Spotlight from the Field: The TCS in Berlin

Germany is the biggest economy in Europe, representing one quarter of the entire GDP of the European Union. For Canadian companies looking for opportunities in Europe, it’s a critical market to penetrate, and the Canadian Trade Commissioner Service (TCS) in Berlin is there to help.

“We make the introductions that matter,” says Andreas Weichert, Canada’s Senior Trade Commissioner for Germany, based in Berlin.

Germany is Canada’s largest export market in the EU and its fifth‑largest merchandise trading partner. Canadian goods exports to Germany were worth $6.9 billion in 2021, up 8.1 percent from 2020. Weichert says the trends show a clear increase in trade in merchandise since 2017, when the Canada–EU Comprehensive Economic and Trade Agreement (CETA) provisionally entered into force. He notes that our top exports to Germany in 2021 included mineral ores, precious stones and metals, machinery and equipment scientific and precision instruments, as well as electronics.

Germany is also a major source of foreign direct investment for Canada, and the two countries have a rich history of collaboration in science and technology, Weichert says. “Companies can benefit from a long history of partnership and cooperation as they seek to engage in the German market.”

A long history of trade ties

Canada–Germany trade relations go back to the opening of the first TCS office in Berlin in 1910, and today the TCS is also in Düsseldorf and Munich. “Germans like doing business with Canada, even if they don’t always know all that Canada has to offer,” Weichert says. “They all know about our beautiful mountains and oceans, and our maple syrup, but maybe not as much about our cutting‑edge technology and world‑leading cleantech companies.”

He says that given the green policies of the “Traffic Light Coalition”, as the current German federal administration is called, Canadian companies with products and services that support the transition to CO2 neutrality will be well-placed for success in the German market. “We encourage them to investigate how their offers can facilitate Germany’s move toward a decreased dependence on fossil fuels, which has become more urgent, given the crisis in Ukraine.”

There are opportunities for Canadian companies in many sectors of the German market, Weichert says, with those that support German policy goals and unmet market demands being the best placed for success. “Most importantly, any would-be exporter should invest appropriate time and effort to ensure the German market is right for them,” he advises, noting that the TCS “is happy to help any export-ready company that has prepared themselves for entry into the market.”

Canadian life‑science companies are well‑positioned to explore opportunities in Germany through trade as well as linkages and out‑licensing opportunities, he says. The TCS is also seeing growing potential in traditionally strong and emerging sectors, including agrifood, cleantech, logistics, aerospace, automotive, infrastructure, and information and communication technologies, which benefit from Germany’s ambitious energy transition, innovation and infrastructure strategies. Weichert notes that Germany has a strong interest in hydrogen as a renewable energy source, and Canadian companies can build on the potential created by the bilateral energy partnership memorandum of understanding signed in 2021.

The TCS in Germany has a team dedicated to science, technology and innovation, while cleantech, life sciences, artificial intelligence and quantum are particularly important research and industrial priorities there.

A key partner in creative industries

Claudia Seeber, who has worked in Berlin as the Trade Commissioner for creative industries for more than 20 years, covering film/TV production, publishing, the music industry and interactive digital media, says it’s important that Canadian companies are prepared for their market entry and ready to invest time and money there. “Successful deals often don’t come overnight,” she says. “They require a persistent approach as well as continuous nurturing of business relationships on the ground.”

Canada and Germany are important co‑production partners in the audiovisual field. In 2020‑21 for example, four German‑Canadian co‑productions were officially recommended by Telefilm, accounting for $73.4 million in total budgets, Seeber says. “That is quite a success story, considering that these projects were realized during the pandemic.”

In the publishing industry, Canada’s guest‑of‑honour role at the Frankfurt Book Fair in 2021 propelled the sale of more than 400 Canadian titles to German publishers, Seeber reports. “The number of sales exceeded expectations by far and is an economic as well as a cultural achievement for Canadian authors and publishers,” she comments. “These Canadian titles were translated into German and will continue to resonate with German readers.”

Canadian companies interested in Germany should “work closely with the Trade Commissioner in your target market to identify potential business opportunities,” Seeber adds. “Once you have established contact with potential business partners in the market, make sure that you are always responsive to incoming requests from potential customers.”

An important source of investment in Canada

As well as engaging with Canadian exporters, the TCS in Germany counsels German companies considering making investments in Canada. Germany is the seventh‑most invested country in Canada, with accumulated investments amounting to $32 billion in 2021.

Detlef Engler, a Trade Commissioner who is Canada’ Senior Investment Officer for Germany, based in Berlin, says that companies expanding to Canada are found in virtually all sectors. Major recent focuses have been on Internet of Things — driven advanced manufacturing and on building resilient and sustainable supply chains in Canada in clean fuels, battery supply and electronic vehicles, as well as in the biomedical sector.

“German investors come to stay,” Engler points out. As highly innovative and competitive corporations, they prefer cost‑competitive locations with access to markets, qualified and loyal labour, and academic and training networks. “They also rely heavily on domestic supplier networks that are consistent, resilient and quality-driven—another advantage for Canada.”

He notes that German companies want to cooperate with innovative suppliers who share their concept of investing in continuous workforce training and in automation. “If you are open to accepting long‑term supply relationships, or are interested in German equity investment, it will be important to demonstrate how you have kept your company competitive and innovative,” Engler adds.

Advantages and challenges

Weichert says that Berlin itself is a very metropolitan city of about 3.5 million people, while also being “super green, with some of the largest urban parks and forests in Europe.” The real estate is pricey, so finding a place to live can be a challenge, although commercial property is a little easier, he reports. “If your business doesn’t need to be in the big city, other locations in Germany might be a better bet.”

Companies need to do their homework, which includes seeking out the right Trade Commissioner who can help. “Importing into Germany requires a company to know EU rules as well,” he points out.

Weichert says Canadian companies are increasingly making use of CETA, although many are not yet taking full advantage of the elimination of duties on 98 percent of goods exported to the EU. “Knowing how your product benefits from CETA and filling in the right paperwork to get the benefits is important.”

Germany has low unemployment, so finding qualified staff can be a challenge. “With the right support from legal and human‑resources experts, setting up a business is a little more complicated than in Canada, but still achievable,” Weichert says, noting that Germany is a highly rules‑based, bureaucratic society.

Some major challenges faced by Canadian exporters to Germany include language barriers, understanding local labelling rules and complying with EU standards and certifications. Trade Commissioners both in Canada and Germany are dedicated to helping Canadian companies overcome challenges and achieve success in the market.

“As Canada’s boots on the ground, we are in tune with developments in the local market and how business here works, positioning us to give practical advice,” Weichert says. “We’re able to pass along this knowledge to our Canadian clients and provide them with perspective on what may or may not work in Germany.” Trade Commissioners also help Canadian companies find local partners and make introductions to local organizations.

There are challenges surrounding uncertainty in the wake of the COVID‑19 pandemic, he says, and the Ukraine conflict is also unsettling.

“We continue to navigate uncertain times,” Weichert comments. “Still, as democracies seek to establish secure and safe supply chains with like‑minded partners, Canada is well-placed to contribute to Germany’s goals of a cleaner and carbon-neutral economy in the long term, and to contribute to Germany’s energy security in the short and medium term.”

Weichert’s biggest piece of advice for Canadian companies is that German counterparts want to get to know them. “Come meet your next key business contact and let your business benefit from this long‑term trading and investment relationship,” he says. “And don’t forget to talk to your Trade Commissioner in market.”