"Made in Germany" without risks!
Many people know about the advantages of selling goods that are labeled as “Made in Germany”. However in conditions of the energy crisis, inflation and Covid opening your own manufacture in Germany is extremely risky. Production might fail before even getting started. Are there ways to have the goods produced in Germany under your name but without opening your own manufacture, without large investments and without high risks? Yes.
In this article we will explain: what is private labeling, how to produce in Germany under a private label, what types of private labeling exist, how private label manufacturing will benefit you and why it is wise to start such a business in Germany now. As usual, we will give you a step-by-step guide on how to establish a business in such a case.
Our company, Nexus-Europe GmbH, assists foreigners with starting and developing their own business of any scale. Over 20 years of operation we have helped more than 7000 customers. If your business is beneficial to Germany we can assist you with obtaining government support, networking and make you a true part of the German business society.
Advantages of manufacturing in Germany
So, how can you benefit from manufacturing goods in Germany? We listed the main advantages of German manufacturing:
- No expensive shipping costs to Europe. For example, you save over 6000 euro for shipping a 40-tonne container from India to Germany.
- Trading with the whole EU without customs clearance and fees. On average, you save 5-12% of the product value on customs fees.
- Reputation of “Made in Germany”. According to a YouGov poll, products made in Germany have the best reputation with international consumers, which makes German manufacturing beneficial.
- No need for external authorized representatives.
- Becoming a reliable supplier. After Europe has suffered from supply chain disruption during Corona major companies are strongly focused on supply chain risk management. Thus they avoid cross-border supplies.
- The majority of B2B and B2C customers prefer buying from EU companies.
- Ease of e-commerce with the whole EU. As a rule, the clients of online shops have a right to return the goods within 14 days after purchase without giving reasons. The process becomes much easier if the products don’t have to be delivered from outside of the EU and then shipped back.
Opening an own manufacture in Germany
While the benefits of producing in Germany are obvious, you may face a lot of difficulties that could make it hard to realize the idea of German manufacturing to the full extent. Some of the difficulties you might encounter are as follows:
- Risk of failing due to the energy crisis and Covid. This point doesn’t need an explanation. All media constantly talk about it.
- High amount of required investments. You’ll need to invest in the construction of the manufacture itself as well as in machines, components or ingredients etc. The costs may be unaffordable for some entrepreneurs.
- Finding suitable components or ingredients. In many cases they have to meet certain requirements and standards, so the process might become quite challenging.
- Storing the components. Many components and ingredients have special storing requirements, such as temperature, humidity etc.
- Need to hire several highly qualified specialists. The stages of the manufacturing process need to be supervised by different specialists to ensure that everything is running correctly. Finding and hiring such specialists may also be a challenge.
What is the alternative to opening your own manufacture if you still want to produce in Germany and sell products under your own name? Private labeling.
What is private labeling?
When you choose private labeling, you have a contract or third-party manufacturer produce the goods for you. Usually you have control over what components or ingredients are used, how exactly the goods are manufactured, packed and labeled. The private label products are produced to be sold exclusively under your name. Once they are produced, the manufacturer delivers them to you, so that you can sell the goods. Shipping them to the customers is your task.
Watch our video on private labeling and its advantages:
Advantages of private labeling
What are the advantages of private labeling? Let’s see.
- Lower costs. You don’t have to invest in building and running your own manufacture.
- Focusing on sales and developing your brand. The manufacturer takes care of the whole private label manufacturing process, including finding components and quality control. This way you can devote your time to other tasks at hand.
- Control over the process without too much effort. As mentioned earlier, you define how and from what ingredients the private label products will be manufactured. But the manufacturer takes care of the rest, allowing you to go back to your job.
- Flexibility. If something isn’t working out as you expected or your demands change, you have the opportunity of finding another manufacturer that is capable of meeting all your requirements.
Private label drop-shipping
There is another option that works well in many cases: private label drop-shipping. As the name suggests, it combines two models: private labeling and drop-shipping. You still have the goods produced by a third-party manufacturer to be sold under your own name plus they are delivered directly to the customer. So, add not having to store the goods and worry about shipping to the previous list of advantages and you get private label drop-shipping.
Starting a business with private label manufacturing
So, what steps do you need to take to start a business in Germany? Let’s go over the main ones.
- Think the concept through. What exactly are you going to produce? What kind of customers are you going to have? What sales channels will you use? Will you be selling goods within the EU or to third countries? Many entrepreneurs decide to sell products outside the EU because goods made in Germany have the best reputation with international customers.
- Register a company. In most of the cases you don’t need a residence permit to open and run a company in Germany. We have detailed articles about types of companies in Germany and what a foreigner must be aware of when registering a company in Germany. When you choose company registration in Germany with Nexus-Europe GmbH we carefully estimate your situation, develop the course of actions and provide you with an effective solution. Without any hidden information and without hidden costs.
- Obtain the tax number and VAT number if you plan to sell your private label products to third countries.
- Obtain the EORI number. We have detailed articles on what foreigners should know when opening a company in Germany as well as on steps to take after the company is registered.
- Find a company that provides private labeling or private label drop-shipping services. In practice it is not simple. In many cases until you have a registered company and obtained tax numbers, 99% of manufactures won’t even provide you an offer.
- Find a warehouse or a fulfillment service provider depending on the chosen operation scheme. If the goods will be brought outside of the EU territory, you might also need a logistics company.
- Get product certification if your products require it.
- Register a trademark. If your business has a distinctive name, logo etc. and/or offers unique products or services, you may want to consider registering a trademark to legally protect your business.
Nexus-Europe GmbH offers individual turn-key solutions. We assist you with choosing an optimal operation scheme, open a company and find a private label manufacturing provider. Obtain the tax, VAT and EORI numbers. We assist with accounting and legal matters. In most of the cases we can launch a ready-to-operate business even without the client’s arrival to Germany. And if your business activity is beneficial to the region and you’d like to get a residence permit, we can assist with business immigration.
Because all projects are guided by certified Project Management Professionals (PMPs), you get a working business in Germany and ensured quality of performance. On time and at the specified cost.
We also have other turn-key solutions such as starting an e-commerce, trading company, transport company or a restaurant in Germany and many others. On our website you’ll also find a lot of other useful information on opening a business in Germany and business immigration.
This document (and any information accessed through links in this document) is intended for general informational purposes only and is not a substitute for professional advice. Each situation is unique and professional advice should always be obtained before taking or refraining from any action.