DACH is an area of expansion that should not go amiss. But like any change, this expansion comes with some caveats.
To succeed with your expansion to the DACH countries you should look closely into two connected aspects: a) culture and b) organisational structure.
THE BIG PICTURE
Germany on its own is the biggest European economy with 83 million inhabitants, followed by Austria (9 million) and Switzerland (8.5 million). With respect to GDP per capita, the Swiss are by far the richest at $85k, second – surprisingly – Austrians with $48k and third the Germans with $45k per capita. All in all, a region with 100 million people producing a total GDP of over $5.5 trillion (yes, $5,500,000,000,000). For these facts, it is no wonder that several outside companies contemplate how to get a slice of the DACH cake.
(Note: DACH comes from the car country codes… thankfully it doesn’t come from today’s internet server extensions as it would be an unpronounceable “DEATCH”).
The culture is moulded by the language which is German in this case (Apart from 3 million French and Italian speaking Swiss, written German unites all three nations). In the spoken form, however, we could paraphrase Winston Churchill by contending that, “these three countries are divided by a common language.” Interestingly, the different dialects reflect the different mentalities of the 3 DACH nations. In my opinion, understanding this ‘cultural code’ specific for each country is the essential key to succeeding in DACH expansion.
YOUR FIRST DEAL
Let’s have an example. When trying to land your first deal in the DACH countries you will need:
THE CULTURAL DIFFERENCES
ORG STRUCTURE
Having covered the cultural issues, let’s move to the organisational structure of a possible expansion. Whatever business you are in, sooner or later you will need local DACH representation. Google, LinkedIn, Facebook, etc are proof that even fully globalised internet services need local offices in the DACH countries to be successful. The question is, should your own subsidiary, or a partner organisation do this change? The answer is: It depends! It’s more about the costs, risks, and gains with your subsidiary, versus a partner firm. Only after a thorough analysis of your business type, financial situation, and other aspects, can you give an exact answer.
Even if you decide to run your own subsidiary, then some local people should be employed. The above cultural reasons justify this. Both Austria and Switzerland have a common habit when foreign companies start their expansion to the DACH countries in Germany. Simply because of the potential of this single market.
IN CONCLUSION
An expansion into the DACH countries is a strategic decision that bears significant costs. A consulting service can help you make the right decision, save unnecessary costs, and produce faster results. For the facts stated above, there is not one single silver bullet. But deeper knowledge, wherever you get it from, of this whole ‘homogenously heterogeneous’ DACH market can help you succeed without too much stumbling.
To talk to us more on territorial expansion, please get in touch by emailing info@sbrconsulting.com or call us on +44 (0) 207 653 3740.
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