As the 4th most innovative economy in the world and largest market in Europe, Germany is an attractive destination for global and regional investors, and its strategic location makes a good springboard for international businesses looking to enter the European market.

In the Global Innovation Index 2021 of the World Property Organization, Germany takes the top spot in patent registrations, reinforcing its reputation as a highly innovative economy.

How did Germany become the economic power it is today? 

Also known as Rhine Capitalism, the social market economy combines the benefits of social policies along with free-market capitalism. This is regulated to ensure a balance between fair market competition and social welfare.

Social market economy principles that form the pillars of Germany’s economic policies have proven to work, resulting in technological advancement and economic prosperity.

What are the advantages of a social market economy?

Since this model combines the best of both the free market and social welfare, social and economic benefits can be observed. For instance, free-market capitalism enables benefits such as economic freedom and technological advancement, while the social aspect looks at ensuring quality livelihood for Germans resulting in a high employment rate.

Startups, in particular, are playing a prominent role in creating a large number of sustainable jobs to drive competitiveness and innovation in Germany’s social market economy.

Economic forecast for Germany in 2022

Germany’s economy is slated to grow at 4% in 2022, an increase from 2021’s growth rate of 2.5%. The positive outlook means that now would be a good period for firms planning to enter the German market given the bullish forecasts.

How easy is it to do business in Germany? 

In terms of ease of doing business, the world bank ranks Germany 22nd out of 190 countries. This means that it’s relatively easy to do business in Germany. Germany also comes in the 4th and 13th place respectively in resolving insolvency and enforcing contracts respectively.

In terms of dealing with construction permits, Germany is ranked 30th place and 5th in terms of getting electricity.

Low Corporate Tax Rates

On a global scale, Germany has a relatively low corporate tax rate at 15.285%, including the solidarity surcharge, making it an attractive destination for business expansion.

An English speaking population

This is a paramount factor for foreign businesses looking to enter the German market, as language barriers are often an intimidating factor. This obstacle is absent in Germany, as the country ranks high when it comes to fluency in English.

World-class infrastructure 

Germany has well-connected logistics networks with excellent roads and airports alongside Europe’s 3rd largest container port in Hamburg. Germany’s infrastructure makes the country an excellent investment destination.

A highly skilled workforce

Germany is known to be at the forefront of technology, quality and productivity, and its workforce is no exception. Expanding in Germany allows businesses to gain access to a pool of highly skilled workers that could have been previously unavailable.

Are you considering Germany for business expansion? 

Look no further. Our market exploration program will assist you in assessing opportunities, networking, product localisation and more for a smooth business expansion.

Click here for more insights into the German market.

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