Choosing the Right International Market: Germany

For businesses looking to expand internationally, choosing the right international market involves numerous strategic, logistical and operational considerations. The industry, target audience, business goals, regulations, culture, and logistics are some important factors to contemplate over which market is the right fit.

For firms deciding on stepping foot into Europe, one viable country to consider would be Germany. The highly skilled labour force combined with world-leading innovation and productivity makes Germany an alluring country for overseas expansion.

The 4th largest economy in the world

Germany’s economic policies are based on the principles of a social market economy. This is where rules-based regulations enable the economic benefits of the free capitalistic market while societal benefits translate into high employment rates and high market capital participation.

A world leader in the area of green technology, transportation infrastructure and automobile manufacturing, Germany is a global leader in innovation. The core strengths of the German economy lies in manufacturing and exports where it is one of the largest exporters internationally.

Positive economic outlook

In the international market, general prices have seen an increase due to the sudden rise in energy commodity prices. Germany is no exception with cost increases due to delivery and transport bottlenecks which are predicted to be passed on to consumers. In addition, there is widening profit margins in the face of strong demand and low supply. 

While growth upswings are slightly delayed, economic growth is forecasted to be slightly above 4% and 3% in 2022 and 2023 respectively. In comparison, 2021 saw a 2.7% growth and 2020 saw a decline of -4.6%, signalling a strong rebound from the global pandemic.

The average inflation rate for 2022 is forecasted to be at 3.6% and 2.2% in 2023 and 2024. The increased purchasing power from reduced inflation also means that businesses will potentially drive more sales which translates into higher profits.

An English speaking population

Out of 100 non-native English speaking countries, Germany has been ranked 10th place by the English Proficiency Index. In terms of English language skills, Germany is rated 63.77 (very high), and this is higher than the European average at 56.71.

The German population’s proficiency in English allows smooth communication, minimising the language barrier for international businesses seeking to enter the market.

Europe’s largest consumer market

The largest consumer market in Europe, Germany’s GDP of over USD 3.8 trillion certainly makes Germany an attractive market for potential entrants. A larger market size also means that businesses will be able to reach more consumers, resulting in higher sales.

A gateway into Europe

For businesses thinking about entering Europe, Germany is an appealing place to start. Its developed infrastructure that spans across interconnected airports, roads, railways and ports allow greater interconnectivity for labour as well as goods. Located in the centre of Europe, expanding into other European countries from Germany would be smoother given this logistical interconnectivity.

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