Insights from the ITU Webinar "Entering the German Market"

On February 6, the ITU Webinar “Entering the German Market” took place, organised by the IT Ukraine Association in partnership with RS Engineering & Management GmbH. The speaker was Robert Schuppenhauer, Master of Science in Business Engineering. 

 

Punctuality plays a significant role in German business culture and respect for others’ time is crucial for building trust. German consumers prioritise quality over price, especially in areas like durability and reliability in manufacturing, technology and luxury goods.

 

The German market differs from that of German-speaking countries: Germany has a population of 85 million, while the DACH region (Germany, Austria, Switzerland) has 95 million. The market is highly segmented, with significant cultural, economic, and behavioral differences between Germany, Austria and Switzerland, as well as within different regions of Germany. Purchasing power varies greatly: in Switzerland, income is twice as high as in Germany. Also, major German cities (Munich, Hamburg, Frankfurt) have considerably higher income levels compared to rural areas.

 

Germany, being part of the European Union’s single market, is enjoying benefits from free trade and harmonised regulations. The GDP growth forecast for Germany is 0.7% in 2025, and 1.3% in 2026. Expected inflation is 2.1% in 2025. Unemployment will remain low at 3.3%. The population is aging, with over 50% of people in Germany being over 40 years old, which increases demand for healthcare, products for the elderly and age-adapted technologies (such as larger fonts, easy-to-use technologies).

 

The IT sector in Germany is highly competitive, with noticeable regional differences. Large companies strictly adhere to data protection regulations (GDPR), while smaller businesses are often more price-sensitive. Participation in trade fairs and industry events (such as Hannover Messe for industrial production, BAUMA for construction machinery) is key for lead generation.

 

The German market is highly structured, competitive, and trust-based. Success requires understanding local culture, adhering to regulatory requirements, forming partnerships and implementing pricing strategies. These should include pricing transparency, as German customers expect clear price formulae with no hidden fees and strategic discounts that might undermine the perception of quality.

 

The cost of registering a company depends on the legal structure: a UG (similar to the British Ltd.) costs €500, while a GmbH requires €25,000 in initial capital. Adapting to local payment methods is essential – SEPA bank transfers, PayPal, Apple Pay and Google Pay are widely used in Germany. Many German companies use ERP SAP systems, so integration with SAP provides a competitive advantage.

 

Sales and distribution strategies: 

• Direct sales work well in B2B industries such as manufacturing, IT and engineering but require time and effort to build trust; 
• Distributors and resellers help penetrate the market through established customer connections; 
• eCommerce is well-developed in Germany, especially in consumer goods and technology sectors.

 

IT outsourcing market entry strategies: 

• Ukrainian IT companies should focus on building partnerships in Germany, as trust is a key factor in B2B sales; 
• Although LinkedIn can help establish connections, most sales occur through direct trust-based relationships; 
• Cold outreach rarely works on the German market (for IT outsourcing, that is, since finding local partners in Germany is more effective than relying on cold outreach or advertising).

 

Pitfalls when entering the market:

• Compliance with GDPR — neglecting data protection laws can lead to severe penalties (for example, Google was fined €50 million); 
• Failure to localise — Slack succeeded by adapting its interface and customer service, while Walmart failed due to poor cultural adaptation; 

• Lack of local partnerships — Salesforce built a partner network in Germany, while companies without local support face challenges in gaining trust.

 

 

RS Engineering & Management GmbH is a small consultancy firm based in Karlsruhe, specialising in engineering and management services for construction, infrastructure and manufacturing.