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Student assistant positions in Germany are usually open only to students enrolled at a local university (often where the position is offered, but always in Germany). This is for reasons of social insurance and labour regulation.

You are not enrolled at a local university. In fact, you are studying outside Europe.

Is it just because he think I am not good enough at the first read of my email and make a polite refusal?

Most likely, yes. Note he didn't say the position has been filled; he's only saying he can't offer you a position (perhaps because you don't meet the minimum requirements, or he doesn't think you're suited to the role, there are better candidates who've applied, etc).

This group may have a candidate in mind but forced to put an ad out for compliance.

For many temporary or contract positions, full HR process is not required and a full hiring committee is not struck: the head of the unit is the sole decider. Moreover, there might be seniority issues which guarantee the position to someone who was previously employed in this position - v.g. sessional instructor for a specific course. One is still legally obligated to advertise the position, but the playing field is tilted to favour a particular candidate. Basically, the person previously holding the position has to reapply.

This happens all the time because a contract might run over a set period, but the contract is open yearly. Maybe one needs a lab technician for the academic year but not over the summer recess. Alternatively, the lab technician who’s contract ends in April is asked to apply for a research assistant position to cover the summer months. Contract are structured this way because part-time or contract employees gets fewer benefits than full-time ones.

There are all kinds of combination possible where an internal candidate has the inside track for a position still legally required to be posted.

It may be that the job is subject to visa regulations and the group leader recognised/assumed that it would take extra steps to secure a right visa for you.

Another possibility is that the respective research group leader simply ran out for funds for "Hiwi" positions. Getting good student assistants is hard, and they may have the advertisement on their web site continuously. This could be the case if they are willing to use precious grant overhead money for very exceptional candidates. If the research group leader felt that this does not apply to you and the regular funds have been used up, he/she...may be unable to offer you a "Hiwi" position at this point.

One more possibility: I used to get tons of e-mail from random parts of the world and random departments not my own, asking to be my TA or RA. I'm in Texas. I get an e-mail from Sri Lanka from some guy I never heard of, which includes his vita and copies of publications, and what am I to think? I think that he has probably e-mailed every math/science/engineering professor in world. I wasn't even advertising nor was I in the market for grad students. So these just got deleted. I would get similar bombardments from grad students in engineering (I was in the Math Dept.) mostly foreign students, wanting the same thing. They were also ignored.

If a student can't get support in his own country/department, then that's "strike one" for sure. Sending spam to a country/department that shows that you don't know "how things work" in that country/department, is "strike two." Our department admits and hires our TA's and RA's. The faculty have little to do with who gets to occupy those 3-or-4 person offices. So when I open such an e-mail, my first thought is "Dude, you're asking the wrong guy." It's especially telling if the grad student is in the engineering building across the street and, having been here for at least a year, doesn't have any friends or mentors who can tell him good ways to find support. Specifically, it seems that the grad advisor in Electrical Engineering would know who the student should e-mail in the Math Dept. Yet he e-mailed me.

So my suggestion here is that, perhaps, your application came in with a few hundred other fishing attempts and you got the form response back.