CM September 2020

COUNTRY FOCUS
AUTHOR – Adam Bernstein
Development Germany considers Germany the ‘home
of the SME.’ However, Germany should be compared to
the UK, where 90 percent of firms are classed as micro
SMEs, 8.4 percent as small SMEs and 1.3 percent as
medium SMEs with just 0.3 percent of firms are noted as
large enterprises. (Data from Annual Report on European
SMEs 2018/2019 published by the European Commission).
But no matter the statistics, it’s important for those
wanting to sell to German firms that they don’t just
target the larger buyer as they’d be missing out on huge
opportunities; business size is no barrier to success as the
German market is particularly supportive of SMEs.
No business can exist without good staff and employers
in Germany are blessed with workers that are highly
skilled; 81 percent of the German population has been
trained to university entrance level or holds a recognised
vocational qualification. This dual system of vocational
education, which combines workplace training with
academic training, produces highly skilled graduates
who match the needs of industry. The demand for
professionals is met by 383 higher education institutions
and from an early age, German citizens are channelled
towards careers that allow them to reach their maximum
potential.
In addition, the economy offers a low level of corruption
and a high level of innovation. As for market segments,
the services contribute approximately 71 percent of
the total GDP, industry 28 percent and agriculture one
percent.
It also shouldn’t come as a surprise that Germany
advocates closer European economic and political
integration; its commercial policies, for example, are
increasingly determined by agreements among EU
members and by EU legislation.
Neuschwanstein Castle is a
19th-century Romanesque Revival
palace on a rugged hill above the
village of Hohenschwangau near
Füssen in southwest Bavaria,
Germany. The palace was
commissioned by King Ludwig II
of Bavaria as a retreat and in
honour of Richard Wagner.
SETTING UP A BUSINESS
There are a number of main legal forms for entities
trading in Germany: two societies – registered
cooperative society (Eingetragene Genossensschaft
– e.G.); registered association (Eingetragener Verein
– e.V.); five forms of corporation – limited liability
company (Gesellschaft mit beschränkter Haftung
– GmbH), stock corporation (Aktiengesellschaft –
AG), European company (Societas Europaea – SE),
partnership limited by shares (Kommanditgesellschaft
auf Aktien – KGaA), and limited liability entrepreneurial
company (Unternehmergesellschaft – UG); there are
five forms of partnerships – civil law partnership
(Gesellschaft bürgerlichen Rechts – GbR), silent
partnership (Stille Gesellschaft), general partnership
(offene Handelsgesellschaft – oHG), limited partnership
(Kommanditgesellschaft – KG), and professional
partnership (Partnerschaftsgesellschaft – PartG).
Any legally dependent operating units must be
registered at the local office of trade and commerce
(Industrie und Handelskammer – IHK).
Where an investor sets up a branch, it must register
with a notary public to be entered into the commercial
register (Handelsregister). As would be expected,
documentation needs to be translated and certified.
Further, certain sectors – banking, financial services,
insurance, pharmaceuticals, nuclear energy, public
transportation and gastronomy for example – require a
public licence to operate.
Advancing the credit profession / www.cicm.com / September 2020 / PAGE 25
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