We have investigated the chemical distributions and the local electronic structure of potential diluted magnetic semiconductor Ge0.94Mn0.06 single crystals using scanning photoelectron microscopy (SPEM), x-ray absorption spectroscopy (XAS), and photoemission spectroscopy (PES). The SPEM image shows the stripe-shaped microstructures, which arise from the chemical phase separation between the Mn-rich and Mn-depleted phases. The Mn 2p XAS shows that the Mn ions in the Mn-rich region are in the divalent high-spin Mn2+ states but that they do not form metallic Mn clusters. The Mn 3d PES spectrum exhibits a peak centered at approximately 4 eV below E(F) and the negligible spectral weight near E(F). This study suggests that the observed ferromagnetism in Ge1-xMnx arises from the phase-separated Mn-rich phase.