Internationalization in the Mittelstand: 5 Phases to Successful Expansion

More and more medium-sized companies (Mittelstand) are asking themselves: How can we tap into new international markets and secure our growth? The answer is often: Internationalization. Especially in mechanical and plant engineering as well as the electrical industry, competition is global. The Asia Pacific region is particularly exciting, as it is experiencing strong growth, offers many opportunities, and holds strategic importance. However, expanding abroad is not a guaranteed success. It requires clear steps and thorough preparation.

A weak domestic market and international competition raise a critical question for many Mittelstand companies: How can we access new international markets and secure long-term growth? The answer is frequently: internationalization. This is particularly true in sectors like mechanical and plant engineering or the electrical industry, where the competitive landscape is already global. The Asia Pacific region stands out for its rapid development, attractive opportunities, and strategic significance. Yet, international expansion does not happen automatically. It demands strategic planning, a realistic self-assessment, and a clear understanding of the typical development stages a company goes through during internationalization.

Phases of Internationalization in the Mittelstand

For leaders without international experience, this process can pose a complex challenge. In this article, I will examine the five typical phases of internationalization in the Mittelstand and highlight the challenges that arise in each phase—and how companies can successfully overcome them.

1st Phase: Reactive Export Activity – The First Step Abroad

Many medium-sized companies begin their internationalization journey by chance or in response to external triggers. A foreign customer places an order, a trade fair contact leads to an initial deal, or a major client demands international delivery capability. At this stage, there is often no clear export strategy—companies simply react to incoming requests.

Typical Challenges:

• No experience with customs, logistics, or export regulations

• Lack of internal resources (e.g., language skills, sales expertise)

• No international sales or customer service structures

Solution:

It is now crucial to build the first basic structures: clear responsibilities, internal training, and the involvement of external experts for handling exports are essential steps to professionalize the process and avoid costly mistakes. From my experience, appointing an export officer within the team and building solid knowledge in international shipping are particularly helpful.

2nd Phase: Strategic Export – From Randomness to Structure

After initial success abroad, many companies start to see the real potential. They begin analyzing target markets, plan their sales strategy, and start to systematize their export operations.

Typical Challenges:

• How do I find the right target markets?

• Who are the right local partners?

• What cultural nuances do I need to consider?

Solution:

At this point, a structured internationalization plan becomes essential. Market analyses, customer profiles, and targeted market strategies serve as the foundation. Just as important is building reliable networks abroad—through trade fairs, chambers of commerce, or industry associations. These channels often lead to valuable contacts and trustworthy distribution partners. In my experience, developing a Go-To-Market (GTM) strategy plan is extremely helpful, as it addresses all the key questions involved in entering a new market.

3rd Phase: Local Sales Structures – Acting Close to the Customer

With growing sales abroad, the next level is reached: establishing in-market sales representatives or local partner organizations. The goal is to improve customer proximity and service quality.

Typical Challenges:

• How do I find suitable partners or employees?

• How do I manage coordination between headquarters and international locations?

• How can I stay true to my brand despite regional differences?

Solution:

Professional partner management, training, and the definition of clear KPIs are now essential. It is also critical to ensure a smooth interaction between the headquarters and the local sales organization. In my experience, involving local experts to comply with HR regulations is crucial at this stage. Likewise, knowledge transfer from the headquarters to the local team is key to success. In the Asia Pacific region, building trust is particularly important. Those who want long-term success in the region must invest in relationships and understand local nuances.

4th Phase: International Subsidiary – The Leap into Operational Presence

At this stage, a legal entity is established abroad—whether a subsidiary, joint venture, or local production site. The company no longer acts merely through distribution partners but operates directly in the local market. Depending on the industry, this may also include setting up local value creation structures.

Typical Challenges:

• Complex legal and tax frameworks

• Building a local team and infrastructure

• Leading across cultures

Solution:

At this point, working with local consultants and interim managers who have experience in company setup in the region is highly advisable. Involving local employees early on can help avoid cultural missteps. I recommend developing a detailed business plan for the first five years. Tax considerations should also receive more attention in this phase. In Asia Pacific, this is particularly relevant—every country has its own laws, labor models, and expectations. Ignoring these specifics can lead to high costs and slow growth.

5th Phase: Global Integration – Internationality as Part of the DNA

In the final stage of maturity, the company is globally integrated. It operates multiple locations worldwide, international teams collaborate on projects, and global supply chains as well as innovation networks are firmly established.

Typical Challenges:

• Managing complex international structures

• Cultural integration and cross-border collaboration

• Balancing unified standards with local adaptation

Solution:

At this stage, a global management system, digital tools for international collaboration, and a clear governance structure are essential. Sustainability in global supply chains is also becoming a central focus. In my experience, international subsidiaries at this stage contribute valuable input to the group—especially in terms of innovation and best practices. The Asia Pacific region plays a key role here: it is a major source of innovation, manufacturing capacity, and growth opportunities.

Conclusion: Move Forward with Strategy and Realism

Internationalization is not a sprint, but a marathon with clearly defined stages. Mittelstand companies should realistically assess their starting position and prepare specifically for the next step.

What matters most:

• A realistic self-assessment of internal resources

• A clear and structured roadmap

• Leveraging support programs and expert advice

• Experienced partners, such as interim managers with local expertise

Those who plan and execute their expansion professionally can not only access new markets, but also strengthen their company’s resilience and future viability in a sustainable way.

Especially in the Asia Pacific region, it helps to have a partner who truly understands the market. An experienced interim manager on the ground can help avoid risks, save time, and build high-performing local teams.

Such an expert brings practical experience and local networks to ensure successful internationalization. An interim manager on site can implement the necessary actions within the local cultural context, avoid mistakes, save valuable time, and empower the local team to lead a successful subsidiary.

Would you like to learn more? Get in touch to discuss tailored support for your company’s internationalization.

Let’s talk about how you can shape your international growth successfully.

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FAQ: Internationalization in the Mittelstand

What does internationalization mean for Mittelstand companies?

Internationalization means that a medium-sized company sells its products or services in other countries. This can happen through exports, partnerships, or establishing its own operations abroad—for example, in the Asia Pacific region.

Why is the Asia Pacific region important for the German Mittelstand?

The Asia Pacific region is experiencing strong growth, is innovation-driven, and provides access to billions of customers. Countries like China, Vietnam, and Indonesia offer major opportunities—especially for industrial and technology companies. Southeast Asia in particular shows stable growth at around 5%.

What are common mistakes in international expansion?

Many companies start without a clear strategy, underestimate cultural differences, or choose the wrong partners. A lack of experience with local laws and regulations is also a frequent pitfall.

When does it make sense to bring in an interim manager for internationalization?

When time is short or internal know-how is lacking—for example, during the setup or expansion of a foreign subsidiary—an interim manager with experience in the target market can help minimize risks and speed up the process.

What are the key requirements for a company to go international?

A robust business model, sufficient internal capacity, a structured approach, and solid market knowledge are essential—ideally supported by external consultants or local experts in the Asia Pacific region.