Smart and Effective Approaches in Trade with Germany

We aspire to live in countries where companies offer competitive products and services, have modern business processes, and exhibit a strong openness to business and growing exports. When entering foreign markets, it is crucial to understand and learn about the target market and shape your value proposition accordingly. This article explores ways to improve business ties between Germany and Estonia, though many aspects are universally applicable.

Patience and smart persistence are necessary, as there is often a tendency to be impatient while awaiting quick orders. The reality often falls short of the quick expectations of Estonian companies because Germans require time and familiarity to build business relationships and trust. 

Reaching a specific price inquiry and making an offer is time-consuming but a sure sign of a potentially serious long-term business relationship and entering the client's value chain. Often, Estonian companies confuse these two elements and expect quick financial results. Below, I discuss in more detail which mechanisms are most important for increasing exports to the German market. 

1. Formal and Informal Networks

While Estonians tend to work independently, Germans are known for their propensity to operate through various networks. There is a well-known joke that if three Germans meet, they first form an association. Unlike Germans, Estonian companies are used to working more autonomously and are often oriented towards quick results.

Networks can be formal and structured or informal and flexible. Formal networks include professional associations, clusters, chambers of commerce, and other cooperative organizations. Informal networks, on the other hand, consist of social gatherings without strict structures, such as currywurst-eating events, roundtables, clubs, and even personal recommendations and introductions within one's circle without a clear personal gain. Participating in these networks provides new contacts both within and outside your field, and you never know where valuable opportunities might be found. There is even a saying in Estonian: you never know under which rock a crab is hiding.

For example, an Estonian engineering services company aiming to enter the German value chain might initially consider a German architectural firm as outside their core focus. However, a good contact with the owner of the architectural firm can lead to recommendations to their partners, resulting in 2-3 new business relationships based on personal endorsement. In turn, architects may become interested in collaborating with an Estonian architectural firm. This illustrates how non-traditional networking can create new opportunities and contacts, proving beneficial for both parties involved. 

2. Shaping the Value Proposition: How to Find Contacts? 

Google's advertising services can be both beneficial and disadvantageous. In today's era of information overload and cyber risks, industrial purchasing departments are unlikely to trust advertisements. Truly good companies do not need to advertise on the internet. For example, companies like Hissmekano Estonia and TB Works, engaged in CNC machining and metalworking, might question the necessity of being in the top three search engine results. They know they do not. Searching for new suppliers is usually not based on advertisements but through networks and other trust-building mechanisms like recommendations. However, creating and shaping the company's image occurs through educational texts and both physical and digital presence. Independent advisors can often provide recommendations on various smart channels. 

Many Estonian industrial companies are reliable subcontractors for German clients, primarily not in terms of volume but as small, flexible partners often combining different products in one delivery. It is worth phrasing your strengths in a few sentences in German and communicating them internally within the company. 

A positive and optimistic mindset is always pleasant. There will definitely be many "no" responses. However, what matters is how many "yes" responses and forward-looking discussions there will be. You may also encounter arrogance and condescension (everything unfamiliar is perceived by people as potentially dangerous due to natural reflex) towards an Eastern European supplier, but you can equally encounter kindness, curiosity, and openness. Additionally, it's always nice to talk to people who have done their homework properly. Negative attitudes may also occur between companies from rival countries, such as Switzerland and Germany, Latvia and Estonia, etc. However, it is always healthy to avoid generalizing and categorizing, despite our human desire to create order in chaos and give every phenomenon a name. Iti s worth believing in people rather than generalizations and stereotypes. Contact between an exporting Estonian company and a potential client is still between people, and this social relationship is primarily shaped by those people with their attitudes, strengths, weaknesses, expectations, moods, and prejudices. Every situation is individual. We can always generalize, but it's worth taking the time to cheerfully find out how interest in the topic, product, or service in question might be or become in the future in this particular combination. 

It is typical that today's preliminary work, market communication, and contacts created today will create real value only after some time, be it half a year, a year, or more. For a business transaction to occur, several circumstances must coincide simultaneously. The company must be open to a new supplier, have a current project or order need, and have money or financing (mainly considering fields where large projects are primarily carried out, such as Estanc, Silmet). In the construction market for modular house exports, there are even more restrictions, such as an available plot and building rights or permits. 

In Germany, the mindset of "derisking purchasing" is gradually taking hold—reducing purchasing risks from geopolitically unstable regions like China and India. For example, in the metal industry, several companies, as revealed in a conversation with the testing and certification unit of the Karlsruhe Institute of Technology, should not buy large multi-ton metal components from India and China but rather look to nearby foreign countries like Estonia and the Baltic States.

3. Business Model Innovation in Sales Activities

Where does growth come from? Should one look for sales agents or sell directly? For some product-based intellectual property companies, the question is whether to seek licensees for their products. The choice is, of course, not black and white. Upon closer examination, all companies can successfully define these focal points for themselves and act according to their custom strategic goals. Thus, reviewing the business model and making necessary adjustments in line with contemporary trends is an integral part of daily management. Additionally, various elements of the business model can operate within a hybrid strategy, where firms may opt to work through distributors and intermediaries in some markets and directly in others. It all depends on the goals set, available resources, and feedback from past activities.

A strategic topic for Estonian companies in the German market is whether to participate in public tenders. How does one navigate a country where each municipality has its procurement platform, and there are surprisingly over 450, unlike the centralized procurement platform in Estonia? In today's smart data economy, it is possible to consolidate data and gather the necessary information with simple clicks and minimal effort. Advisors can also help compile public tender bids or filter out the most suitable ones.

Which conferences and seminars should one attend, or is it better to go to a fair instead? At these events, formal and informal networks come together again. A recent visit to the international mining forum in Berlin, Germany, demonstrated that companies like IT firm OIXIO, engineering services provider DMT, and CNC component manufacturer found useful contacts at an event from an entirely different industry. It is important to work across disciplines and regularly seek feedback. What does feedback mean? It means identifying and repeating activities that have worked and given good results, and acknowledging those that have not to adjust the focus for different results. Gone are the days when new clients were sought by opening a phone book or business directory and making cold calls and emails. Nowadays, purchasing departments are flooded with communication and gifts, making it difficult to motivate anyone to take on a new supplier. It is worth patiently finding smart, distinctive ways and tricks to generate interest in continuing communication with you. 

4. Social Skills, Culture, and Networking

How can you get in touch with new firms in today's world of information overload when emails go unanswered and phone calls are unwelcome? LinkedIn and Xing are certainly relevant platforms from a German market perspective, although experiences with these vary across industries—some use them intensively, while others not at all. It's important to remember that there is no single recipe for success; feedback should be sought over time to evaluate what works and make necessary adjustments to methods and tools. For obtaining email addresses, once the name of the contact person is known, such as the purchasing or supply chain manager of a conglomerate, a database like Rocketreach might be useful. However, direct cooperation proposals may not always receive responses. Neutral advisors and consultants often achieve better results as intermediaries, objectively positioning themselves by observing mutual interests.

Creating social contacts is well facilitated by various professional associations, forums, and seminars. For example, an IT company might claim after one unsuccessful visit that it is impossible to make contacts at an international medical fair, but every situation and company is unique. At the same time, IT purchasing personnel from several pharmaceutical companies report that they establish new contacts at such conferences. People tend to generalize and make quick conclusions based on limited information, as social psychologist Daniel Kahnemann extensively writes in his book "Thinking, Fast and Slow." One should not be discouraged by initial "no" answers, as people are emotional beings and often act impulsively.

Sometimes contact creation and order acquisition are mixed up. Starting and building a relationship requires preliminary work, including researching literature and information to understand the most suitable partner profile and refining your profile and value proposition—summarizing your focus in one or two sentences and defining the ideal client profile. Maintaining contact and understanding the company also means learning whether it is a family business, who makes decisions in the organization, and how they handle new innovation issues. In Germany, it's essential to know when public holidays are, the current mindset of people in the company, when their vacations are, and when they have more time. This investigation can be a thoughtful addition to your communication strategy.

Often, the company's head is not the right person to discuss procurement, especially in larger companies. Top management does not usually instruct procurement departments on how to do their jobs. If it is a family business, it is important to understand whether the grandfather, father, or son is running the company, and their attitude and worldview. Once contact is established and maintained, it becomes the company's task to gradually lead the communication to a trial order, which may take time. Pressuring here tends to give negative results, although there are always exceptions. It's worth being attentive and always seeking feedback on your activities. For those who have already started communicating, it's important to find a way to maintain the connection so that in the absence of an immediate need, you don't fall into oblivion but are ready when an opportunity for a visit and a meeting arises.

Attention should be paid to managing your and your company's expectations—relationships are built step by step, and patience should be exercised. Therefore, sales and export managers must manage expectations internally within the company and discuss realistic time perspectives. First meetings often mistakenly jump directly to discussing a potential new supply relationship and expecting a new order. If the company met is not ready to place an order immediately and talk concretely, it is thought that the company is not relevant. In reality, it might lead to a deal some period later. When setting goals, it is wise to consider both soft and numerical metrics. On the one hand, a soft abstract metric could be the awareness of the desired brand and corporate image to create in the market and the networks in which to appear. On the other hand, numerical metrics can set expectations for the number of contacts expected in a time period and how much time is realistically needed to maintain and develop them, although the time required for working with information and literature, meetings, and other social activities is often underestimated.

Personal attention and time dedication may be more important in today's information-dense era than business gifts. Small corporate souvenirs, once widely used, are being replaced by the gift of shared time, whether it's a visit, lunch, coffee, or a joint event. Invite the target client to visit you. There may be no better sales or trust argument than seeing a well-organized production and office. 

5. Certification and Business Processes

Certification can be viewed as a tool for structuring the internal processes of a manufacturer or service company and ensuring consistent quality. The necessary and appropriate type of certification depends on the manufacturer and its products. Germany, as a target market, has the potential to be a much larger strategic export destination for the Estonian economy than is currently utilized by manufacturers.

Business process design and increasing export readiness are also related to the business model. For small and medium-sized enterprises in Estonia, fewer formalities are typical, and the customer journey could be better documented. When making price offers, especially if the company works with product or planning drawings, it is crucial to be thorough and familiarize oneself with the requirements that the product must meet. Mistakes here can lead to unrealistic pricing (too high or too low). It is worth mapping out the customer journey internally to avoid bottlenecks in maintaining contacts, working with drawings, planning, preparing offers, or directing them into production.

Manufacturers in Germany and Estonia approach certification differently. In Germany and other so-called old European countries, the certification of manufacturing companies is usually planned immediately when deciding to enter a new foreign market. In contrast, Estonian, Latvian, and Lithuanian companies often base their actions on customer expectations. If the client requests certified goods, certification is sought. If the client does not demand it due to ignorance, products or processes are often not certified. The responsibility for complying with these specifications always remains with the manufacturer. It can happen that the manufacturer receives an order and suddenly needs a certificate; in such cases, they quickly turn to the certifier: "Can you come quickly?" However, certifiers plan their work 3-4 months in advance, and then it may be too late for the manufacturer to meet the client's wishes with certification.

In Germany, certificates are issued by independent institutions. After successful certification, the manufacturer can mark and sell their products accordingly, with the marking based on a documented procurement, production, quality control, and delivery process shown to the certification body. This marking assures the client that the product's properties are documented and the production conditions meet the independent institution's requirements. The certifier regularly reviews the manufacturer to ensure ongoing compliance with the requirements. It is worth noting that in meeting these requirements, the company organizes internal business processes and learns to perform better internal control over, for example, the quality of raw materials and semi-finished products. Additionally, it ensures that products are manufactured exactly according to the client's drawings without deviations, which is often a problem in the wood industry.

In conclusion, understanding the peculiarities of the German market and shaping the strategy accordingly is crucial. Patience, smart networks, independent advisors, and reliable business processes are key factors that help achieve long-term success in exporting to Germany.

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