As the slump hits home in Ireland, Germany is proving to be an attractive option for firms seeking opportunities

AS THE recession bites, Irish companies are rediscovering the lustre of Frankfurt’s skyscraper skyline.

Enterprise Ireland is reporting a huge upswing in interest in doing business with Europe’s largest economy, a decade after it fell out of fashion. Germany is an underrated and misunderstood market for many Irish companies, but those who have established themselves here are glad they did.

“It’s done us nothing but good dealing with Germany,” says Caroline Kelly, marketing and sales manager of Burnside Autocyl, a hydraulic cylinder manufacturer based in Co Carlow. “The bills are paid on time and the Germans are ethical, honourable, consistent, honest: if only I could say that about every market we deal with.”

Irish interest in the German market hit a low during the recession there at the start of the decade, which coincided with the peak of the Irish boom.

When Irish salaries surpassed German salaries during these years, it only reinforced the view that, after years as the wealthy powerhouse of Europe, Germany’s manufacturing- and engineering-heavy economy had had its day.

But the current slump has resulted in another role reversal: while the Irish economy is in meltdown, the German economy is suffering in a contained way.

Although some sectors are in freefall, and others are treading water, some sectors are holding up well and, unlike Ireland, Germany is not dealing with the aftermath of a burst property bubble. Nor are its consumers drowning in personal debt.

So how should a company prepare to move into Germany? The most commonly heard refrain from existing players is: be prepared.

It is essential that companies carry out exhaustive research early on to identify suitable target clients. An introduction can also help ease the initial contact.

Anyone who gets their foot in the door of a German company should expect to be thoroughly questioned about their business, products, market and competitors. There is no German word for plamásing.

“If a potential customer has made time to meet you, this means they have a problem to solve or a project in mind and they expect that you are not simply coming to tell them what you do, but that you have put some real thought into how you are going to help them solve their problem,” says Deirdre McPartlin of Enterprise Ireland’s Düsseldorf office.

“To convince them of the business benefits you bring, your statements must be backed up with hard facts and evidence.”

Two years ago, Irish software company Corvil signed a partnership with the Deutsche Börse, operator of the Frankfurt stock exchange.

“I would stress not to underestimate the preparation that needs to go into the market- entry strategy and deciding who you need to target,” says Peter O’Connor, managing director of sales of Corvil.

“And don’t underestimate the value of the first win to serve as a flagship.”

Deutsche Börse opened doors for Corvil to sell its software for monitoring electronic trading to Germany’s two largest banks and other bluechip companies.

Along with solid business preparation, a crucial point for sustained trade with Germany is adapting to cultural differences.

“Cultures can be oriented to those who are more relationship-oriented, like the Irish, and those who are more task-oriented, such as the Germans,” says Dr Gillian Martin, head of Trinity College Dublin’s department of Germanic studies.

Her book, Cross-Cultural Business Relations: The Irish-German Experience, co-authored with Mary Keating, provides a wealth of information on how to deal with German clients.

It cites two points on which the Irish and Germans are at opposite ends of the cultural spectrum: how they deal with uncertainty and their approach to conflict.

While the Irish are at ease dealing with risk and uncertainty, studies show that Germans demonstrate higher levels of uncertainty avoidance.

That is reflected in the generally well- structured nature of German companies, with clear definitions of tasks and responsibilities, a stronger sense of hierarchy and respect for authority.

Germans also have no difficulty tackling problems head on and are able to separate them from the person concerned, while research shows the Irish are averse to confrontation.

Rather than seeing German business life as a predictable collection of stereotypes, Martin suggests viewing it as a chance for a new business perspective.

“Whenever we go into another culture, we see what is visible and use our own cultural value system to interpret what we see,” she says. “Being in another culture should provide us with an impulse to reflect on our own value system rather than judging others through our own cultural glasses.”

As in personal friendships with Germans, business relationships in Germany are slowburners, but trust, once earned, is long-lasting. Many Irish managers have watched their relationship with a German company lead to opportunities with subsidiaries or the German company’s clients.

“If you can get good references, you can approach other companies not just as a small Irish company but one with satisfied German customers,” says Ger O’Carroll of medical device services company Arrotek.

Six months after making its first move into the German market with Enterprise Ireland assistance and trips to trade fairs, Arrotek has won three clients.

So how can the Irish stand out in Germany? Experts say Irish companies with smart, niche products will always get a hearing. After all, the real business backbone of the country is not the big names like BMW, but the small and medium-sized enterprises or Mittelstand: no-name niche operators with a worldwide demand for their products.

When Burnside Autocyl began selling its hydraulic cylinders to German companies, it could have become a “coals to Newcastle” moment.

Twenty years, however, after taking on the might of German engineering, the company is going strong with about half of its business coming from German customers.

“It was our low cost that helped us catch the eye of German companies in the 1980s but, with that gone, we try to do everything a local supplier would do and then offer something more: flexibility,” says Kelly of Burnside Autocyl.

In the sometimes rigid German business world, she says, the ability to adapt quickly to client demands is recognised and rewarded.

The final key to doing business in Germany is also the thorniest: the language. As former German chancellor Willy Brandt said: “If I’m selling to you, I speak your language. If I’m buying, dann müssen Sie Deutsch sprechen.”

Even with German customers who are happy to switch to speaking English, Irish companies should not overestimate their language skills. When it comes to important negotiations, the Germans will switch to their native tongue, putting an Irish entrant at a disadvantage.

The verdict of companies with long-time dealings with Germany: speak their language.

“The first thing we said in 1989 was, ‘they speak German and they are our customers’, so we went off and learned German,” says Kelly.

“You shouldn’t expect customers to put themselves out and, if they can ring a German-speaking supplier down the road, why shouldn’t they?”