriers, political uncertainty and the declining value of the pound.

Based on these results, continued uncertainty and the decreasing value of Sterling, the DIHK have revised their forecasts for export growth to -1.0% for 2016 and -5.0% for 2017 (so a decline). As a comparison, 2014 saw export growth of 11.1% and 2015 12.8%

German companies in the UK

Although the majority of German companies with a presence in the UK see no change in their circumstances and market development, over a third are considering a decrease in investment and about a quarter are looking at reducing headcount. The overwhelming majority (over 90%) predict no such adjustments for their German operations.

British companies in Germany

Interestingly, 21% of British companies in Germany who responded to the survey are looking at increasing their investment in Germany and employing more people. A clear sign of the move to a UK/EU entity configuration within corporate groups to help minimise the volatility of Brexit and ensure future access to the single market.

Wednesday, 29 June 2016

Here's how British companies can secure future access to the single market

British companies can act now to secure access to the single market in both the medium and long-term. By setting up a subsidiary in Germany, you will be able to access the single market from within the EU, benefitting from the free trade area and free movement of goods.

Why Germany?

Germany has always been a popular target for investment from the UK. Over 800 British companies representing a wide range of industries are already present across the country. They enjoy a stable economic, legal and administrative framework in which to do business. Furthermore, Germany is an excellent distribution hub to serve other markets within the EU.

Why act now?

The future trading relationship between the UK and EU is not yet certain. By setting up in Germany now, companies can still take advantage of current favourable commercial and legal frameworks. British companies who plan ahead can minimise their exposure to any possible future volatility and uncertainty by ensuring some operations are conducted from within the EU.

How I can help

Large organisations are already considering splitting their operations into UK and EU entities. SMEs who have up to now sold to EU customers from the UK could also benefit from such an arrangement.
Whether you are looking at setting up a sales / service office or a warehousing and distribution centre, I can provide;
  • initial feasibility studies to help you make the right choice
  • market knowledge on the best places to locate and the incentives available
  • a strong network of legal, financial and accountancy specialists
  • on-the-ground support both in the UK and Germany
Find out more about my services here. Alternatively, for a no-obligation discussion about your future plans, please contact me on 020 3239 5168 or email me now.

Thursday, 6 August 2015

Why don’t the Germans follow cricket?

The start the fourth test got my thinking about two of my previous positions – one as Deputy Director General of the German-British Chamber and the other as Marketing Manager for The Lord’s Taverner’s – cricket’s charity. You may think this was a bit of a career change but I can see parallels between the two environments.

I know that there are many Germans who do indeed like playing and watching cricket. But I am surprised it’s not more popular in Germany, after all, it’s a game that complements the German psyche, especially when it comes to business. Many of my German friends and work colleagues always argued that they don’t watch as, “The games go on for days and then no one wins.” But I think if they give cricket a chance, they may even become big fans…

I admit cricket is, relative to other games, very long-term. There are some critical decisions to be made during a game that can win or lose the match – for example, whether to bat or field first, or when to declare. Furthermore, a test series of five matches can stretch over several weeks so there is time between the matches to review strategy and adapt playing style. The Germans are adept at planning long-term in business – so the tactics in the game should be easy to relate to. And yes, sometimes after all that effort the match ends in a draw. But isn’t business just like that? Not everything you do succeeds, sometimes no one wins and you just chalk it all up to experience.

Look closely at cricket and there are aspects that reflect German business culture. Firstly, it is a team game where everyone is a specialist. Of course, there are all-rounders, but most cricketers train to be expert bowlers or batters. Excelling in a particular role is synonymous with highly-motivated, highly-skilled Germans. Furthermore, although very traditional – the MCC was formed in 1787 – cricket has embraced new technology. The first test match with a third umpire (an umpire off the field who uses TV replays to assist in decisions) was played back in 1992.

A long-term plan, executed by a team of specialists, in a traditional atmosphere using cutting-edge technology. Doesn’t that sound like the business model of German industry?

Tuesday, 10 March 2015

Are Germans really so demanding?

A recent survey on international consumer attitudes showed that German consumers are the most difficult in the world. As widely reported in the German press, they tend to be extremely demanding in their purchasing decisions.

German consumers score areas such as value for money, innovation, price and a tailor-made purchasing process higher than consumers in other developed markets.  Fulfilling these demands may seem a daunting prospect to any British exporter but it is worth the effort.  After all, a satisfied customer will be an advocate for your products so you need to develop trust in your brand.

And trust is another value that scored highly in the German psyche.  However, this can only be achieved on a one-to-one, personal basis. A corporate image and philosophy can be built online.  But personal interaction and a tailor-made customer journey cements trust. This can, naturally, be difficult when dealing with potential clients abroad as you need to communicate in German and understand cultural norms.

Going back to the survey, my overriding opinion is that German consumers are misunderstood.  Germans seem very demanding - but maybe that is just an Anglo-Saxon interpretation of their inherent logical buying process. They need to know everything about a product; they want to compare it to similar products; they have to make the most informed and best purchase.  And that is why they ask more questions and need more information than other consumers.  By asking all these questions and wanting to know all these facts, perhaps they are perceived as being demanding when, in fact, they are only being "German"!

Once you understand the mind-set of the German consumer, you can adjust your advertising messages, marketing / promotional literature and general approach to the market in order to satisfy these needs. You just need a little bit of market knowledge and forward planning.  Contact me if you have any questions.

Monday, 23 June 2014

Notice Periods and Deadlines

After a year of successful trading, I've joined the German-British Chamber of Industry & Commerce, my old employer, to increase the reach for my services and advice.  During the application process, I was reminded that the Chamber has a three month notice period for membership cancellations and it got me thinking about notice periods and deadlines in both the UK and Germany...