10 Reasons why you should set up a business in Germany

Thinking of setting up a business in Germany? Here are ten reasons why it’s a great idea!

Are you an entrepreneur considering taking your business abroad? Then, Germany is an ideal destination for your startup endeavors. As the seventh-largest European country, Germany boasts a robust economy, making it a prime location in the region. 

This EU member state presents numerous benefits for self-employed individuals, including a thriving economy, robust intellectual property protection laws, governmental assistance and financial resources for business proprietors, and a multicultural society with over 10 million foreign residents harmoniously coexisting with the native population. 

This article invites you to explore the advantages of establishing your business in Germany:

Strategic Location

Germany’s strategic geographical position in the heart of Europe positions it as a vital center for trade and services. Firstly, it’s easy to reach other European countries quickly. You can ship your products or materials efficiently, saving time and money. Plus, Germany has excellent transportation networks, like top-notch roads and railways, making it simple to move goods around.

Moreover, this central spot means you’re close to diverse markets. You can tap into the vast consumer base of Europe, from the UK to Poland and beyond. This geographical advantage opens up opportunities for growth and expansion.

Germany has notably gained from the European Union’s expansion. Consequently, it is the sole nation among the seven leading industrialized countries to enhance its global trade participation since 1995.

Powerful Economy

Germany also maintains a solid economy that provides businesses and employees with assurance and safety. This makes it an appealing location for job applicants and businesses to establish operations.

Germany boasts one of the world’s most robust economies, with impressive GDP figures and a favorable business environment. Germany is the largest economy in Europe and the fourth-largest globally, with a GDP of around $3.8 trillion. This economic prowess is attributed to several factors that make it an attractive hub for businesses and foreign contracts.

Firstly, Germany is renowned for its strong industrial base, led by automotive, manufacturing, and technology sectors. Companies like Volkswagen, Siemens, and BASF are household names worldwide. This diversified industry base ensures stability and resilience in economic fluctuations.

The ease of doing business in Germany is further highlighted by its skilled workforce and renowned engineering and innovation capabilities. High education, vocational training, and research investment contribute to this advantage. Germany’s low unemployment rate is a testament to its skilled labor force.

Supportive Government

Germany is renowned for its business-friendly and supportive government policies, making it a hub for foreign investment and international contracts. With a robust legal framework, political stability, and a skilled workforce, Germany has consistently ranked high in ease of doing business indices.

One of the key factors contributing to Germany’s business-friendly environment is its low corporate tax rate, which stands at 29.8%, significantly lower than the global average. Moreover, the German government offers various incentives and subsidies to attract foreign investors. For instance, the “Investment Grant Program” provides financial assistance to companies establishing or expanding their operations in Germany.

Germany’s strong commitment to innovation and research is another draw for businesses. The country boasts a high number of patents and is home to several world-class research institutions and universities. This environment has attracted giants like Siemens, Volkswagen, and Bosch, fostering collaboration and innovation.

Open Market

In addition to having the largest GDP, Germany’s population of 83.2 million outnumbers all the other nations in the EU, accounting for 18.6 percent of the total EU population. As a result, Germany has the biggest consumer market in Europe, both in terms of population and spending power. The retail market in Germany was worth EUR 672.9 billion in 2022, and it is predicted to increase at a CAGR of more than 2% between 2022 and 2027. Extending your business’s reach to Germany can give you immediate access to this enormous consumer base, assisting you in growing your company.

Germans are progressively embracing e-commerce, with 91.41% of German people having an internet connection, offering significant potential for e-commerce enterprises looking to increase their customer base. Foreign e-commerce enterprises can increase their impact among German customers by building a German-specific website, as almost half of German e-commerce buyers would need to be more confident shopping from a foreign website in a different language.

Innovative atmosphere

Germany is one of the world’s top ten most inventive and open-minded countries, with an extreme focus on applying knowledge to economic advantage. This concentration has resulted in significant job development and has been a straightforward approach to integrating German scientific research to help society.

The government demonstrates a significant commitment to R&D by sponsoring research institutes, fostering the formation of startup enterprises, and licensing intellectual property to assist scholars in establishing careers outside of academia. The Agency for Breakthrough Inventions is in charge of introducing revolutionary technologies-based inventions. As a result, fresh investors have an enormous opportunity to alter markets by introducing new goods, services, and value chains.

Talented workforce

Germany’s highly educated and talented workforce is critical to the country’s excellent productivity. It has an employee base of over 43 million, making it the largest pool of qualified workers in the European Union.

Its world-class universities and vocational schools are at the heart of Germany’s education system. Universities like Heidelberg, TU Munich, and Humboldt University Berlin consistently rank among the top globally, offering many programs. Germany maintains a high percentage of people with secondary and tertiary education. As reported by EUROSTAT, approximately 87 percent of people aged 25 to 64 have finished at least a high secondary system, and around 28 percent have a postsecondary degree. 

Additionally, Germany’s dual education system seamlessly integrates theoretical knowledge with practical skills, producing well-prepared graduates for the workforce. Apprenticeships and vocational training programs provide hands-on experience, ensuring graduates possess job-ready skills. Over forty percent of the young people have finished a dual vocational education and training (VET) course that combines vocational on-the-job training and primary classroom teaching.

Startup Culture

The thriving startup environment in Spain is another critical aspect of promoting a creative culture. Spain has grown into an appealing location for entrepreneurs and business people because of its friendly business climate, talented workforce, and government assistance.

Spain also hosts large trade shows and events promoting technological development and innovation significance. These conferences bring together professionals and speakers worldwide to exchange ideas and debate the most recent advances in the area. They also let businesses present their latest innovations and goods to a worldwide audience.

Investment opportunities

Germany can be a terrific place to start a new business for anybody who wishes to become an entrepreneur. Small and medium-sized businesses (SMEs), which comprise most of the businesses in Germany, are evidence of this.

No surprise: an increasing number of international corporations opt to set up their headquarters in Germany and capitalize on Germany’s advantageous position to grow their commercial activities there. Germany is the world’s fifth-largest receiver of foreign direct investment (FDI). Today, Germany is home to over 55,000 international enterprises employing over 3 million people.

Quality of life

Germany’s exceptional quality of life directly contributes to its attractiveness for business and foreign contracts. With a strong economy, highly skilled workforce, and excellent infrastructure, it’s no surprise that Germany is a hub for global commerce.

Germany consistently ranks high in global quality of life indices. The country offers a world-class healthcare system, efficient public transportation, and a rich cultural scene. This quality of life extends to the business environment, ensuring a healthy and motivated workforce. The average annual income exceeds $45,000, providing stability for employees and bolstering consumer demand.

Furthermore, Germany’s commitment to education results in a well-educated population, with over 80% of the workforce having completed some form of postsecondary education. The country also invests heavily in research and development, fostering innovation and technological advancement.

Direct Communication 

Germans are renowned for their direct and clear communication style, which dramatically facilitates business practices. This characteristic is deeply ingrained in their culture and reflected in verbal and written interactions. 

One key aspect of German communication is their preference for getting straight to the point. In business meetings or negotiations, Germans prioritize substance over small talk. They believe that concise and direct communication leads to better understanding and decision-making. 

Furthermore, Germans are meticulous about their documentation and follow-up. Contracts and agreements are typically detailed, leaving little room for interpretation. This attention to detail ensures that all parties involved clearly understand their rights and responsibilities, reducing the likelihood of disputes.

A significant factor contributing to the ease of business communication with Germans is their proficiency in English. English is widely taught in German schools, and many Germans are fluent. This linguistic competence fosters international business relations, allowing seamless communication with partners and clients from English-speaking countries.

Final thoughts about Germany

Thank you for reading this article. You can continue to explore our articles about Germany in our Blog or access some other articles about German Education and Housing, how to start a Business and Statistics, Finance and Travel Business. If you need services related to company formations, nominee services, banking or payment processing services, please get in touch, and we will introduce you to our trusted partners.