German Business Runs on Companies You Never Heard Of

Ask where German business happens, and the honest answer is a list of towns you have probably never heard of.

Volkswagen builds cars in Wolfsburg. BASF runs the world’s largest integrated chemical complex in Ludwigshafen. That site covers around 10 km² (4 sq mi). It keeps its own fire brigade and 230 km (140 mi) of railway track. Adidas, Puma, and Schaeffler all sit in Herzogenaurach, a Franconian town of roughly 24,000 people. Bertelsmann is headquartered in Gütersloh.

Frankfurt handles the money. The making happens everywhere else.

That pattern is older than any factory here. Blades were ground in Solingen because the Wupper turned the grinding wheels and the hills held iron ore. Lenses came out of Jena because a mechanic and a physics professor there started working together. Clocks came out of the Black Forest because the winters were long and the wood was free. Three towns, three reasons, and not one of them a business plan (well, not one anybody wrote down).

The skill stayed put. Somebody built a factory next to it, and the town never let go.

So the pages below are sorted by what you came for. Some readers want to understand how the thing works. Others want to open an account, sign a lease, or get a business off the ground.

How the German Economy Is Put Together

More than nine in ten German companies are small or midsize, and more than half of all jobs sit in them. We call this the Mittelstand. The word gets translated as “small and medium enterprise,” which is accurate and misses the point completely.

Many of these firms are family owned, three or four generations deep, and the biggest employer within a half-hour drive. What’s less obvious is how many of them are the best in the world at exactly one thing.

Remember the grinding wheels in Solingen? Same thing, centuries later, with machine tools instead of a river. Hermann Simon coined the term hidden champions for these firms back in 1990. He meant companies that rank first, second, or third worldwide in their niche while almost nobody outside the trade can name them. Roughly half of them are German.

They build the machine that builds the thing you bought, and their front door is on a village street. Ever heard of any of them? That’s rather the idea. Too bad, in a way, because most of them never put their name on anything you would recognize.

Which is why industry still accounts for about a quarter of everything this country produces. In France, Britain, and the United States the figure is closer to a sixth. We never traded the factories for offices, and the whole economy leans on that decision. Stubborn? Probably. It has also paid the bills ever since the war.

It cuts both ways, mind you. Close to half of German industrial revenue comes from customers abroad. When the world stops buying machines, we feel it before anybody else does, and we feel it for longer.

Then there’s the training, which explains more than it gets credit for. Plenty of school-leavers here head for a trade rather than a desk. They sign a contract that splits the week between a company and a vocational school, usually for three years. About two-thirds of them train at firms with fewer than 250 people.

It’s why the man who shows up to fix your hotel boiler moves like he has done it ten thousand times.

All of it goes on public display several times a year. Two-thirds of the world’s leading trade fairs are held in Germany, spread across roughly seventy exhibition grounds. Hanover, Munich, Cologne, and Düsseldorf each own a handful of the giants. Berlin and Frankfurt take their share as well.

And here’s the part that matters even if you have no business there at all. A Messe week fills every hotel in town and well past the city limits. Rates climb far above what the same room costs two weeks later. Check the fair calendar first, then book the city. Sounds obvious until you try finding a room in Hanover during the big one, doesn’t it?

Banking, Property, and Going into Business

German banking runs on three separate systems, side by side. Private banks are one. The other two are local. The Sparkassen (municipal savings banks) belong to the towns they sit in. The cooperative banks belong to their own customers.

That sounds like bookkeeping trivia until you see what it does. A machine shop in a small town borrows from a banker who lives in that town and who will still be there in fifteen years. The Mittelstand has been financed that way for well over a century, and mostly still is.

Frankfurt is the exception, and it looks the part. The European Central Bank, the Bundesbank, and the stock exchange all sit within a few U-Bahn stops of one another. It’s the one skyline in this country that would pass for American, which is exactly why we call the place Mainhattan. ;-)

One habit to know before you land: cards work nearly everywhere now, but bakeries, market stalls, and small restaurants often still prefer cash. Carry some.

Property works differently here than almost anywhere else. Germany is the only country in the European Union where more people rent than own, and the tenancies last. The average one now runs close to two decades. Renting the same apartment for thirty years is an ordinary life here, and the law was built for it.

Setting up on your own starts with one question. Work that counts as a trade gets registered at the town hall (Gewerbeanmeldung). Work that counts as a liberal profession goes straight to the tax office instead, and skips that step entirely.

From there it depends on the legal form. You may land in the Handelsregister or commercial register. Chamber membership arrives with the territory rather than by choice. And certain crafts call for a Meisterbrief, the master certificate, before you can run a shop of your own and train apprentices.

How long any of it takes depends on which door you came through. The rulebook itself reads the same for a newcomer as for anyone born here. It also tends to stay put from one decade to the next. Plenty of people consider that the best part of the arrangement (I am one of them).

For how that reputation was built, insult and all, start with Made in Germany. For the country itself, the wider view sits on Germany.

One closing thought, and it’s the practical one. If you want to see what this economy actually is, skip the stock ticker. Go look at a machine works in a town with one bakery. The sign on the gate will mean nothing to you (nor to me, and I live here). Its product is sitting in factories on four continents.