Information and communications technology to Germany

(Last updated: 12 Jul 2007)

Trends and opportunities

The market

E-government

Like many Western European governments, the German Government’s use of online technologies has advanced rapidly during the last few years.

BundOnline 2005 project was initiated by the German Government which aimed to implement 376 government services (from 100+ federal authorities) online.

The largest buyer of ICT in Australia is the government and thus there exists Australian expertise in this sector.

E-commerce

Germany traditionally was one of the largest mail-order markets in the world. With a growing number of Internet accesses in the population, online shopping is gaining popularity. Germany has one of the world’s most sophisticated e-commerce markets and ranks among the top European countries in terms of online sales, along with the Scandinavian countries and the UK.

B2B and B2C platforms are well established. Currently 45.6 per cent of the German population (37.7 million) have Internet access.  Leading Internet Service Providers are T-Online, AOL, and Tiscali.

Online banking

Germans are the heaviest European users of banking and financial websites, and Germany is much further ahead in the use of online banking than the USA. Deutsche Bank recently reported that research firms predict this number will grow to between 22 million and 30 million in 2006. Opportunities exist in both sectors, B2B and B2C. Total e-commerce turnover forecast for 2006 is €676.1 billion.

Telecommunications

Deregulation in the telecommunications sector is creating new opportunities in several sectors from ISDN/DSL based software/hardware to mobile commerce applications. UMTS and GPRS will also offer opportunities for Australian exporters.

Outsourcing

Major international and national banks in Germany are beginning to outsource their IT departments in order to reduce costs. Other industries increasingly follow this trend to focus on their core businesses. There are good opportunities for Australian service providers to offer their services in this segment.

Growth in the software market was negatively impacted by the difficult situation of the German financial sector, which used to be a heavy adopter of IT. German companies have a strong Enterprise Resource Planning and applications tradition. In this area, demand is shifting towards faster and easier solutions with emphasis on functionality and with an increasing focus on relationship management with suppliers, order management, and procurement.

Opportunities

Major opportunities exist for Australian companies in the following areas in the German ICT industry:

• e-commerce, e-government, e-banking
• telecommunications applications
• hardware - niche products
• software 
• IT security

Tariffs, regulations and customs

Tariff rates range from zero for all software products to 2.6 per cent of the value for hardware on CIF prices. There are very few import regulations for ICT products.

Localisation (translation) of software products is required. It concerns not only the interface, but also, more importantly, the adaptation to local laws and regulations, where applicable.

There is an import turnover tax of 16 per cent on the CIF price applicable to all imports of all foreign products. The same levy is placed on domestically produced products in the form of a VAT.

The European Union has a harmonised trade system. Common Customs Tariff (CCT) is applicable to goods from non-EU countries, including Australia.

Most duties are ad valorem (%), based on the GATT Valuation Code (approximate CIF value).

Before shipping any goods to Europe, you should obtain a written customs duty ruling from the local customs service. These rulings are called Binding Tariff Information (BTI).  Getting a BTI is free and will prevent any conflict over customs or excise duty.

Marketing your products and services

Market entry

Australian suppliers should consider the following:

• Many companies also plan to establish a direct presence in Germany. This can be important commercially, as it is seen as a sign of commitment to the market.The use of case studies involving internationally recognised organisations helps to increase confidence and demonstrate the relevance of the product. 
• A first approach should clearly state the benefits of the technology to the customer in terms of cost reduction, efficiency and/or return on investment. Approaches should be tailored for each company or sector and ideally in German language. It is also important to address German business people by their family name rather than by their first name. Introduction letters have to be addressed to relevant people rather than a job position, ie. Managing Director or CEO.
• Commitment to support, and long-term presence in the market must be demonstrated. In many cases this will include establishing a direct presence or strategic alliance in Germany. German companies prefer to have local support rather than online support from other countries including the UK.
• The growing use of the Internet to provide service directly to businesses and consumers will allow Australian companies to tackle mass markets through partnerships with major technology providers. 
• There are several specialist IT trade shows in Germany. The best way to get a feeling for the market and to benchmark own products/technologies is by exhibiting at a trade show or at least visiting the main fairs.

German companies are rather conservative when purchasing technology and often reluctant to buy business critical equipment from companies with no proven track record or in-country support.

Distribution channels

Infrastructure in Germany is excellent making distribution throughout the country easy. Distribution channels in Germany are highly developed, and the most effective route to the market depends on the product in question. The major distribution channels in Germany are:

• Importer - importing directly and distributing to the wholesale, retail, and discount trade. Normally, an importer would not supply to all these market sectors but specialise in only one or two.
• Importer (direct sale) - some importers specialise in direct sales to consumers either by mail order or personal sales by their marketing staff.
• Agent - working on a commission basis, the agent will generally be authorised to cover the whole of Germany selling either to the importer, wholesaler or retail trade.
• Retail (direct import) - some large retail store chains have the facility to arrange direct imports either under the producer’s own label or their own company label.

Links and industry contacts

ICT–related resources

Association of the German Software Industry (VSI) -– www.vsi.de
CHIP - www.chip.de
Computer Zeitung CZ - www.computer-zeitung.de
Bundesamt fur Sicherheit in der Infiormationstechnik - www.bsi.bund.de/english/index.htm
BITKOM (Bundesverband Informationswirtschaft, Telekommunikation und neue Medien) - www.bitkom.org
Deutscher Multimedia Verband e.V. (DMMV) - www.dmmv.de/de/7_pub/homepagedmmv.cfm
Electronic Commerce Forum (Verband der Deutschen Internet-Wirtschaft e.V.) - www.eco.de
Heise Online - www.heise.de/english
Information Week - www.informationweek.de/cms/885.0.html
internetWorld - www.internetworld.com
PC Shopping - www.pc-shopping.de/srvinclude/1/1/default.asp
Verband der Unterhaltungssoftware Deutschland e.V (VUD) – www.vud.de

Government, business and trade resources for Germany

Common Customs Tariff (CCT) - http://europa.eu.int/comm/taxation_customs/customs/index_en.htm
Federal Center for Foreign Investment in Germany - www.invest-in-germany.de/en/
Federal Ministry of the Interior - www.eng.bmi.bund.de
Federal Statistical Office - www.destatis.de/e_home.htm
German Institute for Standardization - www2.din.de/index.php?lang=en
GoToBavaria - www.gotobavaria.org