Doing Business In Germany
1. What is the current business climate in your jurisdiction including major political, economic and/or legal activities on the horizon in your country that could have a big impact on businesses?
Germany's status as a pivotal player in the global economic arena remains unchallenged. It stands as a beacon for sustainability and business viability on the world stage. As the gateway to the European market, Germany boasts unparalleled infrastructure and a workforce recognized for its qualifications and diligence. The country's robust economic framework and legal system ensure stability, making it an attractive destination for significant international investments.
Recent shifts in the global tech landscape further underline Germany's appeal. Notably, the decision by TSMC, the world's leading chip manufacturer from Taiwan, to channel a EUR ten billion investment into a new facility in Dresden signifies international confidence in Germany's tech industry. Similarly, Intel's commitment of around EUR 30 billion toward a state-of-the-art factory in Magdeburg reflects Germany's rising stature as a hub for advanced manufacturing and technology.
However, prospective investors should be attuned to evolving political and economic scenarios. The country is navigating transitions in energy policy, aiming for a greener footprint, which may affect industries reliant on traditional energy sources. Legal reforms, especially in the digital and tech sectors, are also on the horizon, aiming to adapt to the rapid technological changes. These reforms also increase the regulatory requirements on tech products, such as machinery (with the new Machinery Regulation) and batteries (with the new Battery Regulation).
In summary, while Germany presents immense opportunities, staying abreast of its dynamic political, economic, and legal landscapes is crucial for businesses seeking long-term success in the region.
2. From what countries do you see the most inbound investment? What about outbound?
Germany is experiencing a robust flow of inbound and outbound investment. From an inbound perspective, the US remains a major investor, attracted by Germany's technological innovation and manufacturing strength. At the same time, China sees Germany as a strategic partner in Europe, focusing on sectors such as automobiles, machinery, and electronics, which is reflected in its substantial investments. In terms of outbound investment, Germany's global reach means that it focuses on both emerging markets and established economies. While the United States and China remain primary targets due to their sheer market size and potential, other regions such as Southeast Asia and parts of Africa are also attracting German interest.
3. In what industries/sectors are you seeing the most opportunity for foreign investment?
Germany, with its reputation for engineering and innovation, offers countless opportunities for foreign investment. The automotive sector stands out. As the birthplace of the automobile, Germany is now leading the transition to electric and autonomous vehicles. This development opens up opportunities for investment in electric vehicle infrastructure, battery technologies, and software development for autonomous driving. Beyond the automotive sector, the renewable energy sector is on the rise, driven by Germany's commitment to sustainability. In addition, the biotechnology and pharmaceutical sectors are thriving, fueled by advanced research facilities and a robust healthcare system. Furthermore, Artificial Intelligence (AI), which encompasses automation and data exchange, offers significant investment potential.
4. What advantages and pitfalls should others know about doing business in your country?
Advantages:
- Stable economy: Germany has the largest economy in Europe and the fourth largest in the world, providing a solid foundation for businesses.
- Strategic location: Located in the heart of Europe, Germany offers access to a huge consumer market and acts as a gateway to both Western and Eastern Europe.
- Skilled workforce: Germany's vocational education system ensures a steady supply of highly skilled workers, particularly in the engineering and manufacturing sectors.
- Innovative drive: With a strong emphasis on research and development (R&D) many global innovations originate in Germany, making it a hub for technology and manufacturing innovation.
- Supporting infrastructure: From world-class airports to an extensive telecommunications network, Germany's infrastructure facilitates efficient business operations.
Pitfalls:
- Regulatory environment: Germany's bureaucratic system can be complex and time-consuming. Compliance, especially for new businesses, can be a challenge.
- Labor Laws: While the workforce is skilled, labor laws can be rigid, making it difficult to adjust staffing levels quickly.
- Cultural differences: German business culture values punctuality, directness, and formality. Misunderstanding these nuances can lead to lost opportunities.
- Tax system: Although there are incentives for businesses, the tax system can be complicated and requires expert advice.
- Language barrier: While many Germans speak English, especially in business contexts, it's beneficial to have a working knowledge of German, especially when dealing with local authorities or smaller businesses.
5. What is one cultural fact or custom about your country that others should know when doing business there?
In the German business world, two cultural customs are paramount: direct communication and punctuality. Germans value straightforward exchanges, emphasizing facts and clarity over ambiguity or prolonged pleasantries. This focus on directness reflects efficiency and respect for time and is not perceived as abruptness. At the same time, punctuality is revered, signaling professionalism and consideration for others. Late arrivals, especially unannounced, risk damaging business relationships. Adhering to these norms—valuing punctuality and embracing clear communication—not only ensures productive interactions but also fosters trust and cooperation in the German professional world.
Our Firm
1. What distinguishes your firm from others in your market?
Taylor Wessing is a leading German law firm with global reach, focusing on technology-intensive and innovative industries. We have positioned ourselves at the intersection of law and technology, ensuring that our services are both cutting-edge and industry-specific. With a deep understanding of the technology landscape, we are uniquely equipped to address the nuanced challenges our clients face. Our other core sectors—private wealth; real estate, infrastructure and energy; life sciences & healthcare—complement our expertise. Our commitment goes beyond legal advice; we embrace digital innovation in our own operations, driving efficiencies and encouraging proactive problem-solving. And in a world where environmental, social, and governance (ESG) factors are increasingly important, we pride ourselves on leading by example. Our focus on sustainability and social responsibility is not just a service offering, it's a core tenet of our corporate ethos.
2. What are three words that describe the culture of your firm?
Challenge. Expectation. Together.
3. How does your firm participate in Corporate Social Responsibility (CSR) and/or Environmental, Social and Governance (ESG) initiatives?
“Responsible Business” is our clear goal and that is also the name of our corporate strategy. The aim of our Responsible Business strategy is to build and implement a good sustainability commitment so that our activities have real impact and can be communicated clearly externally and internally. We are supported in the implementation of this strategy by our Responsible Business Manager. A major focus is on the topic of diversity and the environment. In 2023, we set out to review and improve our environmental impact. Besides sustainable mobility campaigns in all Taylor Wessing offices in 2023, the Hamburg office deals with a comprehensive set of environmental issues. We are part of the ÖKOPROFIT Hamburg program—a program for corporate environmental management. Over the course of a year, we take part in workshops on energy, waste, emissions, and mobility, receive on-site advice on how we can make the site more sustainable, and will undergo certification at the end.
So far, the program has been so successful with the Hamburg site that we will also participate in the ÖKOPROFIT program with our Düsseldorf office in the winter of 2023.
4. Are there any new and exciting initiatives, practice areas or industry focuses in your firm?
New initiatives at Taylor Wessing emphasize ESG. We have established an ESG group, providing an interdisciplinary and cross-jurisdictional advisory approach in order to help companies, executives, boards of directors, and supervisory boards worldwide to develop and put into place an ESG strategy that meets international gold standards. Building on the success of our Digital Academy 2022, we launched the "ESG Academy 2023," attracting 2,000 participants and addressing key sustainability topics like Lieferkettengesetz, Corporate Social Reporting Directive, and Green Buildings.
Legal Podcast: Keeping our clients informed on the go, our in-house podcast productions delve deep into pressing legal topics. These sessions demystify global judgments, legal developments, and their potential ramifications, offering practical advice to navigate complex legal challenges.
Tech&Law TV: Bridging technology, business, politics, and law, our Tech&Law TV is a live discussion platform. Each episode, spanning approximately 30 minutes, hosts two guests discussing a singular topic, weaving together theory and practice, the abstract with the tangible, and today's realities with tomorrow's possibilities.
Authors
Dr. Rebekka Krause, Dr. Benedikt Rohrßen, and Niklas Heldt
