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International ‘Net; Berlin, Germany

Posted on 10.29.2008

By Mike Phillips

The Web has brought us all closer. We now work and live in a global community and, as such, we can’t afford to ignore business opportunities across borders. This issue we introduce International ‘Net, a new feature of Website Magazine where we take a look at Web-based business around the globe. We start with Berlin, Germany, where Web 2.0 Expo Europe just wrapped up.

Berlin experienced an Internet boom in 1999 and into 2000. And now it’s happening again, according to Alexander Koelpin, Head of Business Unit Media, ICT & Creative Industries at Berlin Partner, the business development agency for the city of Berlin.

According to Koelpin, Berlin is an ideal place for companies to enter the European market. To start, it’s economically feasible. Berlin offers subsidies to business, up to 35 percent of your investment back from the State; which, as Koelpin points out, is important when investing in high-end hardware and software. Koelpin sees many businesses set up a presence in London in an attempt to enter the European market, where it is very expensive and, in Koelpin’s opinion, “Being in the U.K. is not yet being in Europe.”

There are also geographic and social considerations. Berlin is in the center of Europe, so your business presence can extend across several countries. For example, German speaking employees give businesses a headstart in dealing with countries such as Austria and Switzerland. “Add in Frenchspeaking [individuals] and you can cover a huge part of the market,” says Koelpin.

Germany’s history has also played a key role in its Internet boom, especially in Berlin — much of its infrastructure has been completely revamped because it was owned by the Eastern side. This has allowed for substantial growth in the online market, as well as a rapid penetration into the mobile market.

But perhaps one of the biggest advantages in Berlin is the available crop of programmers, young graduates and interns from the several large universities in the city and surrounding areas. And, according to Koelpin, every developer and designer speaks enough English to communicate in business. This makes communication between businesses and service providers much easier, and results in lower wages for a well-qualified person. In addition, to attract more business to the German market, an organization like Berlin Partner will help find personnel, secure visas and even organize subsidies.

Of course, where there are opportunities, you will find missed opportunities.

“In my experience, in watching the Internet market for the past decade, it’s interesting to see how U.S. companies enter Europe — or don’t — like Facebook,” says Koelpin. “Now we have StudivZet [the German equivalent of Facebook] who is being sued by Facebook for copyright infringement.” Rumors circulate that the lawsuit is to drive the price of StudivZet lower, so Facebook can buy the company.

“With a little foresight, they could have avoided this,” says Koelpin. “eBay, for example, entered early and now their largest office outside the U.S. is in Berlin, where they cover the European market.”

For many businesses, setting up shop overseas might not be attainable yet. But there are many small businesses who set up a sort of micro-office simply to have a presence in Europe, and that might be an option for some.

So how can you decide whether to make a run at the European market, either with a small presence or a full-out cross-country effort? Koelpin suggests trying some simple translation of your Web pages and a targeted AdWords campaign. This way you can measure the interest in your products or services in an unfamiliar market. “It’s cheap and easy, and gets one in the right direction.”

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