Doing business in Germany

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The name Germany has long described not a particular place, but the loose, fluid society of Germanic-speaking peoples that held power over much of western Europe for millennia. Although Germany in that sense is an ancient entity, the German nation in more or less its present form came into being only in the 19th century, when Prussian Prime Minister Otto von Bismarck brought together dozens of German-speaking kingdoms to form the German Empire in 1871. This so-called Second Reich quickly became Europe’s leading power and acquired colonies in Africa, Asia, and the Pacific. That overseas empire was dismantled following Germany’s defeat in World War I and the abdication of Emperor William II.

Germany is located in Central Europe bordering Austria, Belgium, the Czech Republic, Denmark, France, Luxembourg, Netherlands, Poland and Switzerland. It is the second most populous country in Europe with a population in excess of 83 million.

Roughly 10.6 million foreigners live in Germany. The Federal Statistical Office reports that slightly more than one in ten people (12.7%) living in Germany had no German citizenship. Turkish people accounted for the largest group (1.3 million; 12.4%) of the total foreign population. They were followed by Syrian (787,000; 7.4%) and Polish citizens (774,000; 7.3%). Berlin is the capital of a reunified Germany and has a population of just over 3.5 million.

The German economy – the fourth largest in the world and Europe’s largest – is a leading exporter of machinery, vehicles, chemicals and household equipment. The country sells around 6 million cars a year, making it one of the largest car producers in the world.

Business culture in Germany

It benefits from a highly skilled workforce, but like other Western European countries, faces significant demographic challenges to sustained long-term growth. Low fertility rates and an increase in net immigration are increasing pressure on the country’s social welfare system and necessitate structural reforms.

The country has been encouraged to increase the number of skilled workers and set out a strategy for next-generation technology to regain their leading ranking. High-value manufacturing and a number of microenterprises mean that R&D is a top priority for the country.

Much of Germany’s post-World War II success has been the result of the renowned industriousness and self-sacrifice of its people. This devotion to hard work has combined with a reserved demeanour to produce a stereotype of the German people as aloof or distant. Yet Germans prize both their private friendships and their friendly relations with neighbours and visitors, place a high value on leisure and culture, and enjoy the benefits of life in a liberal democracy that has become ever more integrated with Europe.

In German companies, there are binding rules, regulations, structure and procedures. These underscore a need for reliability, consistency and orderliness but may leave little room for flexibility or individualism.

The German expression ‘ordnung muss sein’ (there must be order) reflects the cultural preference for organisational planning. It also explains the preference for having one’s socio-relational boundaries defined. People generally like to understand the context to interactions and what is required of them in certain scenarios.

For most Germans, the focus is on the task, and this forms the central issue in business relationships. The German preference is for compartmentalisation and a clear separation between their private and business lives.

Germans are famed for their punctuality and time management. Appointments are planned and meeting times adhered to, as punctuality is a sign of good manners. This also means they are likely to have a higher expectation of deadlines, as setbacks and foreseeable scheduling delays are meant to be included in the project timeline. German colleagues appreciate a thorough, well-planned approach to projects.

When presenting a plan or idea, be prepared to talk about the details and not just the ‘big picture’. Knocking on the table with one’s knuckles at the end of a meeting signals approval of an agreement and the conclusion of the meeting.

Finally, Germans communicate directly and explicitly. They do not view it as confrontational or rude to politely correct you if they feel you have made a professional mistake or taken an inappropriate action. These corrections are intended to show care that they want you to do better.

Subtleties such as indirect hints, messages ‘between the lines’ and many non-verbal signals can be easily missed. You may observe a lack of small talk in offices, shorter and more structured ‘chat’ at the beginning of meetings, and a tendency to work with office doors closed more than in other countries.

Alternative Description

Inspired? If you want to learn how you can work more effectively with your German colleagues, clients or supplier, contact us for a 'Doing business in Germany' sample course outline’.

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