Spun cotton ornaments were made in BOTH Germany and the Soviet Union primarily between 1950 and 1980. They are very similar, but once you know what to look for, they are pretty easy to tell apart. The Russian ones (most often made in Ukraine) are a smoother formed cotton that is more molded than spun, and the features are usually pretty primitive. The German ones are much more detailed, and are truly from "spun" cotton, and/or wool. This one appears to be most likely wool. I will refer to it, however, as spun cotton, as that is what this type of ornament is called. This means that the cotton or wool has been spun on a wheel, and then added by layers to the wire form. The head of this piece feature spun cotton sewn together. His tail is real fur - you can see the seams along the edges of the tail. I don't know what kind of fur. His little belt is suede, and his hat has a real pheasant ribbon on top. He is large, for this type of ornament - 6 inches tall, and 5 inches across.
When I say "cottage industry" what I mean is that the makers of these types of ornaments (and many of the German wood ornaments and toys as well) are made by folks who live rurally, and have other jobs in the non-winter months. They are famers, shop owners, involved with tourists, and more. In the winter, with all the snow, they stay inside and make stuff. Like this piece. Then later, they sell them in the local shops, and ship them overseas. Many of the families combine and make them as a group- one person does faces, etc.
One of the biggest regions of Germany for this type of piece is the Erzgebirge region, which encompassed both East and West Germany when they were separated. (Items marked Western Germany were 1955 to 1989).
The Erzgebirge region was also called Iron Mountain, as it was home to miners for hundreds of years. (Hence the design of lots of gnomes). Once the ore ran out, they turned to farming, and "cottage" industry, making small items for sale from their "cottages". This has gone on for at least 150 years, with some of the really old pieces going for several thousand dollars. Their items are all really high quality, and even the new pieces are highly collected.