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Foreigners set up 40pc of new German firms

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Foreigners set up 40pc of new German firms
Last year 45 percent of new foreign businesses set up in Germany were in construction. Photo: DPA
08:43 CEST+02:00
Germany is increasingly relying on foreigners to stir entrepreneurial spirit in the country, as the number of new companies being founded by Germans falls.

The number of foreign entrepreneurs setting up new companies in Germany has risen from 90,000 in 2005 to 145,000 last year, despite an overall fall in the number of people setting up on their own.

A study released on Monday by a think-tank for medium-sized business, Institute für Mittelstandsforschung (IfM), showed three-quarters of new foreign-founded companies were in the construction (45 percent), trade (18.2 percent) and hospitality (10.2 percent).

While the number of foreigners starting new businesses in Germany has risen almost every year since 2003, the number of Germans doing so has been falling since 2004.

This trend has boosted the proportion of foreigners among new entrepreneurs in Germany. Immigrants in Germany were responsible for founding 42.7 percent of all new businesses last year - more than double the share recorded in 2005 (18.8 percent), said the Bonn-based IfM in a statement.

The IfM believes the reason for the sudden surge is relaxation of employment rules in Germany for citizens of eastern European countries which joined the EU in 2004.

If broken up by nationality, the figures show that the numbers of new entrepreneurs in Germany from outside Europe and from older EU countries was actually falling. The new businesses were all being founded by new EU citizens, IfM found.

When their countries joined the EU in 2004, Germany placed employment restrictions on citizens from Estonia, Poland, Lithuania, Latvia Slovakia, Slovenia, Czech Republic and Hungary, requiring them to get work permits before they could start their own business. These restrictions were only lifted in May 2011.

Employment restrictions on Romanians and Bulgarians, meanwhile, whose countries joined the EU in 2007, were only lifted at the beginning of this year.

But deputy manager of IfM Rosemarie Kay said the trend was unlikely to continue. "In the medium term we expect this founding activity by citizens of the newer EU countries to reflect that of the other foreigners and... fall significantly," she said.

Setting up in Germany

Brit Michael Ashley met his now business partner when he came to Berlin in 2010.

And in mid-2013, he was given the chance to open his own ethical-clothing shop in the centre of the city called Atelier Akeef.

He said: “We only gave ourselves two-and-a-half months to literally do everything - store design, building work, compiling a complete brand list, branding, marketing - you name it. That was highly challenging for such a short space of time, but we got there.

“Now that seems like the easy part; each day we’re working to get our name out there and engage with people and help them to understand our new approach.

“Sometimes the language barrier can be tricky, especially when speaking to companies handling all our money transactions, but you’ve got to work through that, to make sure you understand everything clearly.

“I think Berlin is a place in which someone can come to and really make something of themselves, if they are ready and willing to put the work in. Life is easy and cheap, compared to many places, and there are many people who want to create something.”

What are your experiences of setting up a business in Germany? Share your thoughts below. 

SEE ALSO: Nine tips to survive as a freelancer in Germany

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