Doing business in Hamburg with a foreigner’s background

Hamburg is a cosmopolitan city, and it has been since the beginning of the last century with numerous waves of immigration. Many foreigners have chosen the hanseatic city as adopted home and have built a living. Currently more than half a million people with an immigrant background live in Hamburg, representing some 30% of the population, which is significantly above the German average of almost 20%. And this share is reflected in the corporate landscape. The Hamburg Chamber of Commerce has more than 20,000 member companies where the owner or CEO is in possession of a foreign passport.

In addition, the willingness of refugees  to establish enterprises is significantly higher than among Germans, probably a side effect of the difficulties to get access to the German labor market. And one shall not forget: beneficiary of the corporate tax is the city of Hamburg, some 50% of the "Körperschaftsteuer" and 100% of the "Gewerbesteuer" remains in Hamburg. On top of that comes the share of the income tax paid on the managing directors salary and dividend income.

A real challenge is the outsight of where a foreigner sees its future.

Most of these entrepreneurs, namely around 5.800, have Polish passports. In second place follow Turkish enterprises with approximately 2.100 companies and in third place is Bulgaria with about 1.800 companies.

"Not being able to speak and understanding German is a key obstacle when building an entrepreneurial existence."

In contrast to what is unfortunately often presented in the media, this whish is very dominating. After all, a foreigner remains a "foreigner" for a very long time in Germany. It takes long to really feel at home.

The image of a typical company, however, has changed dramatically over the last 30 years. Today a considerable part of them generate revenue with science-intensive services.

The particular difficulties of enterprises are still language barriers, lack of knowledge of the German authority procedures and the legal system or even problems in commercial understanding, not necessarily of the basics but more of the cultural aspects. Industry-specific guidelines, be it the packaging guide, dangerous goods policy or, more generally, the arrangements for the recruitment of staff, are particularly at the beginning a major hurdle. Also not unimportant are problems in financing by financial institutions.

The bureaucratic hurdles are relatively low in many countries of origin, and, feeling overwhelmed, the founders tend to their relatives and friends to get help instead of contacting the Chamber of Commerce who is the first choice for German founders.

Whilst Germany is a very attractive country, and Hamburg, with its many foreigners is a preferred location to settle down as foreigner, most foreigners have the whish to return to their home country at "some later point in time". The more freely the decision to come to Hamburg has been made the longer that period may be. As a consequence, business strategies often reflect only a short- or medium term period and forecasts are humble.

The multicultural backbone of Hamburg however offer enormous opportunities. An example is Irfan Gündogan, founder of Aramada Festsaal, who started with researching event halls for turkish festivities, often encompassing 400 people and more. Initially he organized locations for around 4-5 events a year. Nowadays, they are hosting more than 80 events a year. And his company grew from a one-man show to a 15 staff enterprise. The grounds for his success, he says, lay in his use of his vast connections in the turkish community. 

However, friends and relatives are not necessarily experts for the questions at hand. The Hamburg Chamber of Commerce has offered special programs for many years for start-ups with an immigrant background and has since August 2015 made another effort: The department "Migrant Companies" now supports in the process of business start-up with its linguistic and cultural competence - both with special courses in the premises of the Chamber of Commerce as well as on-site at the companies.

"A big challenge is the wish to "go home" and to overcome it when thinking business."

"Making use of the various expatriates networks is a booster to a foreigner's business."

And the expatriates communities in Hamburg are strong. The American Business Club, the German Russian Forum, the German British Community, as well as international communities like Internations, Toytown, Girls Gone Internatonal and the like are substantial business factors.

Verónica Gualda and Cecilia Sroor built their business "Cherrylicious" on the same pillars: a vivid network of foreign women in Hamburg.

On top of their commercial and administrative qualifications the members have cultural roots in diverse countries and speak both languages fluently. The Chamber of Commerce is hoping thus to make a significant contribution both to the economy of Hamburg as well as to the integration of migrants - a challenge that is presently heavily discussed in Germany.

The economic contribution of refugees now coming is significant. Costs for the logistical feat to provide shelter for all and shoulder the process of the asylum procedure and the first integration measures as language courses, are high. Some 25,7 billion EUR estimates Matthias Lücke, Institut für Weltwirtschaft in Kiel. Devided by around 1,1 billion refugees this results in cost of roughly 25.000 EUR for each refugee. However, although it takes time for a refugee to find work, statistically, after just 5 years his contributions into the German social system amortize the initial cost, and thereafter it is predominantly a positive development. This assumes a limited income of around 30.000 EUR per year and getting work in the second year.

They have successfully filled a gap for the desire of beautifully decorated cakes for special occasions apart from the wedding cake.

The Red Relocators also offer support to establishig a business. The offer is sought for especially by spouses accompanying their partner, be it man or woman. Often the locational change is a welcome trigger to resort life and think about alternative solutions. Since a lot of employees are send to the next assignment within a couple of years ideas are developed to find a lasting product or service that is independent of location or can be expanded or transferred to any new location. We advise on bureaucratical procedures, tax specifics, rules and regulations, rights and obligations, and we serve as competent sparring partner for strategy and operational processes. With our experience about the specific circumstances of international assignments we are perfect partners in this challenging period.

Posted in Working.