Made in Members: Why trading with Germany ranks so high
Last year, our Annual Member Survey provided clear and concise visibility of the international trade ventures of our members. Made In members currently export to over 120 countries, with the survey highlighting the top 20.
Ranking second on the list of the most popular destinations for members to export their goods was Germany, holding its position just behind France. However, in terms of importing, Germany was top of the list. In a wider sense, Germany also holds second place in the list of the entire UK’s top exporting countries, behind the US. In 2017, exports worth $38.6 billionwent from the UK to Germany, according to the OEC (Observatory of Economic Complexity).
Germany and the UK have a long history of trade, partly due to the similarities between their economies and business practices. Ultimately what this means is that if your product or service is successful here in the UK, then it is likely that you’ll see the same results overseas in Germany. As members of the European Union, they are both bound by the same laws, regulations and product standards. Germany’s regulatory environment is strong and companies looking to open up their trade there should spend some time ensuring they’re aware of everything that is required of them.
As their political and economic structures are highly developed and secure, Germany is relatively low-risk in terms of investment. When you add in their highly qualified workforce, competitive tax regulations, investment incentives, and a wide-spanning legal system which protects property and individual rights, UK manufacturers exporting to Germany often undergo a smooth and fruitful process.
Germany currently ranks 24th out of 190 countries when judged by its ease of doing business, as reviewed by the World Bank in 2019. Also, Germany operates on a similar time zone to the UK, being just an hour ahead, and so doing business with your German partners can take place during your workdays. Something which is set to transform the various industries in Germany, as it is in industries throughout the world, is digitalisation. This primarily concerns manufacturing, involving new eras such as Industry 4.0. It’s also shifting Germany’s ever-booming automotive industry, which has countless significant ties with UK manufacturing.
There are other aspects, such as VAT, packaging of products, and the overall culture of business in Germany which are primary considerations UK manufacturing companies must make before committing to trade in this region. In terms of culture, it is often the case that German companies are family-owned and therefore take a more long term view of a business. This means that firms will usually value the prospect of long term business agreements over getting the best price. UK companies dealing with German businesses often find that they are meticulous, well-prepared for meetings, and put in a lot of research.
Of course, we can’t discuss international trade with Germany without bringing up Brexit. Once again, the Department for International Trade has provided some very useful information on exporting to Germany in the case of a no-deal Brexit– something which is being considered by manufacturers in all sectors across the UK. It may well be of use to Made In members to stay ahead of what might come in the event of a no-deal, by understanding what such an outcome will entail.
To exemplify a practical implementation of all of these considerations, let’s take a look at a
quick case study of some Made in members…
An example of a Made In member’s success in Germany can be seen in OE Electric’s exporting of their innovative products. Working with commercial furniture manufacturers all across the world in over 65 countries and integrating them with their charging products, OE has established sites in Wakefield, Australia and, of course, Germany. Doing so allows them to service their customers no matter where they are located, and having a closer presence means they can provide a more effective and tailored product. Their manufacturing site near Cologne allows them to work closely with their contacts across Germany, France, Poland and Holland.
Far from slowing down their trade in this region, OE Electrics are in the process of launching OE Germany and are pushing their new and innovative products like their QikFit design. They were also awarded the prestigious Queen’s Award for Enterprise this year, and their massive success in Germany is a big contributor to this. Germany has long since been established as a popular export destination, particularly for UK manufacturing companies, and particularly for Made in Members.