If you are considering to expand into Germany, Berlin as Germany’s capital might seem like a good place to start. Especially if you are planning to set up a subsidiary or teaming up with a local partner to cover your operations. But be aware! Unless you are a startup, the right decision for your location might not be Berlin.
But why is the right location an important decision in the first place?
First of all, there are centers of consumption, production, research, development which, at the same time, are pressure vessels for innovation and investment decisions. This is where we want to focus on because these “ecosystems” provide you with advantages that might be decisive to the success of your business expansion. Be it regarding transport and traffic hubs, access to funding programs, potential network effects or even being close to another neighboring country.
Finding the right location for your expansion to Germany is confusing, because unlike France or the UK, industries in Germany are located decentrally. This map gives you an impression of what that means (see map on the left). It depicts Germany’s biggest companies in accordance with their geographical distribution.
Here we give you an overview of Germany’s complex regional structures to help you find orientation and guide your decision making process.
One thing to be clear about in advance: the question of the right location affects B2B companies more than B2C companies. If you are looking to sell sustainable products, for example consumer goods or fashion, Berlin is always worth to keep an eye on. Berlin is a good testing ground, especially Berlin’s district “Prenzlauer Berg”. It is known to be a suitable “lab” for testing new products, because purchasing power is relatively high, people are open to novelties and it is likely a place where trends get adopted by a larger crowd.
Industries in Germany and their geographic locations
Electronics and the aerospace: the major urban innovation centers for these industries are in southern Germany such as Stuttgart, Munich, Erlangen/Nuremberg, Dresden and up in the north in Hamburg and Bremen.
Solar: to be found especially in Dresden, Frankfurt an der Oder and Berlin.
Electrical engineering, mechanical engineering, automotive: to be found in almost all urban agglomerations such as Munich, Stuttgart, Rhine-Ruhr area, Hamburg, Frankfurt.
Media: they are concentrated in a few main locations such as in the Rhine-Main-Neckar and Rhine-Ruhr area, Munich, Berlin/Potsdam and Hamburg.
Logistics: the large trading companies are concentrating at two main locations with particularly good transport connections: Rhine-Ruhr and Hamburg.
Finance: one of the world’s most important financial centers is Frankfurt am Main (stock exchange, banks, Bundesbank, European Central Bank). Its importance exceeds that of the few secondary locations in Germany.
Business-related services: such as consulting, law, research and product development, advertising/marketing tend to concentrate at a few main locations like Munich, the Rhine-Main-Neckar and Rhine-Ruhr area and Berlin.
Tourism: to be found in the Rhine-Ruhr area, Hamburg, Munich, Frankfurt, Berlin.
Other service sectors in Germany
Universities and colleges: they can be found in all parts of Germany. The most important locations are the Rhine-Ruhr area, Munich, Hamburg, Münster and Berlin.
Public administration: federal administrative institutions are not only to be found in the capital Berlin but decentralized throughout the whole federal territory. The administrative institutions of the federal states are always located in the state capitals.
As you can see, in most industries there is not only one city where consumption, production, research and innovation come together. All the more it is important to research further and find out what the perfect business environments should provide exactly.
If you are a startup
If you are a startup, the availability of public funding programs, loans, a network of venture capitalists as well as access to accelerators and incubators is essential. So if you are a startup, Berlin provides you with an excellent ecosystem.
RECOMMENDED READING: Public Funding Programs for Green and Social Businesses in Berlin
But don’t rush. Take a minute to look into this map depicting 12 digital hubs throughout Germany. The Digital Hub Initiative, provided by the Federal Ministry of economics and energy, was launched to connect businesses, larger corporations with innovation partners and startups. This map also inspired to look all across Germany.
Need advice on the right place for your company to expand to? We are happy to help you with the decision making process.