As a startup, you face customer decisions even before you have a product. On a very basic level, the Business Model Canvas by Alexander Osterwalder suggests that you should build awareness around the customers you will be serving. Is it a mass market? Is it a niche? Is it something in between? Whatever your answer is, this has a huge impact on what you’re building and how you will assemble your product. China might be a solution for many cases, and there’s a reason why lots of startups do well with their product in China or elsewhere in Asia. But I’ll give you five arguments in which “Made in Germany” steals the show.
1. Iterations are faster
We at Protonet are in close contact with our suppliers; the factories are within 30 minutes reach of our headquarters in Hamburg. As we develop our hardware (a private cloud appliance), we have learned that communication and the ability to stay flexible while producing in small batches saves us money and time. This would not be possible if we ordered in foreign countries – it’s simply a pain and increases costs. As you have to have the tools to do so, or at least the access to 3D printers, CNCs etc., colleges are a great starting point. If you’re not in college, there are numerous co-working like spaces that have the tools. The prominent ones might be the betahaus in Berlin or the MakerHub in Hamburg. All the tools you’ll be needing are right in your backyard – so no reason to go abroad.
2. Quality is unbeaten
Engineering and manufacturing have always been core competencies of the Germans. While universities and scholar programs are state of the art, the influence of the world-leading automotive and machinery industry set the benchmark for skill and knowledge development of potential startup employees – there’s no better place in the world to recruit hardware engineers. This is a reason why Germany is the #1 country in the world to export machinery. Tesla Motors for instance, buys its robots here.
For a startup like Inreal in Karlsruhe, the German Silicon Valley, capturing this talent is the basis of their success. They deal with augmented reality, producing glasses that allow you to walk through your home while experiencing a variety of virtual interiors. They also produce locally.
3. Environmental standards
If you are building a product of very high quality, you will also care about the components you and your suppliers are using. In Germany, you cannot use any raw material; the conditions you must fulfill include aiming for an environmental-friendly product. Good for the environment also means efficient handling of resources, which will save you money in the long run and will also have an impact on your marketing and customer development strategy.
4. Development of trust
Many customers buy a product simply because it is “Made in Germany”! The more complex it is on the inside, the more relevant it becomes. If a customer has the feeling that the engineering is solid and built to last, she will be more than willing to pay for it. Everybody who reads this post has most likely had an experience with a low quality product “Made in China”. You simply develop a resistance. But to be fair – the improvement in the recent years has been astonishing. German companies like Airbus are manufacturing in China (or Asia in general) now. With the aviation industry having top level standards for quality, it shows how keen the Asians are on increasing their skills. Nonethless, Germany will always be a leader in creating innovative solutions – especially in manufacturing – and I don’t see how this will change any time soon. Germany is an innovation hub.
5. Working conditions
There’s not much to explain here. China Labor Watch presented a study last year that stated up to 100-130 hours of overtime per month – per employee. Next to that you’ll find a higher rate of injuries at work and a higher exposure to toxic materials. But again: this is getting better with companies putting pressure on their suppliers – the question is how long will it take for working conditions to reach western standards?
There are further arguments like talent recruiting and liability. In any case, please beware. All of this depends on who your customer is, what your product is like and how much money and skill you have. Compare: You can buy a 3D printer for under 1000$ today. This is about the cost of a flight from Frankfurt to Shenzen. For us it’s not just a matter of costs, it also concerns your vision and attitude surrounding the quality you want to deliver. That’s why we at Protonet chose to do hardware “Made in Germany”.
A guest post by Philipp Baumgaertel
Biz Dev & Growth, Protonet, Hamburg-based