Irish firms eye opportunities as German economy gains strength

Irish companies are moving into Germany like never before as the resurgence of Europe's economic giant coincides with the realisation…

Irish companies are moving into Germany like never before as the resurgence of Europe's economic giant coincides with the realisation that Ireland can no longer rely as heavily on multinationals for exports.

"While some growth will come from new and emerging markets like Russia and China, it's also extremely important to re-examine potential markets like Germany which is coming out of a down cycle," said Angela Byrne, Enterprise Ireland manager for Germany, Austria and Switzerland.

For years, Germany was caught in a vicious circle of slow growth, rising unemployment and weak consumer spending. The German media pushed this gloom boom and, despite Germany's continued underlying economic strength, the message was picked up and amplified by the international media.

After economic reforms and years of wage freezes and cost-cutting, the World Cup kicked Germany back into international favour - helping to revive the economic outlook for the coming years.

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"There hasn't been a lot of spin put on the positive aspects of a booming Germany from the perspective of an Irish exporter," said Ms Byrne. "But Germany is now the challenge to the Irish sector."

After Irish investors "rediscovered" the potential and stability of the German property market, Irish companies are following their lead into business - from engineering companies to medical technology and information technology.

Enterprise Ireland has established the Irish Business Network, bringing together companies contemplating the plunge with new arrivals and established Irish companies in Germany to swap contacts and experience.

Recent arrivals include Quinn Insurance, Norkom, O'Brien's Sandwiches and spread betting company Delta Index. Delta seized on the opening of the European financial instruments market to launch in Germany early in 2008.

"Germany is a really good test of any company because consumers are very discerning and will give instant and frank feedback," said Chris Curran, director of Delta Index international business development.

The year spent preparing the German launch has, he said, helped him reassess common stereotypes of the German market and consumers.

"Contrary to the usual stereotype of German investors as conservative and risk averse, there is a niche of people who have a very strong risk appetite and those are the people we are after: older, smarter guys who don't get caught up in fashions who want to engage with markets in a leveraged way online."

Quinn Insurance is now up and running in Germany after establishing itself in Frankfurt last August. Carola Geary, insurance operations manager of commercial European operations, said its entry to the German market was made easier by existing Quinn chemicals and plastics businesses here.

"It wasn't like we were walking into the big unknown," she said "And after entering the insurance market in Belgium and the Netherlands, Germany was the next logical step."

The company is eyeing profitable niche business like property insurance and the large third-party liability sector. Rather than impose the company's Irish direct phone sales model, where over a third of its insurance business is generated, Quinn has hired local experts to build contacts with Germany's well-established broker network - the most popular way to sell insurance here.

Country manager Klaus Hagenrainer is confident Quinn can hold its own in the backyard of insurance giants like Allianz.

The Quinn group's own experience and identity as a family business will, he says, be an effective overture to customers of the Mittelstand, the medium-sized enterprises that are the backbone of the German economy.

"We don't want conflict with Allianz but we are telling brokers, 'Call us, let us create a special product with you'," said Mr Hagenrainer. "We have more flexibility."