What you need to know before expanding your Dutch business to Germany
Doing business in Germany from the Dutch point-of-view
Anyone who first enters the European market will quickly discover that every European country is different. The Netherlands and Germany are major international players and share a long trading history. Every year, Dutch entrepreneurs enter the German market but often with a Dutch frame of reference. Is this way of doing business effective, and how can a Dutch company prepare for the German market? Grenzhoppers, Internationales Netzwerkbüro, STRICK and Klaar Voor DE Start examine how to appeal to German customers and create awareness of Dutch companies in Germany.
Economic connections and differences
The Netherlands and Germany have strong economic connections with each other. Therefore, it is no surprise that Germany is the most important sales market for Dutch companies. Compared to other trading partners, such as Japan, neighboring Germany is very close. Nevertheless, successfully entering the German market requires intensive preparations for the Dutch neighbor. Germany is a large country, with significant differences in language, culture and regulations. While it is self-evident for most Dutch companies to be active internationally, it is more self-evident for German enterprises only to be nationally active. This activity is often challenging for Dutch companies: How can a Dutch company excel in the German market? On the other hand, this also has advantages: the physical distance is small, and the German business culture is more apparent than the international business culture.
German companies often sufficiently benefit from the German national market. Despite this, Germany remains a top location in Europe. According to the UK comparison portal, Nimble Fins, the country ranks highly in the business climate, trust in the rule of law and economic health. In addition, foreign companies have many options for applying for subsidies. Nevertheless, foreigners should be prepared for the individual characteristics of the German member states. Each Member State has its own culture, dialect, customs and economic specialization.
The first step: Find and understand the differences
Being aware of corporate and intercultural differences greatly benefits Dutch companies entering the German market. Consider, for example, the separation of work and private life. German business people like to see their life as a role play, based on hierarchy. At work, they show expertise. They let go of the professional role at home, and the personality comes to the fore. In the meantime, it is much more natural for Dutch business people to show personality at work as well. Conviviality takes you far in Dutch business life. With this knowledge, you can already imagine how a business meeting can go when a Dutchman and a German start a conversation without prior knowledge of each other’s culture.
In general, the Dutch want to appear sympathetic and demand a comfortable working environment. Germans like to appear competent and demand respect in the workplace. While the Dutch want to have fun with and at work, Germans often find it a challenge to deal with the self-relativization and self-irony of the Dutch. Germans often want to hear concretely how the problem is being tackled, while Dutch are quickly satisfied with a “We’ll get this sorted out, so don’t worry.” As a result, the Dutch often approach German customers with ‘promises’ such as “We deliver this product the fastest.” If this promise is made, German customers will want to see clear proof of why your company is the best, based on facts, not feelings. Dutch consumers respond better to storytelling, so keep this in mind to be very precise in your communication with German consumers. As a result, Germany experts advise against copying Dutch business plans to the German market, as this generally causes miscommunication.
Leistung schafft Vertrauen … Performance inspires trust!
Expanding to Germany or starting a business in Germany requires intensive preparations, but it is certainly possible to achieve success. Be prepared to be patient and assume that the achievements will be long-term. One way to make your company, products and/or services more attractive to the German market is to set up a gmbH. With this ‘camouflage method,’ you can effectively build a German identity and attract customers and partners.
In addition, your company must comply with German laws and regulations. As mentioned before, these are different than in the Netherlands. As a Dutch company in Germany, your business will be negatively affected if you do not comply with the rules. You will not only run into problems with the German authorities; German consumers and companies will also not trust your company and will not want to do business with you until the distant future. So make sure that the general terms and conditions (Allgemeine Geschäftsbedingungen) are correctly formulated, tailored and legally valid.
Once the first steps have been taken in Germany, the communication to the German market must be formal, detailed and correct. Germany experts recommend avoiding language errors, avoiding conflicts, addressing others by their last name and using precise language. Be tactful, honest, trustworthy and kind. Also make sure that there are German-speaking employees active in your company, as Germans prefer to do business in their language. Understanding the German language and culture prevents projects from missing out due to language problems and intercultural differences.
Communication is key
Approaching customers and partners takes time and effort, but the road to a good deal can be long and tiring if you don’t adhere to the business values and standards. An effective way to build trust and shorten the path to decision-making is to keep meeting reports (Kaufmännische Bestätigungen). The Dutch like to arrange business over the phone, but Germans find it more pleasant to do business by keeping written notices. Has a price been agreed, but one party says €15, and the other says €11? Then it is a matter of looking back at the review reports since the price is written in black and white. With these written summaries, you carefully check the agreements, and immediate (written) action can be taken if people disagree with the content.
In the end, Germans prefer to choose what they already have and prefer to be on the safe side. Ultimately, the boss makes the final decisions, and only these will be accepted and executed. Changes take time and require patience; a Dutchman who prepares properly and accepts this will eventually reap the benefits.
Global Connect Admin is a Dutch company with German influences and customers. We mainly focus on companies that are active internationally. While our managing director is German, he chose the Netherlands as his head office, because of its international nature and attractive corporate culture. While we speak the international language, we also understand national company languages, including Germany. As a Dutch company, if you have questions about the German market or would like assistance with international business as a German company, do not hesitate to contact us. We are happy to help you and your company on the way.