Exporting to Germany
Strong trade partnership
Germany is the UK’s second largest export market for goods and services and second largest trading partner, accounting for more than 10.2 % of all UK trade in 2019 (ONS, 2019). During that period, total trade between the UK and Germany was worth £136 billion.
Digital industry and economy
The digitisation of Germany’s industry and economy will impact on all sectors and enhance opportunities associated with business models, manufacturing processes, digital marketplaces, mobility, cyber threats and supply chains. There is demand in areas of UK strength such as big data, artificial intelligence, cyber security, food and drink, consumer goods and the internet of things.
Strong economic framework
Germany offers competitive tax regulations, investment incentives and a secure, highly developed political and economic framework. This is supported by an excellent infrastructure, a highly qualified workforce and a legal system that protects property and individual rights. Germany also host some of the largest international trade shows, where companies have access to German and international buyers.
Ease of doing business
22nd
out of 190 countries, World Bank 2020
Currency
Euro
Business languages
German
You may need a translator
GDP per capita
$47,662
UK is $41,030 (IMF, 2019)
Economic growth
1.5%
2019, IMF
Time zone
GMT +1
Opportunities for exporters
There are opportunities for UK companies across a broad range of industries. Our trade advisers in Germany have identified particular opportunities for UK businesses in the following sectors:
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Technology
The German economy is characterised by its small and medium sized enterprises (SMEs), which offer many opportunities for UK information technology and expertise.
Investment incentives
Germany offers investment incentives, ranging from cash incentives for the reimbursement of direct investment costs to incentives for labour and research and development.
SME sector
Germany has a very high performing SME sector, called the ‘Mittelstand’. These companies are world leaders in their fields but often need support with the challenges of digitalisation.
Drive to improve efficiency
German manufacturing companies are keen to make their factories more efficient. There are opportunities for UK companies specialising in data and technology to help improve the output of German plants.
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Automotive
Germany is one of Europe’s leading automotive manufacturers and exported $257.3 billion worth of vehicles in 2017. The sector’s importance to German manufacturing means that disruption in the industry represents nothing less than a national challenge. This challenge presents opportunities for UK companies.
Investment in future mobility
German automotive companies are investing heavily in 'future mobility', meeting the transport needs of the future. Volkswagen is investing €30 billion until 2023 with the aim of transforming the business from a manufacturer to a future mobility service provider. Other car makers are doing the same. They need new solutions to achieve this, presenting opportunities for UK companies.
Demand for UK skills
The biggest challenge German automotive companies are facing is the need for new software and engineering talent. The UK's reputation for high-end engineering and software skills is recognised in Germany. Automotive companies are also more open than ever to engaging in partnerships, rather than direct procurement.
Ties with the UK
The ties between the German and UK automotive industries run deep. Leading global players based in Germany have significant existing manufacturing ties to the UK, including VW, BMW, Ford, Daimler AG, Opel and Bosch. The UK automotive industry is close to home for German carmakers and respected for its business practice and innovation.
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Health and life sciences
Germany is at the forefront of healthcare innovation. A sophisticated and demanding market, the opportunity for companies providing innovative products and services is substantial.
Market size
Germany offers one of Europe’s largest markets for healthcare and life sciences products, with health expenditure accounting for 10.3% of GDP in 2018 (German Federal Statistics Office, 2019). High market demand and Germany’s strategic location make it a preferred choice for many international healthcare and life sciences companies preparing to expand.
Health technology
An increasing demand for healthcare services in Germany, combined with widespread digitisation and growing awareness of the importance of health and fitness, are paving the way for digital solutions in healthcare. Germany is also a world leader in medical technology and biotechnology, offering considerable opportunities for UK companies.
Pharmaceuticals
Germany presents significant opportunities in high quality pharmaceutical research, production and distribution. The country can offer unique benefits to UK companies in the pharmaceuticals sector, including direct access to internationally renowned scientists, outstanding research units, and major international markets.
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Food and drink
German imports of UK food and drink were worth £1.5 billion in 2019 (Food & Drink Federation, 2020). There are significant growth opportunities in meat and dairy products, alcohol, confectionery, snacks, vegan, free from and international products produced in the UK.
Growth in the online market
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.
Increasing demand for goods from other countries
The German public is becoming more open to new tastes and flavours. Food and drink imports from the UK remain concentrated at the medium to high end of the market, but interest is growing steadily, enabling the range of products to increase.
Opportunities for specialist sectors
Specialist sectors such as vegan and free from foods are becoming increasingly popular in Germany. As in most European countries, the demand for private label products is increasing too and this is visible throughout the supermarket chains and discounters. As the UK is one of the leading manufacturers in private label products, there is considerable potential in this sector.
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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 into neighbouring countries, Germany is well-located for distribution to Western, Central and Eastern Europe.
Growth due to innovative sales methods
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.
World-leading trade fairs
Germany hosts some of the world’s largest trade fairs across all consumer sectors. Just some examples: streetwear and sustainable fashion at Berlin Fashion Week, living, dining and giving at Ambiente Frankfurt, jewellery and luxury at Inhorgenta Munich, and child and baby at Kind und Jugend Cologne.
High-potential products
Major growth areas in the 2020s are homewares and interiors, personal care and cosmetics, and DIY and gardening.
Doing business in Germany
Preparing to export
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.
Goods exported from the UK to Germany are zero-rated if your customer provides their VAT registration number.
Packaging and labelling
Packaging has a strong influence on German consumers and informs how they choose products. It’s worth doing research to check that your packaging is to German tastes.
EU standards apply to packaging. For more information see the EU trade helpdesk.
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.
Operating in Germany
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:
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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.
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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.
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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. DIT can suggest online marketplaces to help you get started. DIT’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.
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.
Next steps
DIT can advise you on doing business abroad, and help put you in touch with other people who can help such as lawyers and distributors.
