With more than 3.6 million registered businesses, the company landscape of Germany can be overwhelming at first sight. But among these are worldwide famous companies, hidden champions and maybe your next collaboration partner.
In the following, we want to help guide you through Germany’s corporate ecosystem, specific business and cultural characteristics. In addition, we invite you to do a deep dive with us into the unique phenomenon of “German Mittelstand”.
To do that, we will split the content in two main parts:
General information about the German economy
A deep dive into the unique “German Mittelstand”
Important German industry sectors
Annual Turnover by Industry (Data as of 2020, Source)
€ 426 bn
€ 226 bn
€ 196 bn
€ 192 bn
€ 179 bn
Food and Beverage
The German company culture
The German corporate landscape is composed of family offices and companies with a lot of history and tradition. Often, they are still managed by the owner or the founder. Not only can this management style be recognised in the way these companies work or interact with other market participants, but this mind-set is also expected when collaborating.
Although the German Mittelstand is adapting more and more new work principles, such as agility, you should be aware of the following cornerstones of German business etiquette.
Punctuality is key – Always be on time and stick to the plan.
Look in the mirror – If you want to collaborate with a member of the German Mittelstand you have to convince other entrepreneurs, not necessarily accountants or controllers. So tell them what you would want to hear.
Have a plan – schedule meetings in advance and try to avoid sending emails at the last minute.
Clean the desk – Resolve concerns or problems immediately. Be straight, direct and honest in order to secure a viable partnership.
Know the market – Prepare yourself with facts and figures regarding the market, the industry or competitors.
Do your research – Gather as much information about who you are going to meet as possible.
Language barrier – Germans prefer to collaborate with a German competitor to avoid misunderstandings, even if they speak English or French fluently. Having someone on your team who speaks German helps.
This diagram shows the distribution of different-sized German companies in combination with the annual turnover for each. While the purple bars represent the general share of the respective company sizes within the German ecosystem, the black bars show the annual turnover.
Data as of 2019, Source
It is Interesting to see that only 0.6 % of the German companies (the biggest companies) contribute almost 70 % of the overall German annual turnover. This share includes first and foremost the aforementioned industry sectors.
But what you can also read in this diagram is that you will most probably find possible partners for cooperation within the “German Mittelstand,” composed of small and medium sized German companies and extracted to the right side of the diagram. Therefore, we want to focus now on this unique sub-ecosystem.
The so called “German Mittelstand”
The German Mittelstand represents the backbone of the German economy. It is composed of several types of companies with different sizes, including small companies, family offices and medium sized companies (collectively called “small and medium-sized enterprises” or SMEs). There are various definitions of the German Mittelstand; that which is given below by the “Institut für Mittelstandsforschung Bonn” gives you a feeling about the relevant indicators.
Mittelstand enterprises are defined by the unity of ownership and management.
In a Mittelstand enterprise…
- up to two natural persons or their family members hold (directly or indirectly) at least 50 % of the shares of the company
- these natural persons belong to the management
The German Mittelstand in numbers
99.4 % or 3.5 million
of companies in Germany can be categorised as “German Mittelstand”
of the “German Mittelstand” are still family-owned
of the German net value added is created by SMEs
of German exporters are SMEs
The “German Mittelstand” is a unique phenomenon in the world. Proximity to customers contributes to the fact that new products and services can be developed immediately after demand occurs. Furthermore, the fact that almost every company is still family-owned brings with it an intrinsic entrepreneurial motivation and a certain work attitude which will be highlighted below.
Why would you collaborate with someone from the German Mittelstand?
Due to various reasons, such as less media presence and lower visibility in top locations, companies from the German Mittelstand are often missed by start-ups that are looking for collaboration. However, there are several reasons why it is worthwhile seeking collaboration with them, as the following list shows:
Some are world-leaders in their specific field
Most have an excellent and strong R&D Department
They have close connections to large supplier and partner networks
They are close to the customers and understand their problems
They are also interested in fast decisions
Examples of German Mittelstand companies
Almost every camper in Europe knows Truma, who manufacture heaters and air conditions for caravans and motor homes. In 70 years, Truma has become a successful international company that is still family-owned.
Over the last decade, Siegenia has developed a wide ranging product portfolio for modern window systems, door systems and comfort systems.
Tyczka Energy is one of Germany's leading specialists in the field of liquid gas. The company was founded 95 years ago and has been growing steadily ever since. They employ about 350 people throughout Germany.