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Germany 2018 Germany 2018 Table of Contents Doing Business in Germany ______________________________________ 5 Market Overview ________________________________________ 5 Market Challenges _______________________________________ 5 Market Opportunities _____________________________________ 6 Market Entry Strategy _____________________________________ 6 Political Environment __________________________________________ 7 Political Environment _____________________________________ 7 Selling US Products & Services _____________________________________ 8 Using an Agent to Sell US Products and Services ______________________ 8 Establishing an Office _____________________________________ 9 Franchising ___________________________________________ 11 Direct Marketing ________________________________________ 11 Joint Ventures/Licensing __________________________________ 13 Selling to the Government __________________________________ 14 Distribution & Sales Channels _______________________________ 15 Express Delivery _______________________________________ 15 Selling Factors & Techniques ________________________________ 15 eCommerce __________________________________________ 16 Value Added Tax (VAT) ____________________________________ 17 Trade Promotion & Advertising ______________________________ 18 Pricing _____________________________________________ 21 Sales Service/Customer Support ______________________________ 21 Protecting Intellectual Property ______________________________ 23 Due Diligence _________________________________________ 24 Local Professional Services _________________________________ 25 Principle Business Associations ______________________________ 25 Limitations on Selling US Products and Services _____________________ 25 Web Resources ________________________________________ 25 Leading Sectors for US Exports & Investments _________________________ 29 Agricultural Sector ______________________________________ 29 Overview ____________________________________________ 29 Leading Sub-Sectors _____________________________________ 29 1 Web resources: ________________________________________ 31 Aerospace/ Defense/ Security ________________________________ 32 Overview ____________________________________________ 32 Leading Sub-Sectors _____________________________________ 33 Opportunities _________________________________________ 34 Web Resources _________________________________________ 34 Advanced Manufacturing __________________________________ 34 Overview ____________________________________________ 34 Leading Sub-Sectors _____________________________________ 35 Opportunities _________________________________________ 36 Challenges & Barriers _____________________________________ 36 Web Resources _________________________________________ 36 Healthcare ___________________________________________ 37 Overview ____________________________________________ 37 Leading Sub-Sectors _____________________________________ 39 Opportunities _________________________________________ 40 Web Resources _________________________________________ 41 ICT _______________________________________________ 42 Overview ____________________________________________ 42 Leading Sub-Sectors _____________________________________ 43 Opportunities _________________________________________ 43 Web Resources _________________________________________ 43 Smart Cities __________________________________________ 44 Overview ____________________________________________ 44 Best Prospects for U.S. exports _______________________________ 45 Selected Opportunities in the Energy and Transportation sector ____________ 45 Travel and Tourism ______________________________________ 46 Overview ____________________________________________ 46 Promotion ___________________________________________ 47 Web Resources _________________________________________ 48 Customs, Regulations & Standards ________________________________ 49 Trade Barriers _________________________________________ 49 Import Tariff _________________________________________ 49 Import Requirements & Documentation _________________________ 49 2 Labeling/Marking Requirements ______________________________ 52 U.S. Export Controls _____________________________________ 68 Temporary Entry _______________________________________ 69 Prohibited & Restricted Imports ______________________________ 69 Customs Regulations _____________________________________ 69 Standards for Trade _____________________________________ 70 Trade Agreements ______________________________________ 76 Licensing Requirements for Professional Services ___________________ 76 Web Resources ________________________________________ 77 Investment Climate Statement ___________________________________ 79 Executive Summary _____________________________________ 79 Openness to and Restrictions upon Foreign Investment ________________ 80 Bilateral Investment Agreements and Taxation Treaties ________________ 81 Legal Regime _________________________________________ 83 Industrial Policies ______________________________________ 87 Protection of Property Rights ________________________________ 88 Financial Sector ________________________________________ 89 State-Owned Enterprises __________________________________ 93 Responsible Business Conduct _______________________________ 95 Corruption ___________________________________________ 95 Political and Security Environment ____________________________ 98 Labor Policies and Practices _________________________________ 98 OPIC and Other Investment Insurance Programs ____________________ 100 Foreign Direct Investment and Foreign Portfolio Investment Statistics _______ 101 Contact for More Information on the Investment Climate Statement ________ 102 Trade & Project Financing _____________________________________ 103 Methods of Payment _____________________________________ 103 Banking Systems _______________________________________ 104 Foreign Exchange Controls _________________________________ 105 US Banks & Local Correspondent Banks __________________________ 105 Project Financing _______________________________________ 105 Financing Web Resources __________________________________ 106 Business Travel _____________________________________________ 107 3 Business Customs ______________________________________ 107 Travel Advisory ________________________________________ 107 Visa Requirements ______________________________________ 108 Currency ____________________________________________ 108 Telecommunications/Electric _______________________________ 109 Transportation ________________________________________ 109 Language ____________________________________________ 109 Health _____________________________________________ 109 Local Time, Business Hours and Holidays ________________________ 110 Temporary Entry of Materials or Personal Belongings _________________ 110 Travel Related Web Resources _______________________________ 110 INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2018. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES. 4 Doing Business in Germany Market Overview The German economy is the world's fourth largest and accounts for more than one-fifth of the European Union’s GDP. Germany is the United States' largest European trading partner and the sixth largest market for U.S. exports. Germany’s "social market" economy largely follows market principles, but with a considerable degree of government regulation and wide-ranging social welfare programs. Germany is the largest consumer market in the European Union with a population of 82.3 million. The significance of the German marketplace goes well beyond its borders. An enormous volume of trade is conducted in Germany at some of the world’s largest trade events, such as MEDICA, the Hannover Fair, Automechanika, and the ITB Tourism Show. The volume of trade, number of consumers, and Germany’s geographic location at the center of the European Union make it a cornerstone around which many U.S. firms seek to build their European and worldwide expansion strategies. As of June 2018, economic forecasters expect about two percent GDP growth for 2018 and a similar rate in 2019, a slight slowdown from 2017 but still above what many analysts consider Germany’s long-term growth potential (c. 1.5%/year). Demand has begun to shift from exports to consumption and investment, which are projected to remain the main driving force for growth in the near-term. Despite budget surpluses and strong corporate profitability, investment (other than construction) remains somewhat subdued. The labor market remained resilient during the economic and financial crisis and was stronger in 2017 than ever before. Employment in Germany has continued to rise for the twelfth consecutive year and reached an all-time high of 44.34 million in 2017, an increase of 638,000 (or 1.5%) from 2016—the highest level since German reunification (October 1990). As of April 2018, approximately 44.62 million people are registered as employed, 592,000 more persons than the 44.03 million registered during April of 2016. Unemployment fell by more than 2 million since its peak in 2005, and reached in 2017 the lowest average annual value in 26 years. The number of unemployed stood on average at 2.5 million in 2017, down 158,000 from 2016, with an average unemployment rate of 5.7% (down 0.4 percentage points compared to 2016), according to the Federal Employment Agency (BA). Within the European Union, Germany has the second lowest youth unemployment rate (6.3% in 2017; European Union average:
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