GERMANY

Understanding

To analyze and understand the economic, social, and cultural climate that impacts business practices in Germany. The following analysis will highlight the opportunities and threats for introducing the client’s product into the German market.

Overview History Demographics Geographical Location Trade Industry Economy Technology Education Labor Force

• Political Structure Legal Structure Religion Culture Business Environment SWOT Analysis

History

1871: German Empire formed 1914 - 1918: World War I 1929: Global Depression 1939 - 1945: World War II 1934 – 1945 : Hitlar’s Rule 1949: Germany divided into East and West regions 1990: Germany joins the EU 2008: Germany officially declares recession 2009 (Aug): Germany comes out of recession

Demographics Population: 80,683,250  Population is equivalent to 1.1% of the total world

population. Ranks number 16 in the list of countries by population. Population growth rate: -0.061% Birth rate: 8.21 births/1,000 population Life expectancy: 79 years Population density: 230 per sq.km = 597 per sq.mi

Geographical Location & Map

Total: 357,022 sq km

Land: 348,672 sq km

Water: 8,350 sq km

Located in central Europe

Bordering countries: Austria, Belgium, Czech Republic, Denmark, France, Luxembourg, Netherlands, Poland, Switzerland

Water: borders the Baltic Sea and the North Sea

Germany is made up of 16 different “states” Baden-Württemberg, Bavaria Berlin Brandenburg Bremen Hamburg Hessen Mecklenburg-Vorpommern Lower Saxony North Rhine-Westphalia Rhineland-Palatinate Saarland Saxony Saxony-Anhalt Schleswig-Holstein Thuringia

Climate: temperate and marine; cool, cloudy, rainfall during summer and winter

Terrain: lowlands in north, uplands in center, Bavarian Alps in south

Natural hazards: flooding Major cities: Berlin, Hamburg, Munich, Cologne

Geographical Location

Trade Exports $1.159 trillion (3rd highest in the world)

Machinery, vehicles, chemicals, metals and manufactures, foodstuffs, textiles

Export Partners: France 10.2%, US 6.7%, Netherlands 6.7%, UK 6.6%, Italy 6.3%, Austria 6%, China 4.5%, Switzerland 4.4%

Imports $966.9 billion (3rd highest in the world) Machinery, vehicles, chemicals, foodstuffs, textiles,

metals Import Partners: Netherlands 12.71%, France 8.3%,

Belgium 7.19%, China 6.89%, Italy 5.88%, UK 4.76%, Austria 4.55%, US 4.25%, Switzerland 4.07%

Trade

Industries One of the world's largest and most

technologically advanced producers of: Iron, steel, coal, cement, chemicals, machinery,

vehicles, machine tools, electronics, food and beverages, shipbuilding, textiles

Industry and construction accounted for 29% of gross domestic product in 2008, and employed 29.7% of the workforce.

Major Companies

Major Companies Volkswagen Allianz Daimler Siemens Metro Deutsche Telekom BMW

Mercedes Benz Audi T-Mobile Nivea Porsche Merck Adidas

Economy Largest national economy in Europe

and 5th largest in the world Currency: Euro established in 1999 GDP: $3.353 trillion GDP (PPP): $2.81 trillion (6th in

the world) GDP per capita: $34,100 GDP growth rate (2009): -4.9% GDP growth rate (2005): 2.5% FDI: 503 billion EUR (2009)

Technology

105 million mobile cellular phone users (8th in the world) 61.973 million internet users (6th in the world) German companies represent 15.6% of research advanced

goods worldwide, ranking 2nd in the world (following US)

The Federal Government provides funding through annual grants or endowment capital In 2010 the Federal Ministry of Economics and

Technology created a budget of 2.3 billion euros for technology research and development

Education and Labor Force 99% literacy rate

among males and females

Approximately 4.4% of GDP invested in education

250 universities, 100 of which focus on applied sciences

95% of universities and higher education are public

School life expectancy: 15 years

Labor force: 43.5 million Labor force by occupation:

Agriculture: 2.4% Industry: 29.7% Services: 67.8%

Unemployment rate: 7.5% (2009) Much higher unemployment rate in Eastern

Germany than Western Germany

Political & Legal Structure Government type: Federal

Republic Chief of state: President

Joachim Gauck Head of government:

Chancellor Angela Merkel

Elections: president is elected for a 5 year term

Legal system: civil law Value added tax: 19% Value added tax for food:

7% Corporate tax: 15% Profit generated in

Germany can be subject to corporate tax, solidarity surcharge, and trade tax

Religion• Religious freedom• Protestant (33%), Roman Catholic (33%), Muslim

(4%), 108,000 members of Jewish communities, and others

Culture Germans have a strong sense of regional pride Reputation for being industrious, thrifty, and

orderly Germans usually express their thoughts and

opinions in a direct way Separation between private and public relations Interest in academic credentials but not personal

life Formal communication and greetings

Business Environment Starting a business in Germany is ranked 88 out of 183 economies

by The World Bank To start a business in Germany:

It will take approximately 15 days 9 different procedures 4.8% of income per capita

German-American business groups: German American Business Association American-German Business Club Germany-USA Career Center

SWOT Analysis

Strengths• Increasing consumer consumption• Efficient and educated work force• Largest European economy

Weaknesses• High tax rates• Slow negotiations• Demanding employees

Opportunities• Location• Tax incentives• Introduction into European market

Threats• Mature market• Competition

Indian Companies entering German markets. Tech Mahindra Expands its Presence in

Germany – inaugurates its near shore delivery centre in Düsseldorf, Germany.

Hyderabad-based Rain Commodities acquired Rütgers Group, German’s leading manufacturer of chemical raw materials made from coal tar.

Acquisition of REpower by Suzlon Energy Limited, is a wind turbine supplier based in Pune.