INTRODUCTION
Germany’s reputation for its wealthy and prosperous economy may have sparked the idea of expanding your business into this country. In this section, we want to provide you with some – maybe lesser-known – facts about Germany that any entrepreneur should be aware of before embarking on their journey to the German market.
General overview
With more than 350 thousand square kilometers, Germany is one of the largest countries in Europe. Even more importantly, it is the most populous European country (not counting Russia) with a population of over 84 million (2023) and thus the largest workforce in Europe. In 2023, there were more than 41 million employed people living in Germany.
The official language spoken in this country is German, but English is taught to all Germans from primary school and many Germans are also proficient in a third or even fourth language – the most common being French, Russian, Spanish, and Italian. Next to the German capital city Berlin, other major cities include Munich, Hamburg, Cologne, and Frankfurt. An excellent infrastructure is established far beyond these major cities to the smallest corner in the rural areas of this country.
Did you know: Although the misconception persists that Germans have no sense of humor – think Mark Twain’s “A German joke is no laughing matter” – this is not true at all. This false belief may have come to be because Germans prefer a different type of joke than people from other parts of the world. For example, you can make a lot of Germans laugh with sarcasm, satire, or a good pun. So, keep that in mind if you would like to loosen up the atmosphere at a meeting with your German business partner. In fact, we take our humor so seriously that we even established an Institute of Humor in 2005.
Economy
Economic performance
The German economy is the third largest in the world, following only the United States and China. Like everywhere in the world, the German economy was impacted by the corona pandemic, but has largely recovered in the years since – in April 2024, the nominal GDP amounted to 4.730 billion USD.
Unemployment rate
The excellent condition of German economy is also reflected in the country’s unemployment rate. At a current rate of 3.2% (February 2024) Germany records one of the lowest unemployment rates within the European Union. Germany’s youth unemployment rate, which is the lowest within the European Union at 5.8% (February 2024), provides a promising outlook into the future of the German market.
Foreign trade
For 2023, Germany reported exports amounting to 1,562 billion Euros, while at the same time importing goods to the amount of 1,353 billion Euros. This makes Germany the third strongest export nation in the world after China and the USA. Thus, Germany is a perfect location for any manufacturing company looking to export their products to previously untapped countries.
Since Germany’s cars enjoy worldwide fame and popularity, it is not surprising that motor vehicles and motor vehicle parts occupy the top spot among German export goods with a value of 270 billion in 2023. Other examples for Germany’s other most important export goods include machinery, chemical products, data processing equipment, electrical and optical products, pharmaceutical products, electronic equipment, metals, food and feed, rubber and plastic products, and metal products.
In general, the German economy is relatively open, and we also import goods and services from a broad range of categories. Among Germany’s most significant import goods are mineral oil and natural gas, as well as many of the same categories that play a central role in our export trade, such as motor vehicles and their parts, data processing equipment, electronic and optical products, machines, metals, chemical products, electronic equipment, pharmaceutical products, food- and feedstuff, and many more…
Geography and Politics
European Union
Germany lies right in the heart of the European Union and even though classified as a Western European country, Germany constitutes a hub between Eastern and Western European countries. Since Germany shares a direct border with nine other European countries – Denmark, Poland, Checz Republic, Austria, Switzerland, France, Netherlands, Luxembourg, and Belgium – you will reach most of Europe in no time from here. This also makes Germany an excellent location for you to start up business relations with clients and companies from the rest of Europe. Germany’s role in the European Union is naturally significant as it is one of the six founding members, as well as one of the leading economies.
Domestic policy
Germany is a federal, parliamentary democracy, currently governed by the so-called traffic light coalition between three parties – the Social Democratic Party (SPD), The Green Party, and the Liberal Democratic Party (FDP). Overall, there are many different political parties in Germany, but six fractions make it to the Bundestag in almost every government period: the Christian democrats (CDU/CSU), the social democrats (SPD), the liberal democrats (FDP), the Greens, the Left, and in recent years the National Alternative for Germany. Federal elections take place every four years, the next one being in September 2025.
Did you know: With currently 736 members (2024), Germany has the second largest parliament in the world, only surpassed by the 2,977 members of China’s National People’s Congress.
Federal states
When considering an expansion of your business to Germany, it is very important to bear in mind that this country consists of 16 federal states, which do not only differ in landscape and culture, but are each governed by separate state governments with their own rules and regulations. But why exactly is this important for your business? Well, because real estate prices, labor costs and even taxes differ from state to state, and – last but not least – the business environment needs to suit the needs of your company.
For instance, southern states like Bavaria and Baden-Württemberg are traditionally on the more conservative side, both in politics and customs. In the South you will encounter many of the things that are commonly associated with Germany: Weisswurst, Dirndls and the famous Oktoberfest. These states are leading in manufacturing industries such as automotive, machinery and electronics. In northern states like Lower Saxony, Bremen, and Schleswig-Holstein, you will typically encounter very positive and laid-back people. In the North you can also find the port of Hamburg, Europe’s second largest port after Rotterdam, commonly known as “Gateway to the world” since it is Germany’s main foreign trade hub.
When looking at the eastern states that were part of the German Democratic Republic until Germany’s reunification in 1990, such as Mecklenburg-Vorpommern, Saxony, and Thuringia, it is important to note that property prices here are relatively low compared to the country’s average. The East also offers a number of cultural peculiarities which partly stem from the time when this part of Germany was separated from the rest of the country by the iron curtain. In the West, you can find North Rhine-Westphalia, which offers a very diverse culture and is home to the Ruhrgebiet, the heart of the so-called “German economic miracle” in the 1950s and 1960s, when the coal and steel industry saw a massive boom. The region can look back on a long history of migration culture and it is still the strongest industrial region in Europe today.
Did you know: There are between 5,000 and 6,000 different types of beer in Germany and people in different regions can be very particular about which kind of beer they drink. For example, the majority of people in the northern and western regions of Germany will order a Pils with their dinner, but in the southern regions, Lager is most often the beer of choice. There are even pretty serious feuds when it comes to beer from different regions – so be sure to never order a Kölsch when you are in Düsseldorf or an Alt when you are in Cologne!