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US firms often fail to understand Germany
Photo: DPA

US firms often fail to understand Germany

Published: 24 Feb 2013 08:09 GMT+01:00
Updated: 24 Feb 2013 08:09 GMT+01:00

The paper said the US company provided a delayed and poorly detailed answer in badly written German to immediate questions about its German operations, but in this regard it is not alone.

American companies often fail to understand the German market and when things go wrong, their managers and public relations people often feel they are maliciously misunderstood.

This is because cultural differences are often underestimated.

Google’s Chief Eric Schmidt provoked Europeans last year when he proudly said that Google hardly paid any taxes in Europe. “That’s called capitalism,” Schmidt bragged.

The comment pushed Michael Sell, the director of the tax department in the Federal Finance Ministry and his boss, Wolfgang Schäuble to put an end to that. The days in which Google earns 54 percent of its sales abroad but pays only three percent of its taxes there are numbered.

The problem, according to Frank Roselieb, head of the Kiel Institute for Crisis Research, is that race discrimination and sexism is severely penalized in the American media and among the public, but workers’ exploitation and inhuman working conditions are not.

Facebook had to learn about Germany’s cultural differences the hard way. It proudly presented its facial recognition technology in Germany in 2011 – only to learn that data protection advocates and politicians clearly did not “Like” the move.

Many felt they were being taken over by a George Orwell-type-1984 Big Brother technology, in which unauthorized people would have easy access to citizens’ private information.

Time delays between Germany and the United States does not help communication, the story said. Seattle-based Amazon is nine hours behind Germany and by the time the company got an adequate answer – translated into German – back to reporters here, papers had already gone to press.

Most companies learn how to deal with their foreign operations via bad experiences, the paper wrote. Microsoft, for example, had an image problem following European Union competition authorities efforts to go after the software giant.

The company responded by expanding its public relations presence. Germany is a key priority for the company, which is also based in Redmond, Washington. Chief Steve Ballmer is often in Germany and German managers are sent to Redmond.

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Your comments about this article

11:03 February 24, 2013 by Englishted
" workers¦#39; exploitation and inhuman working conditions "

¦quot;That¦#39;s called capitalism,¦quot;
11:41 February 24, 2013 by smart2012
bs, the issue with amazon has nothing to do with language, as management of amazon Germany is mainly German. The issue is that all companies have worsened working conditions in Germany to survive... DHL another example. This thanks to poor reforms done with 400 euro jobs and temp agency as examples.

Again, Germany hide the main issue, point fingers on others, and it will lead to a disaster
12:06 February 24, 2013 by blackboot11
A delayed response? Like things in Germany move much faster.... LOL!
12:26 February 24, 2013 by MrMooochy
An interesting story is the saga of Wal-Mart in Germany, I recall that Wal-Mart made a big entrance here in the late 1990s by building some new stores on the same model as in the USA and buying a chain called InterSpar around the same time and converting them to Wal-Marts a la USA style. Major disaster.

Wal-Mart is long gone now, had to shut down here after failing completely to do its homework on the German market. They lost many millions of dollars / euros here. One (of many) major miscalculation made by Wal-Mart big-whigs and hot-shot American managers is spelled with just four letters: Aldi.
12:28 February 24, 2013 by zeddriver
smart2012

I would even go further and say that the "security personnel" at Amazon are German as well.

I think what most American companies don't understand about doing business with Germans. Are the Germans ability to set aside common sense in the blindly OCD way they follow rules. Germans at the large company level have zero concept of initiative to get things done. Only in Germany could a company be accepting of a worker that gets nothing done. Just so long as the rules where followed while they did nothing.

In America. Workers in general are rewarded for coming up with more efficient ways in which to satisfy customers. Or for simply bending a company rule to get a job done so long as no laws or safety are compromised.

It has been my only source of frustration while living in Germany. Mind you. The German people are wonderful. But doing business with a large company even as a consumer is always problematic.

On the flip side. The Mom & Pop small businesses are always a pleasure.
13:03 February 24, 2013 by pepsionice
The Wal-Mart experience into Germany was deemed a failure by the company.....but the explanation has nothing to do with InterSpar.

Wal-Mart has a general plan as they move into each town. They put up a major building and they want cut their prices to the bare minimum, gut the competition just in that town, and within three years....start seeing the competition in that town shut down. At that point, the prices at that one single Wal-Mart will rise by two-to-four percent overnight. Then they can relax because they've got customers glued into shopping at the store, and occasionally offer up some great deals, but not like the original first three years.

The German stumbling block is that German stores really don't like new competition appearing in their town. So they go to the local city council and make life miserable for Wal-Mart as they apply and try to get property/building space. In a number of cases....like Kaiserslautern....the city council just wouldn't allow them to go forward.

Then the competition business came around to pricing. Wal-Mart has a secondary trick of going to Pepsi and Coke.....buying massive truckloads of soft-drinks, and then selling each drink for five percent less than they paid for the 'unit'. For each drink, there's zero profit, and even a loss which would normally appear on the books. Strangely enough, there is a German law forbidding this type of aggressive pricing (you can't sell less than what you bought the item for). So week after week.....they were taken into court. Court costs, lawyer fees, and fines were deemed fairly excessive after a year or two of this practice. Wal-Mart just simply kept looking at this practice as one of their major ways to get ahead and get addicted shoppers.

So at some point, between the hostile competition situation, and the fines....the leadership of Wal-Mart deemed Germany as a place where you can't launch and make a profit with the business model that the company uses. So they packed up in less than nine months and left. They will never come back....as long as the current business model stays the same way.

A footnote to all of this mess. In Kaiserslautern, the one remaining big-store in the middle of town (their magnet to get people into the walk-platz area).....went bankrupt around four years ago. Real estate people tried to work various deal deals to bring a new company to the building (which is in good shape). The local stores downtown (all small and medium-sized) did everything possible to stop that effort. Strangely enough....as each Christmas season came and went....they made less money than before when the big-store was in operation. None of the local downtown business men can explain the profit losses in detail....but in the past year, they've agreed to allow a new company to move in and operate the big store building. Competition is a necessary evil at times.
13:20 February 24, 2013 by trevzns
Yes indeed there are cultural differences between US and German companies.

In the US there is zero tolerance for Intimation, sexism and discrimination. There is zero tolerance for a practice some German employers engage in. The exploitation (ausbeuten) of workers not being paid for hours worked or paying overtime.
13:21 February 24, 2013 by smart2012
Can someone comment on DHL and deutsche post working conditions? Silent ;)
15:40 February 24, 2013 by catjones
For all the Walmart haters....you successfully kicked out competition. Brilliant.
15:58 February 24, 2013 by Berlin fuer alles
more propaganda on behalf of Dr. Merkzl and Mr Hyde. Point the finger at American companies when the real issue is German management and German HR practices. 400 euro jobs and internships being exploited to a level that borders on a human rights violation are commonplace in the German job market. As smart2012 said, what about DHL and DP. Look at what happened some years back at Siemens as well. Germany loves Gast Arbeiter but hate to give them the rights necessary to survive at a reasonable level compared to German workers. Dirty, Dirty dirty job market in Germany. Just make everything cheap and screw the poor guy at the bottom of the ladder.
18:30 February 24, 2013 by michael4096
"In America. Workers in general are rewarded for coming up with more efficient ways in which to satisfy customers."

And, in Germany they aren't! Really? Last year German companies satisfied American customers to the tune of $108B - $60B more than the other way around. But, they don't reward their employees? How do they do it?

"In the US there is zero tolerance for Intimation, sexism and discrimination."

Apart from the fact that it simply isn't true - I wonder if the author has ever worked in a normal US working environment - Germany has much more stringent laws than the US on these topics including the fact that executives can be imprisoned for not actively stopping it happening.

Anti-US sentiment is a constant complaint on this forum but silly pro-US propaganda is far more rampant. Although I've worked many years in both countries, I've only experienced a smallish number of companies and so I cannot say which environment is generally less discriminatory, more rewarding, better... but, the oft painted picture of US employment perfection is way off.
19:00 February 24, 2013 by Berlin fuer alles
@michael

And, in Germany they aren't! Really? Last year German companies satisfied American customers to the tune of $108B - $60B more than the other way around. But, they don't reward their employees? How do they do it?

That would be down to Germany being an export economy and not importers to anywhere near the level they export. Oder?
19:16 February 24, 2013 by mitanni
@michael4096 People aren't making "pro-US propaganda", they are defending against bigoted and ill-informed attacks on the US. The level of ignorance of most Germans about what goes on outside their country (or even just basic economics) is just staggering.

As for worker exploitation, you are simply demonstrating your ignorance by measuring worker exploitation by the level of legal regulation. The primary mechanism for dealing with worker exploitation in a market economy is through changing jobs: if your company is treating you badly, you go somewhere else. Of course, this doesn't even occur to Germans because job changes are such traumatic events in Germany. The German labor market is so inefficient and long-term unemployment is so rampant that market mechanisms for dealing with worker exploitation fail.

Furthermore, if you measure worker exploitation by the rewards workers receive for their labors, German workers are horrendously exploited, since they receive (on average) much less actual compensation for the same labor than American workers, with the difference disappearing in the pockets of rich folks. And the German system of worker exploitation is such a finely engineered machinery that people like you are completely blind to it.

This is actually compounded by the export statistics you tout, because while export surpluses look good on a financial balance sheet and lead to higher employment, they also reflect a lower level of consumption, and hence a lower standard of living.
19:41 February 24, 2013 by Englishted
" workers exploitation and inhuman working conditions "

"That's called capitalism"
19:51 February 24, 2013 by ChrisRea
@ Berlin fuer alles

michael4096 pointed out that products made in Germany satisfy more American customers than the other way round, so it is ridiculous to say that American workers excel in satisfying customers (in comparison with German workers). The export nature of an economy is given by the competitiveness of its products, it is not a per se condition.

@ mitanni

"People ... are defending against bigoted and ill-informed attacks on the US." - Can you point out such "attacks" in this article or in the comments that followed? I saw none of them.

"you are simply demonstrating your ignorance by measuring worker exploitation by the level of legal regulation." - michael4096 made no reference to worker exploitation. Where did you get this stuff? Who said something about bigoted and ill-informed attacks?
20:02 February 24, 2013 by zeddriver
@michael4096

"In America. Workers in general are rewarded for coming up with more efficient ways in which to satisfy customers."

And, in Germany they aren't! Really?

To a point. Yes. And here is an example of the wonderful help one will get in Germany from a large company.

As I live in a rural village. I had to get internet for my iMac via the cell network. Which then requires that I have a usb stick modem with a simm card. Off to T-Mobile I went. I asked for a usb stick simm card modem. The T-Mobile Rep's eyes simply glazed over and then I heard the German national business anthem. Which consists of only 4 words. "this is not possible" I was gobsmaked. I called T-Mobile in the USA. Guess what they said. Yes sir Mr. Zeddriver. We can get one in the mail to you today. Of course I paid through the nose for it ($130). As I had to get it unlocked. When i went to T-Mobile with my new usb stick modem and asked for a simm card for it. The very same rep from before looked at me, bent down, reached under the counter and came back up with a T-Mobile usb stick modem and said that would be 4.95 euro. I asked him why I did not do that before. His T-Mobile employee handbook book does not call a usb stick modem a usb stick modem. Oh no. They call it a web and walk surf stick. So to his German mind. There is no such thing as a usb stick modem. Otherwise the book would say so. That's the kind of OCD I was referring to.

Of course the US business model does not work like that. I have never worked for a company in the US that requires it's employees to be totally devoid of problem solving initiative. I'm quite sure he knew what a bloody usb stick modem is.

The American rep was taught to make a sale by having the ability to adapt and "get it done" They knew what I was talking about when I asked for a usb modem. Even though the American T-Mobile product is called a webConnect jet. He had the initiative to actually connect a few dots.
20:25 February 24, 2013 by Berlin fuer alles
@ChrisRea

I think Mitanni answered you already if you read his/her comment carefully.
21:31 February 24, 2013 by mitanni
@ChrisRea "The export nature of an economy is given by the competitiveness of its products, it is not a per se condition."

Trade surpluses can also be a result of trade barriers, subsidies, cultural barriers, lower wages, and lower consumption; Germany's trade surpluses are more than explained by those factors, rather than "competitiveness". Furthermore, those factors amount to a government mandated, widespread exploitation of German workers.

"Can you point out such "attacks" in this article or in the comments that followed? I saw none of them ... made no reference to worker exploitation. Where did you get this stuff?"

Are you blind? Roselieb explicitly talks about "worker exploitation" and "inhuman working conditions" in the US, with absolutely no data to back up his accusations. And as my response shows, Roselieb is completely wrong.
21:58 February 24, 2013 by yllusion
Another recent example about the business voracity of the americans is Goodyear in France. Good to know that the CEO got a proper anser from the minister. It's exactly this exploratory capitalism the source of our current social problems.
22:59 February 24, 2013 by mitanni
@yillusion Business voracity? Goodyear determined that the French plant wasn't competitive with Chinese imports and it was losing money. If you can get a set of tires for $100, are you going to voluntarily pay $150? Why should Americans (or other French) subsidize French workers in a money-losing factory?

Montebourg can huff and puff all he wants to, it's not going to create jobs and it's not going to bring Goodyear back. People like Montebourg will keep giving "proper answers" until the country is roughly as well off as the GDR was.
23:24 February 24, 2013 by michael4096
@Berlin - "That would be down to Germany being an export economy and not importers to anywhere near the level they export. Oder? "

Yes, both American and German consumers prefer German products and that results in a trade imbalance. So, that means German companies don't reward for employees' good product ideas?

@mitanni - "The level of ignorance of most Germans about what goes on outside their country (or even just basic economics) is just staggering."

A ballsy statement. Particularly in the context of Germany / US comparison.

"The primary mechanism for dealing with worker exploitation in a market economy is through changing jobs"

I'm afraid your ignorance of basic economics is showing. History too. Or, just perhaps, every nation on the planet is wrong, because they all legislate to a greater or lesser extent on worker exploitation.

"As for worker exploitation, you are simply demonstrating your ignorance by measuring worker exploitation by the level of legal regulation."

Generally, I think most employers in both countries exceed their legal obligations for sound business reasons. The law represents a level below which other employers can't sink.

The point Roselieb was making was that another factor, the media and public opinion, actually set a higher standard than the law in the US but that it covers only some aspects of the issue. I don't actually see any accusations but if he has some I'm sure he can back them up - after all you are reading a secondary source and have no idea what his backup is.

"...while export surpluses look good on a financial balance sheet and lead to higher employment, they also reflect a lower level of consumption..."

This is nonsensical. Export surpluses reflect only a lower level of imports. It says nothing directly about employment or consumption levels.
23:49 February 24, 2013 by michael valerio
The problem with the U.S. and Germany is; if it isn't english or pro Israel it must be Nazi or some such nonsense.
11:48 February 25, 2013 by frankiep
@zeddriver,

I can definitely relate to your story from my years of working here in Germany. Don't get me wrong, I thouroughly enjoy living in Germany and like the German people, but when you work in a German company you are exposed to a level of pedantry I never thought was possible. Everything must be planned and discussed and reviewed and approved and discussed further and replanned - before even the first bit of actual work can be done. And if, once the work actually does start, there is the slightest unforeseen deviation from the plan then everything stops and the whole process of planning, discussing, reviewing, approving, etc. starts all over again. Coming from the US and having worked much of my life among Americans, this is something I don't think I will ever get used to. My American work ethic taught me that, yes, planning and discussion is important, but that a plan should be used as a guideline that allows you to actually take action and make adjustments when needed. Here however, a plan is written in stone with the goal of describing in painstaking detail exactly how every single imagined situation must be handled. I'm not saying the one way is better than the other - since both have their advantages and disadvantages - but that this is a cultural difference between Germany and the US that most people severely underrate.
12:47 February 25, 2013 by Berlin fuer alles
@frankiep

It would have been better if they used either of those ways of thinking when planning and building the Willy Brandt airport in Berlin/Brandenburg.
13:44 February 25, 2013 by ChrisRea
@ mitanni #18

"Trade surpluses can also be a result of trade barriers, subsidies, cultural barriers, lower wages, and lower consumption" - Really? It is because trade or cultural barriers that US imports from Germany are significantly bigger than the exports to the same country? I hope you do not suggest that the goods imported by US from Germany are subsidized (because it would show that you have no idea about the structure of the products imported/exported). Lower consumption? You can have lower the consumption as much as you want, that will not make other countries prefer your products against those produced in other countries.

"Roselieb explicitly talks about "worker exploitation" and "inhuman working conditions" in the US, with absolutely no data to back up his accusations." - Actually Roselieb says that workers¦#39; exploitation and inhuman working conditions are not "severely penalized in the American media and among the public", as opposed to race discrimination and sexism. If you consider this statement false, please come up with facts and figures. I am pretty sure you cannot. So I guess the bigoted and ill-informed attacks originate from you. It would be helpful if you will (re)read the article.

At least you do not attribute anymore to michael4096 things that he never said.
14:33 February 25, 2013 by hanskarl
And after all of this discussion one has the difficulty of understanding German legal jargon, which is another level of language expertise within itself!!!! Arghhhh!!!!
18:57 February 25, 2013 by RosieRosebud
@smart2012..,,,....;American based companies are currently sitting on piles of money never before seen at the current dollar amounts. In other words, these companies have been able to amass huge profits for themselves at the expense of their workers. They refuse to pay a living wage, they refuse to pay for health insurance, they refuse to provide pensions, and they literally have refused to pay their fair share of taxes.

Yes, that is AMERICAN CAPITALISM.

I call it "American capitalist version of how to rape the worker and the nations."

In essence it involves using the force of money to pay for campaigns and then force those indebted politicians to enact laws that allow the company to forcefully take over the well being of not only the employee who needs work to survive, but also the well being of the nation which needs money to provide services.
16:31 February 26, 2013 by zeddriver
@frankiep

Well said sir. You are much more eloquent than I am.

@RosieRosebud

and they literally have refused to pay their fair share of taxes.

Really. Name them.

What most companies do. Is hire tax lawyers to use the tax LAWS to minimize taxes. That is far different than a blatant breaking of tax laws.

Want to blame someone. Look no further than the politicians whom passed those laws. The politicians are simply diverting attention away from their own failings as leaders by pointing their boney fingers in another direction. Hence the cry from politicians of companies not paying their fair share. When the companies are simply using the existing tax laws to their advantage.

I would ask you. If the tax laws you are required to follow stated that you didn't owe a tax on a portion of your income. Would you pay it anyway? Or would you (like most people) simply say that the laws says I don't owe it. Or would you label yourself a person that does not pay their fair share? It's the same thing with companies. If the law states they don't have to pay. Then why should they.
17:07 February 26, 2013 by mitanni
@ChrisRea You're merely evading the issue with your irrelevant responses and handwaving. The fact remains: German workers receive much less reward for the same work than American workers do, and German workers have a much harder time getting out of bad working conditions by changing jobs. That means it is German workers, not American workers, that are being exploited.

@RosieRosebud In fact, most corporate employers provide health care and retirement plans. The people who don't offer health care and retirement plans in the US are very small businesses that barely make ends meet. And US corporations pay exactly those taxes that they are required to pay by law, just like they do in Germany. Marginal US corporate tax rates are among the highest in the world, and effective corporate tax rates in the US are OECD average. In different words, your bigotry and hatred of the US is based on lies.
22:48 February 26, 2013 by chris berlin
... I haven't read anything here for a while and I won't again because I see that there are just a handful people here who do not care about the articles but use this plattform for their prejudices about germany (or the US) or do not see that their subjective perception is not able to be generalised. I do not see any sensitivity. So these forums here should be called: mainly anti- but also pro-germany propagandism... Do not think critically just express your unquestioned opinion!

The great thing about amazone in Germany is that there is a big movement of conscious people in Germany who stopped buying stuff at amazone - which btw destroys all the other small shops. I observe many conscious people who try to buy things with responsibility - if it is fair food, not eating meat anymore, using green energy or buying things at local small providers.... This is a great development.

Amazon is one of these big companies which outsouced at lot of services to save money and then, if sth. goes wrong, says: we are not in charge. This is a phenomenon of a lack of responsibility. there is no connection between managers and workers. This is to observe everywhere, in the US and increasingly also in Germany after it deregulated its job market... so the only way out of this is more regulation by the state and/or more conscious customers.
01:26 February 27, 2013 by ChrisRea
@ mitanni

Oh, suddenly, as your arguments are proven not to hold water, you decide that the issue is something else. Let me remind you the title of this article: "US firms often fail to understand Germany". You claimed that it is about bigoted and ill-informed attacks on US, but then you are also incapable to come up with facts and figures to prove it. So you are actually the case of thief shouting "Thief!".
12:12 February 28, 2013 by jillesvangurp
I think this is more a case of indifference rather than a lack of understanding. Germany seems to live a bit in a bubble. Google to the best of my knowledge still doesn't pay much taxes in Germany. Why should they? German privacy law has resulted in them engineering around Germany rather than adapting their overall strategy. All this proves is that Germany is a difficult market for new innovative products. Amazon is the biggest online retailer in Germany. They're doing something right there and they've largely killed incumbent German competitors.

The reality of corporate Germany is that it is strongly hierarchical, a bit old fashioned, with a touch of nepotism and corruption here and there, and kind of expensive to do business with. Foreign companies dealing with Germany have to be pragmatic when it comes to taxes and employment. It's a reason why they are taking their money elsewhere when it comes to e.g. production capacity. So, Germany needs to be pragmatic as well if it wants to stay relevant as a big economic power.
19:12 March 1, 2013 by Drewsky
Germany's productivity rate and level of domestic industrial manufacturing is superior to that of the USA. Workers have much stronger rights and much better vacation time, health care and pension than do their American counterparts. If I were in my 20s again and knew what I know now, I would emigrate to Germany. I think it's a great country, with much smarter & better educated people than the USA.
14:52 March 3, 2013 by mitanni
@michael4096 "The point Roselieb was making was that another factor, the media and public opinion, actually set a higher standard than the law in the US but that it covers only some aspects of the issue"

I have no idea what that even means. The story is about German managers and German companies abusing minority workers in Germany. What does that have to do with US laws or even Amazon, for that matter? (I'm not going to bother responding to your economic statements; pick up any textbook on economics and you'll find that what I said is true.)

@Drewsky Just about every one of your beliefs is contradicted by data: US productivity is higher than Germany's, pensions and health coverage is higher in the US, and US adult educational levels are higher too.
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