Germany is consistently among Wisconsin’s top export destinations, and was #5 in 2019. This healthy volume of trade reflects a history of German immigration in Wisconsin; mutual strength in manufacturing; and shared emphasis on quality, productivity and a strong work ethic. In all, Wisconsin exported $761 million worth of goods and services to Germany in 2019. The potential exists to increase Wisconsin companies’ sales to German customers even further, and in September 2020, the Wisconsin Economic Development Corporation (WEDC) will be leading a global trade venture to Germany to help Wisconsin exporters find customers in the market.
Germany is the fourth-largest economy in the world and accounts for more than one-fifth of the European Union’s GDP. This economic powerhouse imports more than $1 trillion worth of products each year, $58 billion of this from the U.S. It has a GDP of $4 trillion and logged its 10th consecutive year of GDP growth in 2019. Germany’s path to prosperity over the past decade has focused on developing new technologies, driving innovation and leveraging a highly skilled workforce that demands higher wage rates.
Leading categories for Wisconsin exports to Germany in 2019 included industrial machinery (21%), medical and scientific instruments (16%), miscellaneous chemical products (10%), aircraft and aviation equipment (6%) and electrical machinery (6%).
Because the economies of Wisconsin and Germany overlap to such a high degree, Wisconsin companies will often find their strongest competitors in Germany, but they will also find business partners that easily integrate with Wisconsin companies’ offerings. There is also strong demand in the German market for parts and components going into larger systems.
Advanced manufacturing and the Internet of Things—or Industry 4.0—is one of the most dynamic sectors of the German economy. Major subcategories include robotics and automation, additive manufacturing and advanced materials, precision machine tools, and sensors and instruments.
“Smart cities” technologies that reduce pollution, energy usage and traffic congestion are in demand in Germany. The Water Council, based in Milwaukee, has developed a strong relationship with its German counterpart, the German Water Partnership, and has established the groundwork for cooperative business relationships related to water filtration, usage and reclamation.
With a population of 82 million, Germany is the largest consumer market in the EU, making it a good market for processed foods; food processing and packaging machinery; and health care products. The U.S. is also a major supplier or aerospace and defense- or security-related products to Germany, and that market remains strong.
Germany’s economy is highly regionalized, with each area having sectors of specialization. Companies wishing to do business in Germany should familiarize themselves with these regional differences so they can identify the best area for their company to make business connections.
Spanning Sept. 19-26, 2020, the global trade venture to Germany will travel to four distinct German regions—Nordrhein-Westfalen, Ostwestfalen-Lippe, Niedersachsen and Sachsen-Anhalt—each of which holds strategic importance for Wisconsin companies.
The Nordrhein-Westfalen region, located in the western part of the country, is the most populous state in Germany, and is home to four of Germany’s 10 largest cities: Köln, Düsseldorf, Dortmund and Essen. This region is a particular hub for industrial machinery manufacturing as well as agriculture and food processing.
In the Ostwestfalen-Lippe region of Nordrhein-Westfalen (one of the strongest locations for manufacturing in Europe), a “cooperation conference” supported by the local technology cluster will bring Wisconsin companies together with their German counterparts to discuss potential business relationships and synergies. This particular cluster is the largest of its kind in Germany, and is focused on bringing together businesses with research institutions and organizations to work on topics such as digitization of work environments, automated factories and artificial intelligence.
The group will next travel to Niedersachsen, another top German industrial state and the location of Hannover Messe, the world’s largest trade show for industrial technology. The annual trade show attracts more than 200,000 visitors, and although it will not be taking place during WEDC’s global trade venture, participating companies can still benefit from the area’s concentration of advanced manufacturing companies and knowledge—part of the reason for the trade show’s success. The Niedersachsen portion of the program includes an event at the Deutsche Messe Tech Academy that will showcase trends in Industry 4.0 and examples of business practices. (Nordrhein-Westfalen and Niedersachsen together represent close to one-third of the entire country’s GDP.)
The group will then continue on to the former East German state of Sachsen-Anhalt. Although the state economy is not as advanced as the western part of Germany, this state is an important source of parts and components for manufacturing. The delegation will conclude the trade mission in Berlin.
In Germany, it is common for a world-class manufacturing firm to have its headquarters and main production facility in the same village where the owner’s great-grandfather founded the business 150 years ago. Unlike other markets, where you can simply visit the largest city and find all large companies’ headquarters there, Germany has companies’ head offices scattered throughout the country—often in small towns—and WEDC’s global trade venture will help you gain access.
Germany can be a very demanding market, but if a Wisconsin company can succeed there, they can compete on a global level. German customers are very quality-conscious and want proof that a product lives up to the manufacturer’s claims.
A Wisconsin company looking to export to Germany should have an understanding of the export process and should already have its products CE-certified. Since so many competitors for Wisconsin firms can be found in Germany, Wisconsin exporters must have or develop a strong value proposition with distinct market differentiators.
In addition to having your appointments arranged for you and potential business partners identified, each participant in the global trade venture will also receive a Germany market assessment specific to your company, detailing considerations to keep in mind when introducing your product or service into the market. WEDC has eyes and ears on the ground in Germany, in the form of Wisconsin’s authorized trade representative—thus making it easier for Wisconsin companies to find partners they can trust, and taking some of the guesswork out of launching in a new market. With all your appointments arranged for you, you can focus on business rather than logistics and scheduling.
Learn about exporting to Germany from WEDC’s trade representative
Paul Smerda, a staff member of the office that represents Wisconsin’s trade interests in Europe, discusses opportunities for Wisconsin businesses looking to expand their businesses to the German market.