Case-Study

The first step was to establish a German company (GmbH) as a subsidiary of the UK company. This was necessary in order to consolidate running business and to demonstrate commitment to the market for acquisition of new clients. Compared to incorporation in many other markets setting up a GmbH is relatively expensive and time-consuming. However many suppliers and potential clients prefer to deal with a German entity rather than a branch of a foreign company. This is based on their experience that many companies coming into Germany have difficulty in establishing themselves and often leave the market again within 2 years.

A local dual-qualified (Germany + England) lawyer introduced by us co-ordinated this process and dealt with the inevitable administrative and legal issues which arise. For example it is not straightforward for a new company to open a bank account in Germany e.g. company representatives have occasionally not been able to access the share capital which they themselves have deposited only weeks before! Similarly there are various registrations and publication procedures required which can prolong the process.

In tandem with this and other legal work being done we introduced the company to tax advisers with experience of dealing with foreign investors and the company selected one of them. German tax law, as in many other countries, is complex and it is essential not only to have professional advice but also to use an adviser who is aware of the relevant cross-border issues.

The company wished to identify and approach suitable candidates for the position of general manager in Germany. We introduced them to a recruitment agency specialising in the semiconductor sector and a number of interviews were arranged. However, for various reasons, it was decided that a UK member of staff would fill this position. One reason why this was possible is the international nature of the semiconductor industry which meant that fluency in German was not essential. However, in normal circumstances, it will be necessary for a foreign investor to employ a German-speaker for this type of role.

We also introduced the company to the local economic development agency which was helpful in providing industry contacts and also supporting the company in its PR activity by sending out a press release to the international community within the region. One benefit of this was that a number of potential employees then contacted the company directly.

Once the company was established we organised office space for them in a business centre occupied exclusively by technology companies. This was a low cost solution which also provided access to interesting partners and to the relevant research department of the local university.

We managed and co-ordinated the above activities and processed all invoices for the company in order to simplify the payment of local sales tax. We also had input to the application by the company for financial assistance from an economic development agency in the UK. This resulted in a significant portion of the start-up costs being met from public funds.

The company has benefited significantly in a number of ways from using our network. As a small company with limited management resources it would have been difficult for the company to make progress in Germany and to avoid the numerous risks associated with starting up a business in a foreign country. We provided them with the full range of service providers and other contacts which enabled the company to establish a solid and cost-effective basis for developing a profitable business in the German market.

David Scrimgeour, Business Across Borders Partnership Network Ltd, Munich, Germany

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