RESEARCH: GERMANY

RESEARCH: GERMANY
Robert Smith
Grand Rapids Community College

RESEARCH: GERMANY

Introduction
Germany is a very different place to do business than the United States. Between the
direct roles the German government plays in supporting and helping to manage
technological innovation and work force education, and the national embracing of
immigration and cultural diversity American business can find it challenging to adapt to
doing business in Germany. But, it is a challenge with a great potential for payoff.
Technology
Germans specifically seek industrial innovation, rather than it being a side effect of
defense research, as it often is in the United States. The German government provides an
innovation infrastructure for its industries through funding, guidance, and regulations
geared toward the goal of refinement and improvement in those industrial areas in which
Germany already excels. Their focus is on doing things better, rather than first, and it is
working for them as for years Germany has been quietly outperforming both the U.S. and
Japan by many economic measures. Germany excels at innovating traditional industries
such as chemical, steel construction, and mechanical engineering. In following with
Germanys better-not-first philosophy, their core industries make up roughly eighty
percent of the countrys industrial research and development spending. This is backed by
an extensive network of institutions and incentives which supports the application of new
technologies to existing manufacturing processes. In fact, Germany outspends both the
United States and Japan on non-defense research and development. Government works
closely with industry associations to build and maintain their innovation infrastructure.
Associations of large companies help promote a good regulatory atmosphere for research
and development while associations for smaller firms pool information for each to draw
on. (Burton, 1993)
Education
Germany places a high value on work force education. Industry associations work with
labor representatives to administer training and apprenticeship programs. Chambers of
commerce and industry membership are required by law for business, trade union
membership is a protected right for workers, and government consults with both in
developing vocational training and apprenticeship curricula that suits the needs of the
industry. The federal government also pays half for training centers operated by chambers
of commerce and industry. (Burton, 1993)
Government
Government funding priorities support research and development. German ministries are
required by law to consult with industry associations and trade unions on relevant
legislation. Most importantly for U.S. firms; while there is some attitude-based resistance
on the part of German firms, there are no legal barriers to foreign firms joining German
trade associations. (Burton, 1993)

RESEARCH: GERMANY

Culture
American business people need to be aware of cultural differences in dealing with
Germans. Germans tend to be very literal and direct and they take things at face value.
The American practice of leading with a compliment before a criticism is very confusing
to Germans. They also can come across as arrogant, as they hate making mistakes and
hate admitting to them even more. American business people should also be aware that
Germans are wary of taking risks. Few will invest in equities, preferring low risk, and
low interest stocks. As such, the German Stock Exchange barely exists. They do not like
upsetting the peace, making the resolution of labor disputes peaceful, and wildcat strikes
are outlawed. (Flamini, 1997)
Fair Working Conditions and Equal Pay
Equal pay and equal treatment are practically the law of the land in Germany, largely as a
result of constitutionally protected trade union membership. (Germany: Risk ratings,
2006) There are also actual laws, such as Affirmative Action laws, which protect women
and disabled persons in the workplace. These laws are more stringent than European
Union provisions require. But, violations do not usually reach the courts, as trade unions
are empowered under law to take action against discriminatory practices. (Germany:
Equal treatment bill to provide broad protection against discrimination, 2006)
Harassment
Harassment laws work differently in Germany. Unlike in the United States there is very
little judicial legislation. Harassment and sexual harassment complaints are handled by
the trade unions and work councils rather than the court system. (Quinn, 2007)
Transparency
In regards to governmental transparency, Germany is far behind its neighbors in the
European Union. In the modern day as well as historically, German bureaucracy seems
culturally wedded to official secrecy. Even legislation for Freedom of Information laws
are loaded down with many exceptions. Critics of the legislation complain that the
exceptions are also very vague, suggesting that they can be employed to guard
information far beyond the stated spirit of the law. (Europe: Stained glass, german
political transparency, 2005)
Immigration and Diversity
Recent legislation has made Germany very welcoming to immigration. The German
population has been in decline for many years due to low birth rates. This, combined with
longer lifespans has created a large aging population that the dwindling workforce would
eventually become unable to support without an influx of working-age immigrants.
Therefore, new immigration laws were passed to normalize the process of becoming an

RESEARCH: GERMANY

immigrant to Germany as well as the status of being one. Unlike in the United States,
immigration is now highly encouraged in Germany. For practical purposes, preference is
given to highly skilled workers. (Martin, 2001) Germany has become a country of
immigrants. Nine percent of the population holds a foreign passport and nearly twenty
percent have migrant backgrounds. The larger cities in particular have become cultural
melting pots. Not only does the city of Frankfurt have a population which is forty percent
with migrant background, but one in seven of its businesses have foreign roots as well.
The rich and diverse migrant culture plays a major role in both the countrys
achievements and improved image on the world stage. (www.make-it-in-germany.com,
2015) And the immigrant population is continuing to grow. Due to the crisis in Syria,
hundreds of thousands of refugees are currently marching on Europe, with Germany
expecting to receive one million of them this year. Unlike most of the rest of the world
Germany is embracing the population influx. Granted, the politicians are currently
overwhelmed by the thought of so many migrants settling in their country, but the
population at large is mostly welcoming, as they see the long term advantages for their
economy. With German birth rates in steady decline, the workforce has largely shrunk
over the years, and the addition of the refugees to the labor pool can help keep Germanys
pension system solvent well beyond 2030. It is basically win-win; Germanys low
unemployment equals job opportunities for the refugees, and the influx of young,
motivated workers are a gift to the business community. All of this leads to Germany
transforming into a culturally diverse country. And yet, according to Naika Foroutan, a
top integration researcher and member of the board of directors for the Council for
Migration; Germany will still be Germany. In effect, the new German we is the unity of
differences. (Hornig, 2015)
Summary
Germany can be a great place to expand an American business. German laws and culture
are very inviting to both immigration and foreign investment. Immigration policy and
investment in education and vocational training practically guarantee a skilled workforce;
and the current migrant crisis, while of great concern to most other countries, also helps
to ensure a large and rich workforce. The ability to join German industry associations
further enables access to the innovation infrastructure. For non-defense research and
development, Germany is the place to be. Industry association membership also provides
direct, and legal, access to the ministries as they craft business relevant legislation, which
puts a high funding priority on supporting industry research and development. While
trade union membership is much higher, and constitutionally protected, in Germany
compared to the United States; negotiations between industry associations and the trade
unions tend to be much more civil, as Germans culturally prefer peaceful resolutions.
While Germany does have rigid market regulations and very stringent Affirmative Action
and anti-discrimination and harassment laws, this is mitigated by the fact that the trade
unions handle most of the grievances in these areas, rarely turning to the courts. Although
transparency in German government is in short supply, this too is mitigated through
industry association membership. As long as American business people can navigate the
cultural, regulatory, and political differences between the United States and Germany;

RESEARCH: GERMANY
they will surely find great value in expanding their business into Germany over the other
member countries of the European Union.

RESEARCH: GERMANY

Works Cited
(2015). Retrieved from www.make-it-in-germany.com.
Burton, D. &. (1993). German technology policy: Incentive for industrial innovation.
Challenge, pp. 36, 37.
Europe: Stained glass, german political transparency. (2005, January 15). The Economist,
pp. 37-48.
Flamini, R. (1997). Passport Germany: Your pocket guide to German business, customs
& etiquette. World Trade Press.
Germany: Equal treatment bill to provide broad protection against discrimination. (2006,
May 5). US Fed News Service.
Germany: Risk ratings. (2006). Country Monitor, p. 14.
Hornig, F. P. (2015, Oct. 14). Spiegal Online International. Retrieved from
www.spiegal.de.
Martin, T. (2001). Germany's new immigration plan. Europe, p. 111.
Quinn, B. (2007). The politics of sexual harassment. Contemporary Sociology, 272-273.