Europe is a vast and growing market. Due to its economic strength and diversity, opportunities abound for companies seeking new markets. Five of the top ten world's largest economies (ranked by GDP) are within the European Union, including by rank: Germany, France, the United Kingdom, Italy and Spain.
Europe is the largest consumer market in the world, with a high volume of sales in textiles, consumer goods, all types of manufacturing and information technology. It's easy to see why many international companies target Europe for the sale of their products and services. However, gaining a foothold in Europe can prove a daunting and confusing task.
Selling in Europe Is Not Like Selling in the U.S.
Many companies make the mistake of assuming that the different countries that make up Europe are comparable to the different states of the U.S. They believe that if their products and services have done well in the U.S., there should be no reason why they should not do so in Europe. Unfortunately, that's not the case. Besides having their own national languages, all the countries also have their own cultures, business ethics and purchasing norms, procedures and habits.
The reality is that most member countries of the European Union need to be treated as different, independent markets. Products and services must be uniquely targeted to each individual country. Whether selling directly or through a distribution channel, doing business in Europe is usually a local, country-by-country affair. This means making important, informed decisions before attempting a general European or international expansion effort.
U.K. Is Not the Easy Way In
Many American and Indian companies erroneously believe that the United Kingdom is the best place to launch their European sales efforts or establish their European headquarters simply because English is the national language. But what they fail to realize is that success in the U.K. does not automatically mean success in Europe. The physical, monetary and cultural divide between the U.K. and the continent of Europe is significant and not easily overcome.
Additionally, in comparison to other countries such as Germany, Great Britain tends to have much greater competition, and prices are higher on nearly every type of good and service. The overall market is smaller and behind Germany, technologically.
Start with Germany
Today, many companies are realizing the best place to first gain a foothold in Europe is in Germany. Germany is located in the center of Europe and borders with ten other nations including the Netherlands, France and Switzerland. This makes Germany a very metropolitan and international nation. Germany is also the largest and most economically powerful country within the European Union.
The European Central Bank has its headquarters in Frankfurt, the financial hub for continental Europe and since the introduction of the Euro, Germany is now more center-stage geographically and financially than ever before.
Another major advantage of doing business in Germany is that the country has more than one city that functions as an economic center. Germany distributes its resources and capabilities into different regions and cities of the country.
In other European countries most of the business is centered around the capital, since this is also where most of the population can be found. Even though this might seem convenient at first, it actually restricts those particular markets and limits business and sales possibilities beyond the capital.
Why Germany?
Germany is Europe's most important market. With over a quarter of Europe's GNP, it has the continent's largest economy. Its population of more than 82 million people is the largest in the European Community. Germany is famous for its outstanding quality and highest skills in almost every business and industrial branch. Important junctions like Frankfurt Airport and Hamburg Harbour underline Germany's standing as the European economy's centre.
To begin with, its location in the middle of Europe offers great business opportunities. Every European country can be reached within a few hours either by car, train, or plane. Thanks to the excellent nation-wide transportation infrastructure, traversing Germany only takes a day. Equally interesting is Germany's neighbouring position to the Eastern countries, a gigantic market yet to be fully explored.
Looking into the future means looking at Germany which is considered Europe's innovation engine. IT, biotechnology, pharmaceuticals, and communication are the trend-setting industries on the global market. Germans combine traditional work ethic, such as quality and skills, with these dynamic technological advances and modern business philosophies. Being already one of the top-notch players in this game, Germany even goes one step further and invites foreign industries to participate in their success story. This is partially due to German's enormous spending capacity and their curiosity towards new electronic products. During the previous years, e-commerce has experienced its first period of prosperity. E-commerce's total revenue in 2003 reached the level of 17 billion Euros. Another important aspect is Germany's work ethic. Employees define themselves as part of the corporation they are working for and quickly identify themselves with your product and/ or services. Thus, you can expect to be in best hands when starting business in Germany.
Generating Sales in Germany
The facts and statistics make a strong case for Germany as the most attractive European nation for trade and sales. Germany is the world's third largest economy after the U.S. and Japan. It is one of the wealthiest nations in the world. Almost 50% of the population is of employable age earning money. Most Germans are well-educated and speak English.
American businesses are the single biggest foreign investor in Germany. Approximately 1,800 U.S. companies in Germany jointly generate annual revenues of $540 billion and provide approximately 800,000 jobs, making American companies an important factor in German employment.
Over 35% of all American companies doing business in Germany can be called “very successful,” while 44% are at least “moderately successful.” In fact, almost 40% of U.S. German subsidiaries generate more than 10% of their company's worldwide revenues in Germany.
Developing a Business in Europe
Despite the excellent upside potential of targeting Germany as a foreign company's entrée into Europe, success is not guaranteed. For a product or service to catch on, it must have “German appeal.” Working with a business development firm is often the best way to ensure the business is launched in compliance with German laws, norms and culture and that the product is marketed properly so that it is ultimately well received by consumers. Your business practices applied in combination with local German knowledge provide a significant competitive advantage in the German marketplace.
