Edmund Stoiber, Bavaria’s first minister and also runner-up for election to the federal chancellorship in 2002, is credited with the phrase “laptops and lederhosen.” He used it as a political slogan to advocate his philosophy of economic progressiveness allied with social conservatism. Yet, in spite of its alliterative glibness, “laptops and lederhosen” also serves as a fitting description of Munich, this most likable of German cities.

One really does see the burghers of Munich going about their daily business in “tracht,” the traditional costume of feathered hats and collarless jackets otherwise sported mainly by torch-bearing villagers in Frankenstein films. At the same time, Munich is the center of Germany’s telecommunications, information and biotechnology industries—there are 120 companies specializing in the latter, ranking it alongside Cambridge as Europe’s foremost biotech hot spot. The city also has a highly respected scientific research institute, specializing in technology transfer from academe to commerce.

There are sound historical reasons for this perplexing dichotomy. At the end of World War II, Bavaria was one of the most backward states in Germany, with agriculture accounting for 95 percent of its economy. What changed everything was Siemens. Finding itself in the wrong part of Berlin following partition by the Allies, the technology giant relocated its headquarters to Munich.

That crucial decision transformed Bavaria and its capital city, as modern industries flooded in to service that most gargantuan of German corporate entities. Even today, electrical engineering is the largest industrial sector in the state, accounting for 220,000 employees out of a total population of 12 million. The city and surrounding region have prospered. Bavaria has the second highest GNP in Germany (Dusseldorf is first) and the lowest unemployment rate—5 percent compared with a national average of 8 percent to 10 percent. Salaries are high and so are levels of education, not to mention house prices.

Beyond Siemens and its high-tech hinterland, there are several other regional business specialities. BMW and the bus manufacturer MAN are here. So, too, are Allianz, Europe’s largest insurance company, and Munich Re, the second largest reinsurer in the world. Defense and filmmaking also rank high on the list, and Munich is either the first, second or third biggest publishing city in the world, according to which source is believed most readily. Another big player is Hypo Vereiensbank, the third-largest bank in Germany.

Culturally, this weird blend of tradition and modernity makes Munich and its citizens difficult to characterize neatly. “The so-called Prussian values remain here,” said Helgo Alberts, deputy secretary general of the chamber of commerce for Munich and Upper Bavaria. “That means a sense of discipline and the importance of sticking to what you say. However, Munich is also referred to as Italy’s most northern city, and we tend to be more communicative and open than in other parts of Germany. It is a more communal culture.” Think of the Oktoberfest, that annual, beery bacchanal of a fortnight’s duration, and one sees what he means.

The international nature of Munich’s new industries, plus its allure as one of the country’s most popular tourist destinations, has also made it more cosmopolitan than the Bavaria of old. Munich also draws a disproportionate number of internal German migrants, thanks to its reputation for beery cheeriness, its cultural life and its proximity to other good things such as the Alps and Italy. In one recent survey, 70 percent of Munich residents said they like where they live compared to 41 percent of Berliners.

Expansion of the EU should promote even greater internationalization. “Companies tend to put offices in Frankfurt to serve the markets of Western Europe and in Munich for markets to the east of Germany,” said Kurt Kapp, deputy head of business promotion at the city’s department of labor and economic development. “Along with Vienna, this will be a good base for establishing an operation for Central and Eastern Europe. It is only 93 miles from here to the Czech border.”

Overseas companies wishing to do business in Munich need to understand this diverse, complex set of historical, economic and cultural circumstances if they wish to make good headway. Perhaps the most important consideration for getting along with Bavarians is an appreciation of their sense of regional pride.

“Bavarians like to think of themselves as different from the rest of Germany,” said Charles Pattinson, commercial vice-consul at the British Consulate-General Munich. “It is the only state in Germany to have its own ruling party—the Christian Social Union. As Catholics, they also have a different religion than most of the rest of the country, and they speak in a strong dialect. It is essential to learn a couple of sentences in Bavarian, even if it is just “Grus Gott” (hello) and “Wie geht Ihrnen?” (how are you?). Like other Germans, they acknowledge that English is the commercial lingua franca, but they appreciate the effort.

Pattinson added: “As businesspeople, they are hard but fair bargainers and expect suppliers to fulfill whatever is laid down in the contract. Quality is also essential. To sell consumer goods, you have to compete at the top end of the market.”

“Salespeople need to make thorough preparations. You should know exactly what you are talking about, even with highly technical products. They don’t like it if you say you will have to refer a question to your technical director,” said Pattinson. He recommends printing a brochure in German, if possible. If it is a long, technical document, the original English version plus a précis in German is an acceptable alternative.

In spite of the gregariousness of Munichers, socializing is increasingly confined to after-working hours. Meetings are brief— expect no more than a half-hour—and long lunches are out of fashion. The great German business taboo of being late for appointments applies as much, if not more, in Munich.

Once inside a meeting, sincerity and openness are the qualities that will appeal most, according to Mr. Alberts. He said: “Be straightforward. Munich people say what they think, and they like the same in return.” Brash overselling does not go down well. “We do not like to feel we are being taken advantage of,” he added.

Not surprisingly, Alberts recommends that incoming businesses familiarize themselves with the institutions of Munich as well as the marketplace itself. In the case of Munich, that makes sense. Its chamber of commerce, the largest in Germany, has 240,000 members. Like the rest of the country, membership in the chamber is obligatory for all businesses, regardless of size, but once again that spirit of community makes the importance of understanding the total business picture, as well as the individual companies, greater here. The chamber employs 400 staff, many of them experts in IT, new media, law and taxation, and is happy to advise foreign companies.

Not everything has gone swimmingly for Munich. Germany is suffering its strongest economic downturn in decades, and those go-ahead technology businesses are not buzzing as much as in the late 1990s. However, Alberts claims that Munich is usually the last city in Germany to be sucked into a downturn and the first to re-emerge. Net foreign investment is also positive.

Along with EU enlargement, Munich can also look forward to a doubling of passenger terminal space at its still growing airport within the next 12 months. And should all else fail, there is always football. Construction is starting on a new soccer stadium that will be ready in time for the opening match of the 2006 World Cup. That is one field where success can almost always be guaranteed.