Never ever confuse Germans with the German government (except if you are looking for trouble :-) ). It is well-known that what are "lawyer jokes" in the USA are "politicians jokes" in Germany.
1. German companies are equally as bureaucratic because the people and society in general are culturally so into it.
2. German government is formed by German people voted by other German people, they aren't ruled by some aliens that came from of the sky, therefore are representative for them.
Fear of the boss to be caught with a error on his (hence he adds more bureaucracy), fear of the general public to look racist (hence low policing in high crime area with many foreigners), fear of the case worker to get sued (hence applying the rules literally, to the detriment of the applicant),.etc
This literally applies to big orgs as well with red tape, etc
They're eficient at creating more bureaucracy as a universal solution to all problems.
Having dealt with Germany I have come to realize that excessive bureaucracy is basically a jobs program and a way for people to cover their ass whenever the shit hits the fan.
Something goes wrong and you're the big boss? Add more bureaucracy as your attempt to "fix" the problem and your justification to why your job is valuable to the company.
Something goes wrong on your watch? It's not your fault if you followed all the bureaucracy conjure by your bosses.