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Sector Report: Logistics

INVEST IN GERMANY MAGAZINE

VOL 01 | 04.2008

German Engineering – The Quiet Giant

2 Invest in Germany Magazine

Content

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13

14

Major Investment

Irish Investment with Japanese Technol-

ogy in Germany ...................................... 3

Welcome Address

The Members of the New Supervisory

Board of INVEST IN GERMANY ........ 4/5

Cover Story

Mechanical Engineering:

Germany’s Industrial Backbone ....... 6/7

Robotics and Automation:

Smart Machines ..................................... 8

Success Story

Chinese Capital Meets

German Tradition ................................... 9

Industry Report

Fighting Half

a Trillion Plastic Bags ..........................10

Perpetuum Mobilae .............................. 11

Roaring Red Biotech .............................12

State and Venture Capital Financing

for German Biotech ..............................13

Chemical Industry

Powers Innovation .............................. . 14

Dow Wolff Cellulosics Focuses

on Research in Germany ......................15

The New Alchemy:

Turning Corn into Plastic .....................15

Destination Germany ............................16

Our Events

Turning the Silver Society into Gold ....17

German Business

World Leaders in Small Business ...... 18

The Stunning Rise of

a Healthy Drink .....................................19

Germany Celebrates Its

Best Entrepreneurs ............................. 20

Current Issues

The Tides of Offshoring Turn Back to

Germany ............................................... 21

Marketing Germany

“Best of”

Federal Creativity ................22/23/24/25

Innovative Germany

T-Shirts that Glow and Warm;

Nuts for Oil – a 21st Century

African Tale .......................................... 26

Visual Impressions for Blind People;

Injecting CO2 Into the Soil ................... 27

The Best of German Innovations ... 28/29

Innovation Management

Managing Ideas .................................... 30

Future Germany

Foreigners Dream

the “German Dream” ............................31

Web 3.0:

Germany’s Flagship Project ............... 32

No Fear and Fighting Spirit................. 33

Financing

Financing Germany’s Industries of

Tomorrow ............................................. 34

On the cover:

Escalator production: assembly unit for

escalator balustrades at ThyssenKrupp

Fahrtreppen GmbH in Hamburg

Imprint

Publisher:

Invest in Germany GmbH

Friedrichstraße 60

10117 Berlin

Phone: +49 (0)30 200 099 0

Fax: +49 (0) 30 200 099 111

office@invest-in-germany.com

www.invest-in-germany.com

Managing Director:

Michael Pfeiffer

Chairman of the Supervisory Board:

Michael Glos, Federal Minister of

Economics and Technology

Director Public Relations:

Eva Henkel

Editor:

Eva Forinyak

Language Editor:

Josh Ward

Design:

www.typoly.de (Art: Inken Greisner)

Litho:

Dietsche & Gebhardt, Berlin

Print:

Medialis Offsetdruck GmbH, Berlin

Distribution:

Invest in Germany Magazine is jointly distrib-

uted in North America and Asia by the Finan-

cial Times Group with its “FDI Magazine” and

solely distributed by the publisher in the rest

of the world.

No reprints may be made without the prior

consent of the editors. They reserve the

right to publish or shorten readers’ letters.

The publication is based on information

accessible to the public which the editors

consider to be reliable. However, they assume

no liability for the accuracy of such informa-

tion. Articles published under specific names

do not necessarily reflect the opinion of the

editors.

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Major Investment

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One of the single biggest investments in

Germany is currently being made in Leu-

na, a chemical-manufacturing location

in Saxony-Anhalt. Ireland’s Quinn Group

is building a new factory for €260 million

in order to produce special synthetic

materials starting in 2009. This is also

the group’s first venture into the chemi-

cal business. The company decided it

should be a German-Japanese-Irish co-

operative effort, with the technology

coming from East Asia, the experience

for building and operating the new fac-

tory from Germany, and the company

management and financial resources

from Ireland.

Quinn had been planning to move into the

chemical business for a long time. To be-

gin with, the group bought the license to

a process for the production of methy-

methacrylate (MMA) from a Japanese

company. MMA is a light-transmissive,

synthetic material used in the production

of plastic glasses and foil. “The applied

process is very cost-effective and envi-

ronment-friendly,” says Dermot Carey,

head of Quinn Chemicals in Leuna. The

planned initial production volume of

100,000 tons will mostly be delivered to

Quinn’s existing plastic factories all over

Europe. “It is part of our philosophy to

open new business areas, which are ex-

tensions of existing fields, with new

technologies and products,” Carey adds.

This is the formula for success of Sean

Quinn, founder and owner of the compa-

ny and today one of the richest men in

Europe. In 1973, Quinn started out in the

sand and gravel business. Shortly there-

after, he built new cement factories in

the vicinity of his hometown Derrylin in

Northern Ireland. Thanks to Ireland’s

economic boom in the ’90s, the Quinn

Group grew fast. Glass factories, syn-

thetic material businesses, and heating

appliance production utilities were add-

ed all over Europe. In the meantime, the

family business also made a name for

itself as a financial services provider and

operator of hotels and shopping centers.

According to the group, it now employs

more than 6,000 people.

One of Quinn’s mottos is: “It’s better to

make 10 decisions in a day – of which two

are wrong – than no decision at all.” Ac-

cording to Carey, however, the move into

the chemical business is one of the big-

gest and most important investments

the group has recently made. Owing to

its importance, a number of locations

were considered in Europe. Leuna, with

its rich tradition of chemical production,

convinced the Irish. “Here we found the

skilled employees who were able to build

a new factory with an applied manufac-

turing process not yet used in Europe,”

Carey said about his employees, whom

he affectionately calls his “gray-haired

engineers.” It is one thing to design a

factory on paper, but a lot of experience

is needed to properly align all the pro-

cesses in the facility.

For that reason, one-third of the work-

force will be sent to Japan for a few

weeks in order to familiarize itself with

the processes at an existing production

facility.

Quinn will be linked to the central supply

of electricity, steam, and water used by

the nearly 100 firms – including Linde,

Dow, and BASF – located in Leuna’s

1,300-hectare chemical production area.

Carey sees this as another positive point.

“Our production costs must be competi-

tive,” he says. The markets in Western

and Eastern Europe must be supplied

from Leuna. More investment in the

business location and, for example, in

the processing of synthetic materials

has already been included in the current

plans. By operating fast in the market,

the Irish family business wants to re-

main on the road to success – and with

its chemical business too.

www.infraleuna.de

Irish Investment with Japanese Technology in Germany

4 Invest in Germany Magazine

Welcome Address

Invitation to a Top Location

Statements from the Members of the

New Supervisory Board of INVEST IN GERMANY

Chairman of the Supervisory Board:

Michael Glos, Federal Minister of Economics

and Technology

Germany is once again a major world leader in business! Our location in the heart of Europe combined with our stable political conditions, highly qualified workforce, and legendary innova-tive spirit make Germany the first choice for every international investor.

Prof. Frieder Mayer-Krahmer, State Secretary at

the Federal Ministry of Education and Research

Today’s global businesses seek to locate close to research institutes and institutions of higher educa-tion as these locations provide both highly qualified partners for new developments and creative minds. With its Internationalization Strategy, the Federal Government therefore wants to make Germany one of the most attractive and efficient locations for international research investment and research services.

Deputy Chairman of the Supervisory Board:

Wolfgang Tiefensee, Federal Minister of

Transport, Building and Urban Affairs;

Commissioner for the New Federal States

Excellent education, stellar produc-tivity, outstanding infrastructure, and a high quality of life are just some of the many reasons to make an investment in Germany. Additionally, there are numerous possibilities for incentives, espe-cially for investments in eastern Germany. In this region, there are attractive opportunities to be found in innovative and future-oriented sectors, such as renewable energies.

Georg Boomgaarden, State Secretary in the

Federal Foreign Office

Germany is the industrial nation located in the geographic center of Europe with an outstanding infrastructure, high education level, and excellent quality of life. Germany’s reliability and high level of competitiveness in future technologies make it one of the most attractive investment and innovation locations in the world. These are our strengths, as communicated to potential investors all over the world by INVEST IN GERMANY in close cooperation with the Ministry of Foreign Affairs and its foreign representatives.

Deputy Chairman of the Supervisory Board:

Dr. Heinrich v. Pierer,

Chairman of German Chancellor Merkel’s

Council for Innovation and Growth

Germany, with its proven ability to innovate and its determined drive for excellence, offers unique opportunities today to shape the future.

Dr. Reiner Haseloff, Minister of Economics and

Labor of Saxony-Anhalt

As a business location, Germany offers prime conditions to inves-tors. Entrepreneurs from here and abroad appreciate above all the excellent location in the heart of Europe and the well-developed infrastructure – which enables ideal access to markets and suppli-ers all over the world – the highly qualified work force as well as innovative research fields, which lay the foundation for close cooperation between business and research. The excellent quality of life, with its high standards of health care and education, the high level of arts and culture, and the scenic landscape complete the factors that make Germany a good economic location and a country where you can live a good life.

5

Welcome Address

which is underlined by the high level of German investment in and exports to these countries. As a business location, Germany is known for its extremely well-educated people, high level of competitiveness, strong commit-ment to technology and innova-tion, and highly productive industrial and service sectors.

Prof. Dr. Siegfried Englert, State Secretary,

Ministry for Economic Affairs, Transportation,

Agriculture and Viniculture of Rheinland-

Pfalz

Thanks to its central location in Europe and its outstanding infrastructure, Germany attracts companies large and small. The labor pool, excellently trained in technology, natural sciences, and medicine, supplies the prerequi-sites for entrepreneurial success in all endeavors.

Prof. Gerhard Schulmeyer, Former CEO,

Siemens Corporation USA

For American companies, Germany remains a leading investment location. Companies are using Germany’s excellent infrastructure and outstanding R&D capacities to access the European continent and establish worldwide centers of expertise.

Christa Thoben, Minister of Economics and

Energy of North Rhine-Westphalia

Companies wanting to invest in Germany will find the most important commodity for a sustainable business location here: creativity. All over the world, “Made in Germany” stands for highly innovative products con-ceived and manufactured by creative minds. Here you will find the ideal envi-ronment – a creative economy – which takes its energy from the triad of talent, technology, and tolerance. In the future, we also want to campaign interna-tionally with this new concept of the creative economy for North Rhine-Westphalia and the creative minds of tomorrow.

Dr. Michael Militzer,

CEO of MITEC Automotive AG

As a business location, Germany is innovative, internationally com-petitive, environmentally oriented, and uses its central geographical position in the EU to be the door to Eastern Europe from the heart of Europe.

Dr. Klaus Mangold, Executive Advisor to the

Chairman, Daimler Chrysler Bank AG

The German market is the biggest in the European economy and offers perfect access to Central and Eastern Europe and to other western European countries, a fact

Dr. Hubertus Erlen, Deputy Chairman of the

Supervisory Board of Bayer Schering Pharma AG

Investing in Germany provides access to a very attractive market and takes advantage of the highly skilled and efficient workforce in Germany.

Prof. Dieter Stolte, Editor,

Axel Springer AG

Good news about Germany as a location for doing business – there is plenty of it! The challenge is making sure people know about it. INVEST IN GERMANY has the responsibility of communicating Germany’s good performance to the world and making sure that this information is being received.

Werner Sülzer, Chairman of the Supervisory

Board of NCR GmbH

Germany is a country that creates innovative solutions from ideas. Thanks to their quality and lasting benefits, these innovations are valued worldwide. As a result, we have become the world’s export champion – a title that can only spur us on to further innovations. A well-educated workforce, rising labor productivity, a high level of automation, internationally compe-titive corporate taxation rates, and a world-class infrastructure all guarantee that Germany will remain an attractive and dynamic location for investment.

6 Invest in Germany Magazine

Mechanical Engineering: Germany’s Industrial Backbone

From precision tools to production lines, from robots to power plants, Germany

supplies the mechanical engineering products that drive the wheels of global

commerce. All around the world, wherever there’s a mission-critical mechanical

task to be performed, demand for German engineering is growing.

From Beijing to Bangalore, from Boston

to Buenos Aires, the key components of

industrial commerce are being supplied

by German companies. These firms –

nearly 6,000 in all – design and build the

manufacturing systems that factories

rely on for round-the-clock production.

They furnish the essential valves, tur-

bines, and fittings that assure a continu-

ous flow of utilities to the world’s popula-

tion centers. They make the motors,

transmissions, and hydraulics that allow

us to harvest the earth’s resources and

erect tall buildings. In short, German

firms provide the machinery and equip-

ment that keep the world working.

Yes, Germany does export more mechan-

ical engineering products than any other

country, including the United States and

Japan (the second and third biggest ex-

porters in the sector). According to the

German Engineering Federation (VDMA),

foreign sales of German-made machin-

ery and equipment in 2006 amounted to

€123 billion. These exports accounted for

nearly 20 percent of all global trade in the

sector. Altogether, factoring in domestic

sales, German-based machinery and

equipment manufacturers sold €167 bil-

lion worth of products in 2006. That’s

equivalent to the gross domestic product

of Portugal.

Unlike other cyclical industries that have

been buffeted by market fluctuations over

the past few years, Germany’s mechani-

cal engineering sector has been growing

by leaps and bounds. Between 2004 and

2007, production increased by a total of

about 30 percent. This expansion drive is

expected to continue in the current year,

with the VDMA predicting a 5 percent in-

crease in sales. Assuming 2008 fulfills

expectations, that will make for five con-

secutive years of growth.

2007 was an especially productive year

for the German mechanical engineering

sector. The VDMA is expecting to record

for the period an 11 percent sales in-

crease. Despite the effects of the weak

dollar, demand for certain types of prod-

ucts, such as machine tools, has risen

dramatically. During the first nine months

of 2007, foreign orders for German ma-

chine tools increased 29 percent. Domes-

tic demand in this product segment was

even stronger, with the order volume

leaping a full 35 percent. Ph

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The new, bright annealing line of ThyssenKrupp Mexinox, a subsidiary of ThyssenKrupp Stainless AG

7

Cover Story

CAD (Computer Aided Design) models can be edited using the "Cyberstilo" tool virtually

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Many German companies are now work-

ing extremely hard to fill their customers’

orders. Some of these companies already

have enough contracts on their books to

keep them busy for the rest of 2008. In an

effort to keep up with growing demand, in

2007, German machinery and equipment

manufacturers added about 50,000 new

employees to their workforce. This year,

staff levels are expected to rise by a fur-

ther 15,000.

It’s hard to overstate the significance of

Germany’s mechanical engineering in-

dustry, both domestically and interna-

tionally. In terms of employment, it pro-

vides more jobs than any other manu-

facturing sector in Germany, where

873,000 people are employed in making

machinery and equipment. That’s more

jobs than in Germany’s electrical engi-

neering and electronics industries com-

bined.

With regards to manufacturing sector

output, mechanical engineering is sec-

ond only to Germany’s mighty automotive

industry. Together, these structurally in-

dependent but related industries repre-

sent the twin engines of the German in-

dustrial economy.

So, what makes German machinery and

equipment manufacturers so remarkably

successful? One answer is found in the

results of a study published last Novem-

ber by the Fraunhofer Institute for Systems

and Innovation Research. Announcing its

findings, the Karlsruhe-based institute

observed that “German mechanical engi-

neering is the best in the world thanks

primarily to its ability to develop custom-

er-specific production facilities meeting

the highest requirements for quality, pre-

cision, and flexibility.” The institute also

found that German companies in this field

display an extraordinary degree of client-

oriented adaptability, which they use to

propagate a culture of continuous innova-

tion.

The study concludes that the key compo-

nent in the success of these companies is

not their R&D expenditure, which is actu-

ally relatively modest. Instead, the deci-

sive factor is their ability to “link their re-

search and development resources in a

special manner with the use of new prod-

uct development concepts.” Specifically,

says the institute, German machinery and

equipment suppliers are making the most

of “simultaneous engineering, virtual re-

ality, and cooperative development.”

Virtual product development and simula-

tion are being utilized in 58 percent of

German mechanical engineering firms,

far more than in other manufacturing

sectors. And more than half of all Ger-

man firms in the industry are collaborat-

ing with external research facilities.

The essential role that innovation plays in

the success of Germany’s mechanical en-

gineering sector is underscored by an-

other recent report about the industry

published by Deutsche Bank Research

(dbresearch). The report notes that, by

2005, nearly a third of all revenues from

German companies in the sector were

being generated by new products. The va-

riety of those products, says dbresearch,

is “unparalleled anywhere in the world.”

It is now estimated that half of all me-

chanical engineering products from Ger-

man companies are made to order.

All these products, of course, are de-

signed by people in Germany – teams of

engineers whom dbresearch describes as

the industry’s “guarantors” of success:

“In Germany today,” says the report, “the

cosmopolitan elites of the engineering

world work hand-in-hand with well-

trained, skilled personnel to ensure glob-

al technological leadership.” The indus-

try’s rapid expansion, the report notes, is

also reflected on the personnel side, with

the number of mechanical engineers in

Germany doubling during each of the last

two 10-year periods.

With 70 percent of German-made ma-

chinery and equipment being shipped

abroad, this national champion of an in-

dustry is having a global impact. In much

of the world, German engineering has at-

tained a benchmark status, representing

the competitive standard for industrial-

based economic development. An in-

creasing number of countries are now

depending on German-made machinery

and equipment to drive their own indus-

trial advancement. Viewing mechanical

engineering as a “backbone” technology,

equipment and machinery buyers are in-

sisting on German quality standards.

Many, having experimented with alterna-

tives, are realizing that the only reliable

source for that quality is Germany itself.

This also explains why some German en-

gineering companies that moved produc-

tion to low-cost countries are now re-

turning home. After a year or two of

operating in those alternative locations,

these firms discovered they simply could

not produce the quality there that their

customers demanded. As dbresearch

points out: “The main strengths of Ger-

man engineering companies thus lie in

non-price competition factors.”

When quality, reliability, and innovation

are the critical factors in a market – as

they are with mechanical engineering –

moving production abroad to save on

nominal labor costs makes little sense.

dbresearch is forecasting that, between

now and 2015, German machinery ex-

ports to China, India, and Russia will grow

by 7 percent to 12 percent each year. Giv-

en those kinds of numbers, it is under-

standable why the business magazine

Wirtschaftswoche predicts that the de-

cade ahead could become the “golden age

of German mechanical engineering.”

For more information about this industry,

please contact Mr. Richard Offermann,

offermann@invest-in-germany.com

8 Invest in Germany Magazine

Cover Story

Robotics and Automation: Smart Machines

The past two years have brought signifi-

cant gains for German robotics and auto-

mation companies. From 2005 to 2006,

sales rose 6 percent to €7.3 billion. That

accounts for about 4.5 percent of total

sales volume in the German mechanical

engineering industry as a whole. For

2007, the German Engineering Federa-

tion (VDMA) estimated that sales of Ger-

man-made robotics and automation tech-

nology would reach €7.9 billion, an

increase of 8 percent.

Over 60 percent of sales in this sub-sec-

tor are generated by handling and as-

sembly products, followed by robots (23

percent) and industrial imaging – or “ma-

chine vision” – technology (15 percent).

The largest export markets for German

handling and assembly equipment are

the United States, France, Italy, and Chi-

na.

Among the most prominent trends in the

German robotics and automation sector

is the broadening of the customer base

beyond the automotive industry. The

VDMA cited this development as the chief

factor responsible for sales growth in

2006 within the German robotics sector.

Particularly noteworthy was the in-

creased demand for robots from the met-

alworking, furniture, and plastics indus-

tries. Some 48 percent of all sales by

German robot suppliers in 2006 went to

buyers from outside the automotive sec-

tor.

The fastest growing product segment for

German robotics and automation compa-

nies in 2006 was machine vision technol-

ogy. This small but important segment

recorded a 9 percent sales increase

across the board. Most of that growth

was generated by a surge in demand for

“configurable” systems, which can be

adapted to support changing production

needs. Sales of such systems – which in-

tegrate cameras, computers, and soft-

ware – jumped a full 45 percent.

Aside from its role as a supplier of top-

notch robotics and automation products

to the world, Germany itself also repre-

sents a huge market for such products.

The country’s share of all industrial ro-

bots installed in Europe in 2006 amounted

to 36 percent. Altogether, nearly 130,000

industrial robots are currently operating

in Germany, more than in any other coun-

try except Japan.

Looking to the future, German engineers

and researchers are actively shaping the

industry’s development through a series

of collaborative ventures with interna-

tional partners. One of these promising

projects was unveiled last October at the

newly founded Research Institute for

Cognition and Robotics (CoR-Lab) at the

University of Bielefeld. In cooperation

with the Japanese technology company

Honda, CoR-Lab has become Europe‘s

first university-based institution to utilize

Honda’s state-of-the-art ASIMO human-

oid robot as a research platform. The in-

stitute is focusing its research on artifi-

cial perception and neurological motion

control systems.

The CoR-Lab institute and dozens of oth-

ers like it around Germany are being sup-

ported with generous public funding.

Federal and state authorities in Germany

are pouring millions of euros into re-

search and development aimed at spawn-

ing viable industrial ventures.

For more information about this industry,

please contact Mr. Richard Offermann,

offermann@invest-in-germany.com

One of the most exciting branches

of Germany’s mechanical engineering

industry is robotics and automation.

Encompassing a broad range of

sophisticated products, this industrial

sub-sector represents the cutting edge

of technological development.

German firms working in this field have

been utilizing the country’s advanced

research and development resources

to come up with new applications

for markets clear across the econom-

ic spectrum, from the automotive

sector to medicine.

A star of the “Humanoide League”

of the “RoboCup German Open”

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9

Success Story

Chinese Capital Meets German Tradition

Back into the black

One of Germany’s oldest producers of sewing machines, Dürkopp Adler AG,

and China’s Shang-Gong Group (SGSB) are aiming to sew up the market with

environmentally friendly industrial sewing and production technologies.

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The companies joined forces three years

ago, when SGSB bought out the 150-year-

old German manufacturing firm that spe-

cializes in industrial sewing machines.

Since the takeover, little has changed in

management and production at the Biele-

feld-based company. In fact, rather than

being shut down, SGSB has brought its

acquisition’s finances back into the black

and now plans to take its subsidiary’s

earnings to new heights. The road out of

the red began when SGSB, China‘s oldest

manufacturer of industrial sewing ma-

chines, started making major injections

of funds into technological innovation at

Dürkopp Adler.

That investment is now paying off.

Dürkopp Adler recently began working in a

field for which Germany is well-known –

environmentally friendly technologies. At

the end of last year, it introduced its new

“green line” brand label.

“The green line label is more than just a

logo,” the company said in a statement.

“It is a symbol for environmental protec-

tion and safeguarding resources in the

sewing machine trade.” The statement

adds that the new machines use automa-

tion to conserve energy and other re-

sources. The company also says that it

continuously optimizes the production

techniques it uses in order to make the

production of sewing machines more en-

vironmentally friendly as well.

According to Alfred Wadle, spokesman

for Dürkopp Adler’s management board,

the company has high aims. “Within one

year,” Wadle says, “Dürkopp Adler will

strengthen its leading position in the

sewing machine trade even more.”

The Dürkopp Adler facility in Bielefeld is

a focal point of SGSB’s research and

development. Tests are currently being

devised to determine how much energy

the company‘s machines consume. Engi-

neers at the plant say they hope their

testing methods will become an industry

standard.

A Chinese member of Dürkopp Adler’s

board, Zheng Ying, said, that by becoming

the majority stockholder, the Chinese

company gained Dürkopp Adler’s brand

advantage and development capabilities.

With the reputable Dürkopp Adler name

and German technology the Chinese

group could enter a new market segment

as well.

Dürkopp Adler’s future target customers

are located far beyond western markets.

The company’s designers say they are us-

ing more than a decade’s worth of experi-

ence in operating according to environ-

mental guidelines so as to make their

products attractive to customers in

emerging economies. “We did not have to

reinvent environmental protection,” Wa-

dle says.

SGSB’s familiarity with the Asian market

is proving vital in shaping its subsidiary’s

strategy. The German company says that,

as the costs of resources rise, concerns

about conservation and consumption are

becoming increasingly important in Asia.

“In China, energy efficiency is of the ut-

most importance,” Wadle says. “More

and more enterprises make their pur-

chasing decisions based on this factor.”

Moreover, as one manager at Dürkopp

Adler explains, “Our customers on the

Asian market demand sewing machines

characterized by trouble-free functioning

as well as low energy consumption. So

we’ve developed our Class 281 machine,

which meets all customer requirements

at an attractive price.“

Dürkopp Adler’s trade fair exhibition

schedule shows that Asia is the target

market for the company that is financially

backed by SGSB in Shanghai. Adler ma-

chines have been featured at the Garment

Technology Expo in New Delhi, India. Oth-

er expositions where they are scheduled

to be shown in 2008 include: the India In-

ternational Leather Fair in Chennai, India;

the International Textile and Clothing In-

dustry Fair in Dongguan, China; and JIAM,

the Japan International Apparel Machin-

ery Trade Show, in Singapore.

10 Invest in Germany Magazine

Environmental and energy concerns have been

fuelling the search for new materials

Industry Report: Cleantech

Fighting Half a Trillion Plastic Bags

Searching for new alternatives

European Thermoplastic

Consumption 2006

Germany

21%

Italy

17%

France

11%Great Britain

11%

Benelux

9%

Spain

9%

Skandinavia

5%

Rest of Europe

7%

Rest of

Eastern Europe

7%Poland

5%

(total: 40 million t)

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Half a trillion. That’s the total global out-

put of plastic bags every year. Not only do

they cause extensive environmental dam-

age, but steep rises in the price of oil and

polymers are making them more and

more expensive to produce. So, it’s no

wonder that companies and governments

are desperately searching for new alter-

natives. One of them is bioplastics.

Of course, bioplastics aren’t just about

plastic bags. Catering products, garden-

ing tools, and medical and automotive ap-

plications offer the largest potential mar-

kets apart from packaging. Bioplastics

can be identified by the “compostability

logo,” the European standard that certi-

fies that the material is biodegradable.

The global demand for biodegradable

plastics is estimated at between 110,000

and 120,000 metric tons per year. Indus-

try analysts expect the market to grow by

as much as 30 percent over the next two

years.

A huge potential for organic growth

Although only 0.1 percent of plastic pack-

aging in Germany is currently bio-based,

the annual substitution potential for bio-

plastics is estimated at about 500,000

tons, and the sector is currently enjoying

double-digit growth. One successful niche

area is water-vapor-permeable bioplas-

tic trays and films for packaging organic

fruits and vegetables. The organic food

market has grown 125 percent since

2000, and its total volume reached €4.5

billion in 2006. Research shows that over

three-quarters of consumers will pay

more for organic food, and, by implica-

tion, for sustainable packaging, too. Sev-

eral major supermarket chains – includ-

ing Aldi, Rewe, and Plus – have been

testing biopackaging in some of their

stores.

Germany is Europe’s largest plastics

market for both thermoplastics and over-

all packaging production. In particular,

the country’s booming organic foods sec-

tor and growing consumer demand for

environment-friendly packaging have

been key growth factors. These factors,

combined with the fact that there are rel-

atively few established producers of bio-

plastics, give new entrants to the market

significant first-mover advantages.

Moreover, there is a wide range of regula-

tory, financial, and political support from

both Berlin and Brussels. One particu-

larly important step was the German

government’s decision to exempt bioplas-

tics producers from having to collect

used plastic packages for reuse until

2012, which can generate annual savings

over fossil-based plastics of as much as

€1,500 a ton. Drink containers with a

minimum of 75 percent bioplastic content

are also exempt from the system until

2010, meaning that consumers will not

have to pay the standard, mandatory de-

posit until then.

A concentration of skills and knowl-edge gives Germany the cutting edge

Two other significant advantages Germa-

ny enjoys are a well-trained workforce

and an extensive research landscape.

Germany combines the advantages of a

highly industrialized country with com-

petitive production locations. There are

more than 50 chairs in renewable ener-

gies at universities in Germany in addition

to leading institutes for polymer design,

production processes, and energy crops.

Public funding is also available for R&D

and to encourage the formation of indus-

try-specific regional clusters. One exam-

ple of this approach known as “BIO-PRO

Baden-Württemberg” involves 54 com-

panies and 34 research institutes.

The German Association for Plastics

Packaging and Films (Industrievereini-

gung Kunststoffverpackungen, or IK) be-

lieves that biodegradable plastics will

still be used alongside traditional, fossil-

based plastics for the foreseeable future.

Moreover, the European Technology Plat-

form recently designated bio-based ma-

terials as a “lead market.”

For more information about this industry

please contact Mr. Raphaël Winkler,

winkler@invest-in-germany.com

11

Perpetuum Mobilae

Industry Report: Cleantech

Biofuels could be the key to clean, sustainable mobility

Soaring oil prices and widespread con-

cern about the environmental effects of

fossil fuels have combined with the inexo-

rable growth in road traffic around the

world to make the search for clean, sus-

tainable energy increasingly urgent.

Transportation as a whole is responsible

for 30 percent of energy consumption in

the European Union. Given the automo-

tive sector’s near total dependence on oil

– much of it from politically unstable re-

gions – it is no surprise that the EU and its

member states are now paying a great

deal of attention to biofuels.

Biofuels (also called agrofuels) come as

solids, liquids, or gases and can – at least

in theory – be produced from any biologi-

cal carbon source, although by far the

most common source is photosynthetic

plant matter. So-called “first-generation”

biofuels are made from sugar, starch,

vegetable oil, or animal fats using con-

ventional technology. They include:

biodiesel, which is usually blended with

conventional diesel; alcohols such as

ethanol, which is the most common bio-

fuel worldwide and can be used instead of

gasoline; and biogas or biomethane from

biodegradable energy crops and waste

matter.

“Second-generation” biofuels are derived

from non-food crops, including waste

biomass, wheat stalks, corn, wood, and

special energy or biomass crops. These

include biohydrogen, biomethanol, mixed

alcohols, and Biomass-to-liquid (BtL).

Biofuels are already a reality in Germany.

Over 7 percent (by volume) of all fuel dis-

tributed in Germany in 2007 was biofuel.

Most of that was biodiesel, although bio-

ethanol accounted for about a sixth, and

production capacity for bioethanol is

scheduled to double by 2010. The com-

pany Choren is building the first biomass-

to-liquid production plant with an annual

capacity of 15,000 t in Freiberg. Wide-

spread use of biogas and a growing num-

ber of feed-in projects for biogas with

natural gas quality are laying the founda-

tions for the future use of biomethane in

natural gas cars.

Germany offers optimal start-up conditions for biofuels

The German government is aiming for a

17 percent market share (by energy con-

tent) in biofuels by 2020, or 7 percent

above the EU target. This was given a

boost by last year’s Biofuels Quota Act,

which increased quotas for blending bio-

diesel and bioethanol into diesel and gas-

oline, and the Energy Tax Act, which set

up tax exemptions for second-generation

biofuels, pure biodiesel and E85, and in-

stituted a range of financial penalties for

non-compliance. By the end of 2014, at

least 5 million tons of all distributed fuels

must be biofuels.

With more than 65 institutions – most of

them university-based – carrying out re-

search into fuel technology, Germany is

Europe’s leading R&D location, spending

over €40 million on fuel cell research in

2006, the third-highest amount world-

wide.

Over 7 percent of all fuel distributed in Germany in 2007 was biofuel

The majority of R&D institutions are lo-

cated in the cluster of North Rhine-West-

phalia, and there are also smaller clusters

in Hamburg, Berlin, Hesse, Baden-Würt-

temberg, and Bavaria. Together with a

wide range of public-private partnerships,

they provide a strong, innovative thrust in

this relatively young – but rapidly expand-

ing – field.

Germany’s dynamic biofuels market of-

fers huge potential investment opportu-

nities. The relatively small number of

established players offers significant

first-mover advantages, and generous in-

centives are available. The country’s so-

phisticated transportation and logistical

infrastructures also provide easy access

to the large domestic and European mar-

kets as well as the extensive network of

chemical parks, refineries, and sites with

rail, road, and water access.

In short, biofuels are already making

their mark in Germany and, as the need

for clean and sustainable energy sources

grows in tandem with commercial trans-

portation and private mobility, offer un-

paralleled scope for expansion.

For more information about this industry,

please contact Ms. Karolin Blattmann,

blattmann@invest-in-germany.com

Ph

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: F

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e.

V. Our events

Meet us at the Clean Moves Event in Hanover,

featuring the entire spectrum of market-

proven, energy-efficient mobility solutions!

Come to our workshop on April 23rd from

10 a.m. till 1:30 p.m. in Hall 27 and learn more

about investment opportunities in clean

mobility in Germany.

(see also program insert in this magazine)

12 Invest in Germany Magazine

Industry Report - Biotechnology

Roaring Red Biotech

Germany is the world’s second largest

market for biopharmaceuticals after the

United States, and there are more com-

panies operating in the biotech and bio-

medical sectors here than in any other

country in Europe. In 2006, over 500 bio-

technology companies and 350 biophar-

maceutical companies generated com-

bined sales of more than €4 billion in

Germany, an increase of 12 percent over

2005. From applied genomics to molecu-

lar medicine and biomedical nanotech-

nology, new products are flooding into the

market.

As the German biotech sector grows in-

creasingly more adept at channeling lab-

oratory research toward the market-

place, sales of biopharmaceuticals in

Germany have boomed. In 2006, sales to-

taled €3.13 billion, accounting for 12 per-

cent of the total German pharmaceuticals

market. Over 30 percent of all drugs with

new active ingredients approved in Ger-

many in that same period came from the

biotech sector, often as the result of ex-

cellent international research coopera-

tion within the industry.

Roughly 80 percent of German biotech

companies work in the medical sector.

The majority of them focus on proteins,

genetics, or cell and tissue cultures, and

nearly a third are actively involved in bio-

process engineering. Companies active

in the sector range from small startups

to huge multinational corporations, such

as Bayer Schering Pharma, Boehringer

Ingelheim, and Merck Serono. The big

companies’ financial clout means that

they play a key role in research and devel-

opment as well as in manufacturing and

marketing. More and more small compa-

nies are entering into commercial part-

nerships to develop technologies and

products.

In all, 2006 saw 48 German biotech com-

panies sign nearly 90 joint agreements, a

66 percent increase over the previous

year. Many of these agreements involve

marketing and operational aspects as

well as R&D, and nearly two-thirds in-

volve licensing agreements in one form

or another. Beacon arrangements such

as the multi-year cooperation agreements

between Morphosys, Novartis, Silence Ther-

apeutics, and Astra Zeneca demonstrate

that the high quality of technologies and

products developed by German biotech

companies is recognized internationally.

The presence of 4SC, MediGene, Mologen,

Geneart, MorphoSys, and Jerini among

Germany’s strongest-performing biotech

companies in 2006 highlights one of the

major strengths of Germany’s biotech-

nology sector: the close ties between

companies, universities, and research in-

stitutes. All of the companies mentioned

above were originally spin-offs from re-

search institutions. Indeed, arrange-

ments of this nature are characteristic of

Germany’s diverse biotech sector and

play an important role in fostering inno-

vation and specialized R&D across the

industry as a whole.

Over 300 universities and almost as many

academic research organizations focus-

ing on medical and life sciences – includ-

ing the German Research Foundation

(DFG) and the four main independent in-

stitutes: the Helmholtz Foundation, the

Fraunhofer Society, the Leibniz Associa-

tion, and the Max Planck Society – play a

vital role in Germany’s scientific land-

scape in addition to carrying out cutting-

edge research in other fields.

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Thus, it should come as no surprise that

– proportionally speaking – the country

produces more Ph.D.s in the natural sci-

ences than either the US or Japan, or that

nearly a third of all worldwide biotech

patent applications filed at the European

Patent Office between 2000 and 2003

came from companies in Germany.

Germany’s biotech landscape also has

some clear regional characteristics, with

the largest biotech clusters being located

around Munich, Berlin, and Heidelberg.

Almost 30 so-called “bioregions,” each

with their own research capabilities, act

as platforms for industrial development

and public private interactions. Cooper-

ating closely in a network that leverages

their individual strengths, these “biore-

gions” also help investors solicit capital

and gain access to a range of federal and

state incentive programs in addition to

those offered by the European Union. Bio-

tech funding from the private sector is

also growing in scale and importance

(see our next article).

For more information about this industry,

please contact Dr. Nicola Henneberg,

henneberg@invest-in-germany.com,

or Dr. Tilo Mandry,

mandry@invest-in-germany.com

Geographical distribution of dedicated

biotechnology companies. The size of

the symbols is proportional to the number

of companies located in the region.

Clusters are shown cumulatively.

Distribution of biotech companies

in Germany

Source:

Biotechnology Company Survey 2006

by biotechnologie.de

13

venture capital

IPOs

capital increase via the stock exchange

public subsidies

State and Venture Capital Financing

for German Biotech in Millions/Euro

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State and Venture Capital Financing for German Biotech

Source: biotechnologie.de, transkript; 2006

Biotechnology is a very young business

sector, and so are most of the companies

in it. To begin a startup is expensive, and

it takes time to turn an idea into a prod-

uct. For that reason, readily available

long-term financing – either from the

public or private sectors – is vitally im-

portant. This is why the German govern-

ment supports young firms to cover the

costs of suitable premises, high-tech

equipment, highly qualified personnel,

and long development and trial phases

for products. This makes ongoing opera-

tions possible despite low initial returns

for sales.

Grants from Germany’s Federal Ministry

for Education and Research (BMBF) and

other public sources have accounted for

about 10 percent of total biotech financing

in Germany until recently, and more than

a third of the companies in the sector

have taken advantage of these funding

sources. With Berlin’s avowed aim to turn

Germany into “the most research-friend-

ly nation in the world by 2020,” there will

most likely be a dramatic increase in such

funding. For example, the BMBF alone

will have allotted €430 million to various

biotech-related initiatives and an addi-

tional €800 million to health research in

the period between 2006 and 2009.

Additionally, private investment in the

German biotech industry has also seen

significant growth over the last few years.

Many companies have been able to se-

cure venture capital financing from pri-

vate sources, which provided approxi-

mately €365 million in biotech financing

in 2006. In fact, Germany currently at-

tracts 40 percent of all biotech venture

capital in Europe.

A number of big names in German busi-

ness have now entered the fray. SAP co-

founder Dietmar Hopp has invested more

than €250 million in biotechnology com-

panies, including €40 million in Immatics

and €20 million in Cytonet. Roland Oetker,

another private investor, holds a 13 per-

cent stake in Evotec and another five per-

cent in GPC. A third major player, Santo

Holding – set up by Thomas and Andreas

Strüngmann, who are also the founders

of Hexal (now part of Novartis) – has re-

cently closed a €15.6 million deal with

MediGene and invested nearly €17 million

in 4SC, as well as putting a total of €37.2

million into GANYMED Pharmaceuticals.

While the larger international companies

might be able to afford to finance their

projects by themselves, smaller biotech-

nology companies still need solid and

flexible financing if they are to succeed in

getting their innovative ideas out of the

laboratory and into the market place, let

alone move into the black. This is why the

healthy mix of government grants and

private capital remain vitally important

for their existence and, on the other hand,

why an investment into a promising Ger-

man biotech company or project often

turns out to be a lucrative deal for the

investor.

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14 Invest in Germany Magazine

Chemical Industry Powers Innovation

The German chemical industry is the most important supplier of innovative materi-

als to industry. Foreign companies manufacturing and researching in Germany

are playing an increasingly larger role as suppliers of innovative materials.

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The chemical industry is playing a lead-

ing role in German innovation. It is by far

the most important supplier of new mate-

rials to industry. Nine percent of all R&D

expenditure in Germany is in the chemi-

cal industry and, in 2006 alone, this figure

reached €4.5 billion. Four out of five

chemical companies managed to bring at

least one new product to the market with-

in three years. “The chemical industry has

the second-highest ratio of innovative

companies after the pharmaceutical sec-

tor,” says Christian Rammer from the Cen-

ter for European Economic Research (ZEW).

The chemical sector is also the driving

force behind many new products in other

sectors. About 10 percent of the overall

industry demand for material and inter-

mediary products emanates from the

chemical sector. The strong position in

research can mostly be attributed to the

support of the large, tradition-rich com-

panies, such as BASF, which was estab-

lished in 1865 and is the biggest chemical

company in the world today. The pharma-

ceutical and chemical company Bayer

was established in 1863. The blossoming

of the chemical industry with the produc-

tion of coloring agents, fertilizer, and

plant protective agents occurred hand in

hand with the growth in knowledge and

the rise in the number of graduates work-

ing in the chemical industry. To date, no

fewer than 29 German researchers have

received the Nobel Prize for chemistry.

The most recent one was awarded last

year to chemical engineer Gerhard Ertl

for his work on surface chemicals.

Moreover, there has traditionally been a

close relationship between companies

and universities. “The strength in re-

search is the main reason why Germany

is the leading location in Europe today,

both for basic chemistry with raw materi-

als and for special chemistry,” Rammer

says. This position was strengthened in

the recent years with an enormous in-

crease in efficiency. Between 1991 and

2006, the turnover per employee rose

from €148,700 to €372,000 per year. But

this doubling came at a price, as the num-

ber of employees dropped in the same

period from 716,700 to 436,000.

The big German chemical companies

compete on the international stage and

continue to make investments abroad. On

the other hand, many foreign chemical

companies have discovered Germany as a

place to locate company assets for both

production and research. In fact, re-

search has seen considerable growth

and, in 2004, chemical companies with

majority foreign ownership were respon-

sible for 15 percent of all chemistry

research expenditure in Germany. (1997:

6 percent). The companies behind this

phenomenal growth are Dow Chemical,

3M, Akzo Nobel, and Celanese, to name

just a few.

Dow made the single biggest investment in

the “Chemical Triangle” of Halle-Leipzig-

Bitterfeld since German reunification. “To-

day, the plants at the center of Germany are

among the safest, most modern, and most

efficient in the entire Dow network,” says

Markus Wildi, president of Dow Europe.

“Dow’s track record of success in Ger-

many can be attributed to a number of

factors. The highly qualified, motivated,

and innovative German workforce is our

most important asset,” says Wildi. With a

turnover of more than €4 billion, Germa-

ny is Dow’s second most important pro-

duction location after the USA.

Another successful settlement is the

young chemical company Dyneon, estab-

lished in 1996 in Burgkirchen (Bavaria).

The company, which specializes in fluor-

polymers, grew out of a cooperation be-

tween the German company Hoechst and

the American company 3M. Since 1999,

Dyneon has been fully owned by 3M. “It

was our German parent that gave us the

technological strength needed to comple-

ment our American marketing skills,”

says Dyneon managing director Michael

Peters. Dyneon’s firm intention has al-

ways been to use Germany as a “base for

further growth of the business.”

Regular surveys of investors in the chem-

icals industry paint a clear picture of the

strengths of German locations, namely

the infrastructure and services offered in

the chemical parks, the proximity to mar-

kets, well-educated experts, and the re-

search environment. Conditions for pro-

duction are important to companies, but

to a growing extent the conditions for in-

novation are, too, as the most successful

global chemical companies are those

with the most innovative products. Ac-

cording to ZEW, almost half of all German

chemical companies send new and inno-

vative products abroad.

15

Industry Report: Chemical Engineering

The New Alchemy: Turning Corn into Plastic

Many chemical companies in Germany work in close cooperation with research

institutes. At the Fraunhofer Institute in Potsdam work is in progress to create the

synthetic materials of tomorrow.

The shortage of petroleum and natural

gasoline and the associated steep rise in

market prices for fossil raw materials in

recent years have led to new concepts in

plastics production. “One alternative to

petroleum-based plastics is to produce

synthetic materials from renewable re-

sources,” says Dr. Mathias Hahn who is

researching ways to manufacture plastic

bottles from corn at the Fraunhofer Insti-

tute for Applied Polymer Research (IAP)

in Potsdam-Golm.

One IAP research project is to develop

plastics based on polylactic acid (PLA). In

a first step, starch is extracted from corn

and then “broken open” by enzymes. The

lactic acid formed during this process is

then transformed into polyester which is

entirely biodegradable. Products such as

biodegradable garbage bags take advan-

tage of this behaviour and are already

commercially available.

The biodegradability is a characteristic

also of particular interest to the food

packaging industry. “Foodstuff can be

packaged in bio-based plastics foils,”

says Hahn. From a technical point of view,

plastic bottles can already be manufac-

tured from renewable resources such as

PLA. However, before they can be estab-

lished on the market considerable devel-

opment work remains to be done as pro-

duction at present is much more expensive

than for conventional plastics. Nonethe-

less, experts assume that 5 to 10 percent

of the synthetic plastics market will be

replaced by bioplastics within the next 10

years. In order to achieve this goal, the

Fraunhofer researchers equip bioplas-

tics with new attributes and properties in

cooperation with chemical companies.

Dow Wolff Cellulosics Focuses on Research in Germany

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“We’re combining the best of two worlds.”

That was the declared goal of the Dow

Chemical Company when it took over Wolff

Walsrode AG, a subsidiary of the pharma-

ceutical company Bayer, a few months

ago. Along with the Dow business unit

Water Soluble Polymers, Dow Wolff Cellu-

losics (DWC) was created to be the world’s

leading company for cellulose derivate.

Unlike previous acquisitions, care was

taken with this merger to link and develop

the strengths in technology and to market

the know-how of all participating parties.

The Walsrode Industrial Park in Bomlitz

in the state of Lower Saxony was chosen

to be the location for the company’s head

office.

But that’s not all. Dow also decided to

concentrate its research and develop-

ment activities in the Walsrode Industrial

Park. As far as DWC Global Manager Mar-

tin Sonntag is concerned, this was a good

decision, as Bomlitz is not only the single

biggest settlement of the new company, it

also has an excellent reputation for its in-

novative strength. For Dow, the skilled em-

ployees and close cooperation between

production, marketing, and research were

the crucial reasons why it chose to locate

its research activities in Bomlitz (with 120

employees).

Cellulose is an important renewable raw

material. “From cellulose we extract

high-quality additives with a sophisticat-

ed production process,” says Sonntag.

The additives are invisible, but even in

small quantities, they play a major role in

many products found in everyday life. For

instance, in building materials such as

ready-mixed mortar, ceramics, and tile

adhesives, cellulose products operate

like small ball bearings, ensuring light,

smooth processing.

In this field, constant innovation is called

for. For example, Dow Wolff Cellulosics

supplied special additives for a tile adhe-

sive with an especially high sticking abil-

ity that were used to tile the bathrooms

and cabins on the luxury ocean liner

Queen Mary 2.

The food production and pharmaceutical

industries are also fast-growing areas

for application. In this case, pill produc-

tion is the best known example. Methyl-

cellulose in tablets ensures that there is

a delay before the active agents are re-

leased. “It is the goal of our research and

development services to develop new

products to the point where they are

ready to go to market,” Sonntag says. To-

ward that goal, the company has many

cooperation partners, including the uni-

versities of Braunschweig and Jena and

the Ecole des Mines in Paris. With its

2,200 employees worldwide and an an-

nual turnover of a several billion dollars,

Dow Wolff Cellulosics is one of the biggest

companies in the sector worldwide. The

company is confident that innovation will

keep it on the growth path in the coming

years.

16 Invest in Germany Magazine

Industry Report: Tourism

Destination Germany

Germany’s tourism industry buzzing

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The German National Tourist Board (GNTB)

has a busy year ahead of it. A major part of

the board's 2008 activities will be spent

promoting Germany in the US market. This

year has particular historical relevance, as

the first German immigrants arrived in

the New World in 1608 – exactly 400 years

ago. With some 42 million Americans (or

15 percent of the current population) hav-

ing German roots, the GNTB hopes to en-

tice many Americans to visit the home-

land of their ancestral fathers.

Fortunately for the GNTB, Germany al-

ready enjoys a world-class travel and

tourism environment. According to the

recently published World Economic Fo-

rum’s second annual “Travel & Tourism

Competitiveness Report 2008”, Germany

has the third most conducive environ-

ment for travel and tourism industry in

the world (behind Switzerland and Aus-

tria respectively).

This is in no small part due to Germany's

excellent ground and rail transport infra-

structure and a policy culture which ac-

tively promotes and safeguards sustain-

able environmental regulations and high

safety standards. Moreover, Germany

scores better than both Switzerland and

Austria for policy rules and regulation af-

fecting the travel and tourism industry.

No surprise then that Germany already

enjoys an ever-increasing number of for-

eign visitors streaming into the country.

In 2006 alone, US guests accounted for

4.7 million overnight stays in German ho-

tels and lodgings. In the past US tourists

used to visit "must-see" cities like Lon-

don, Paris or Rome. However, in recent

years, Berlin has moved up into third

place. The number of visitors to the Ger-

man capital has virtually exploded and

the trend shows no sign of abating.

It might come as no surprise to learn that

the great majority of visitors are Europe-

an; with statistics showing that 90 per-

cent of the continent’s inhabitants remain

within Europe when travelling abroad.

Germany has emerged as the third most

popular destination for all travelers be-

hind the more traditional tourist spots of

Spain and France. As a cultural destina-

tion, Germany appears to have moved up

into second place in Europe – directly be-

hind France!

Germany also occupies another very im-

portant third place in the tourism ranking

scales. According to the World Economic

Forum’s “Travel & Tourism Competitive-

ness Index” Germany occupies third posi-

tion – behind Switzerland and Austria re-

spectively – for its “regulatory framework,

business environment, and infrastruc-

ture and human, cultural, and natural re-

sources.”

In 2006 – the most recent year for which

statistics are available – Germany set a

new record, with foreign tourists spend-

ing nearly 53 million nights in hotels and

other lodgings. Particularly impressive

was the growth in business trips from

elsewhere in Europe to Germany: with al-

most 10 million hotel overnight stays

making a remarkable 16 percent increase

on 2005 results. This has helped make

Germany the European market leader in

the MICE (“Meetings, Incentives, Confer-

ences and Events”) subsector.

All the signs are that this positive devel-

opment in the German tourist industry

will continue, and that investment in this

sector will continue to reap handsome

dividends. Forecasts predict hotel and

motel revenues reaching $38.9 billion by

2011 (a 16% increase on 2006), with hotel

construction projects (228 projects to be

completed by 2013) reflecting the growth

in both the budget and high-end seg-

ments.

A further indicator is the steadily increas-

ing number of visitors from Eastern Eu-

rope and elsewhere who are spending a

rising proportion of their disposable in-

come on travel to take advantage of the

variety of offerings available in the budget

airline market. As a result, many visitors

plough the costs savings made by flying

budget into better and more expensive

hotel accommodation and the local econ-

omy.

It also pays to invest in the “health tour-

ism” sector. Already today there are a

large and wide variety of treatments be-

ing offered at health, wellness and beauty

treatment hotels across the country as

well as the more than 300 health resorts

and spas dotted across Germany.

As a growing number of guests increas-

ingly require different and diverse ser-

vices – from traditional massage to

Qigong (Chinese energy-movement ther-

apy) – the considerable growth potential

in this blossoming sector remains rela-

tively untapped. Here again, domestic

tourism plays a major role with the de-

mand for health treatment holidays grow-

ing as the German population also grows

older.

For more information about this industry.

please contact Ms. Asha-Maria Sharma,

sharma@invest-in-germany.com

17

Turning the Silver Society into Gold

“Investment Opportunities in an Aging Society” was the title of Invest in Germany’s

Third Japan-Germany Industry Forum held in Japan at the end of last year.

Japan and Germany share a common

problem. Their societies are aging. How-

ever, what might seem like a serious

challenge at first sight also provides a

golden opportunity for innovative ideas in

a number of industries. With that in mind,

INVEST IN GERMANY’s Third Japan-Ger-

many Industry Forum in Japan focused

on two industries which will have increas-

ing importance to an aging society: robot-

ics and food.

A high divorce rate (51.9 percent in Ger-

many in 2005), growing urbanization (ap-

proaching 90 percent of Germans live in

cities), and an increase in the percentage

of single households (38 percent in Ger-

many in 2007) suggest that more and

more people will depend on external help

in their everyday lives. As a result, older

members of the community will come to

increasingly rely on robots around the

home.

So-called “functional,” “health” and “well-

ness” foods can help slow down the aging

process. In Germany today, more than 20

percent of the population is over 60 years

of age. Statistics show that this will reach

33 percent by 2050, creating a market of

one third of the population potentially in-

terested in new labor-saving machines

and services which can support and im-

prove their quality of life.

The INVEST IN GERMANY event served as

a forum for experts and business people

from both countries to exchange ideas

and explore possible cooperation, devel-

opment and investment opportunities.

More than 300 participants attended the

events held in Tokyo and Osaka.

The keynote address was provided by

House of Representatives member, for-

mer Japanese health and welfare minis-

ter and great friend to Germany, Jiro Ka-

wasaki. During his speech, Mr. Kawasaki

emphasized the timely and significant na-

ture of the forum event subject matter. A

number of leading German and Japanese

industry managers spoke of the new Ger-

man tax regulations and a highly devel-

oped infrastructure which now extends to

the eastern German federal states. Japa-

nese guests were particularly keen to

hear about the improved tax situation, the

new law for limited companies, and the

competitive and hard-working German

workforce. In addition, they also had the

chance to learn about the local offers

from INVEST IN GERMANY’s federal state

partner event organizers. The German

Embassy and Consulates provided fur-

ther support in the guise of their success-

ful networking program.

An executive from Japan’s leading produc-

er of robots for industrial applications,

Yaskawa Electric, presented the compa-

ny’s newest developments and partner-

ship with Takara Tommy, Japan’s leading

toy manufacturer at the “Robotics Work-

shop." He reported that their machines are

able to realize three generation dialogues,

and are, as such, more than just toys.

Fraunhofer IPA, one of Germany’s leading

robotic systems research centers, pre-

sented its new developments in the field

of robotics and welcomed the possibility

of close cooperation with Japanese part-

ners.

At the health foods workshop, INVEST IN

GERMANY highlighted the significant

growth in functional and health foods sales

across Germany as a result of increased

consumer health and wellbeing aware-

ness. Functional food products are widely

considered to be the most important and

dynamic segment of the European food

market, as the functional foods concept is

a relatively new market development with

great potential for further development.

The current major industry segments are

functional dairy products and non-alco-

holic beverages, but the remaining food

categories also provide potential to in-

vestors.

Germany’s aging population continues to

display a rising demand for products de-

signed to boost their physical and mental

energy reserves. This thriving market

holds untold investment and business op-

portunities for foreign companies with

experience in the functional food sector.

Invest in Germany also noted that, despite

the fact that the German food market is

highly competitive, German consumers

are very receptive to new and different

products. This was particularly encour-

aging for those Japanese companies

whose specialty products are not yet

known in the German market.

Individual examples of successful inward

German investment were presented by

Yakult (well-known Japanese functional

food brand leader) and Suntory (one of

the world’s largest beverage companies).

A speaker from the IGV Institute for Ce-

real Processing also pointed to the grow-

ing import of functional foods in the Ger-

man market.

INVEST IN GERMANY’s next Japan-Ger-

many Industry Forum will take place in

Japan later this year with the focus this

time being “cleantech."

Our Events

18 Invest in Germany Magazine

World Leaders in Small Business

Germany might be more famously known

around the world for its car manufactur-

ers, state-of-the-art technology, banking

and insurance conglomerates and chem-

ical giants, but it’s also home to a number

of companies leading the world in small

business sectors.

According to a study of companies with

sales of up to €50 million conducted by

Bernd Venohr, a professor of strategic

management at the Berlin School of Eco-

nomics’ Institute of Management, there

are 1,300 German firms leading their re-

spective sectors. "On top of that, there are

surely another 1,000 micro-world market

leaders in even smaller niches” he said in

an interview with Germany’s Wirtschafts-

Woche (Economy Week) magazine.

Here we take a look at just a few of

Germany’s small business world

leaders.

Glasbau Hahn

(Glass Construction Hahn)

Visit the Louvre in Paris or the Metropoli-

tan Museum of Art in New York and one

thing remains the same – the glass cabi-

nets you’re looking at were most likely

provided by Frankfurt’s Glasbau Hahn.

Glasbau Hahn also enjoyed the rare privi-

lege of being selected by the U.S. National

Park Service to construct a glass cabinet

for President Abraham Lincoln’s Bible.

Founded in 1836 with a staff of 125, the

company is the world leader in its market

as well as manufacturing other glass

products including the bulletproof glass

used in banks.

Dresdener Sportgeräte GmbH

(Dresdener Sport Equipment)

More than 40 nations have bobsled teams

competing for Olympic gold, but only one

company supplies most of the world’s two

and four-man sleds. Germany’s Dresdener

Sportgeräte GmbH.

Around 36 of the world’s 42 teams buy the

“made in Germany” sleds, which can of-

ten cost as much as a midsize car. Once

part of East Germany’s VEB Flugzeug-

werft (VEB Aircraft Works) which supplied

East German teams with closely guarded

state-of-the-art sled, the company fell

upon hard times in the early 1990s. The

company now finds itself firmly back on

track thanks to the efforts of Karola

Brauer and business partner Stephan

Weber who acquired the company in its

lean years and helped steer the business

to its current success.

Groz-Beckert

The Swabian Alb in the southwestern

state of Baden-Württemberg was once a

hotbed for the textile industry in Germany

before the sector fell into decline during

the 1970s. However, some companies were

able to adapt and even flourish. Groz-

Beckert KG is one such survivor. It has

been making precision needles and appli-

cations for machinery, clothing, leather,

shoe and carpet companies across the

whole world. Founded in 1852, Groz-Beck-

ert has 7,000 employees in 150 countries

and annual sales of €480 million – with

only 10 percent of these revenues coming

from the domestic market.

Klepper Faltbootwerft

(Klepper Folding Canoe Works)

For more than 100 years, canoeists

around the world have been using the

“Faltboot” or folding canoe made in Ger-

many. In 1907, an inventor by the name of

Alfred Heurich turned over the business

to a master tailor from Rosenheim named

Johannes Klepper. The boat’s wooden

frame and canvas shell could be taken

apart and stowed away in a backpack. A

century later, Klepper’s company domi-

nates the world with 70 percent market

share.

Adco Umweltdienste

(Adco Environmental Services)

On first glance, it might not seem like the

most glamorous of industries. But Adco

Umweltdienste has proven there are

market share and profits to be won wher-

ever people come together. That’s be-

cause Adco is the world leader in portable

toilets thanks to its Dixi and Toi Toi brands

and operations in 31 countries. It has 56

subsidiaries in places as far flung as the

United States and Hong Kong, Malaysia

and Taiwan with a global workforce of

1,700. The company can look to annual

revenues of around €160 million from its

160,000 portable toilets ranging from its

basic Dixi Klo model right through to lux-

ury container models with marbled walls,

tiled floors and full-length mirrors used

for VIP events.

Pöschl Tabak

(Pöschl Tobacco)

100 years ago there were 20 companies in

the German town of Landshut producing

“Schnupftabak” (snuff tobacco) which is

popular in parts of Germany and ingested

with a powerful snort into the nose. Of

these companies, only one survived – the

Pöschl Tabak Group. The 105 year old

company only relies on snuff tobacco for

12 percent of its annual sales revenue of

€230 million, but it still produces 240

tons of snuff tobacco a year – around one

third of which is exported across the

globe to 80 countries.

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He launched an international trend with a

hip, new fi zzy drink called “Bionade” (pro-

nounced “Bee-oh-NAH-da,” in German).

Bionade CEO Peter Kowalsky, 39, and his

stepfather Dieter Leipold, 70, have cap-

tured the taste buds of Germany, Austria,

and Switzerland with an organic soft

drink brewed the same way as beer – fer-

mented with only natural ingredients and

in accordance with Germany’s strict Rein-

heitsgebot (or “beer purity law”) dating

from 1516. The drink – created after a lot

of late-night tinkering – went on sale in

the Benelux countries, Scandinavia, Italy,

Spain, Portugal, and Ireland in the last two

years, and there are plans for further in-

ternational expansion to the United States,

Britain, and Japan in 2008.

“The big question when we started out

was: Is this a product that anyone will

want to drink?” says Kowalsky, CEO of the

Peter Brauerei, the brewery founded by

his grandfather in the small northern Ba-

varian town of Ostheim in der Rhoen

(population 3,370). “We just didn’t know.

We only knew that we had to come up with

something different and something bet-

ter than what was already on the market,”

he recently told Der Spiegel in an inter-

view. “Our aim was to come up with a

healthy, quality drink with better ingredi-

ents,” he added. "Beer has been falling

out of fashion. And it’s the breweries’ own

fault for squandering the chance to keep

beer socially acceptable.”

After about eight years of experimenting

with the alcohol-free brew and testing

different recipes of the low-sugar, low-

calorie carbonated beverage on family

and friends, Bionade fi nally went into pro-

duction at the failing, 28-employee brew-

ery in 1995. (“Bio” is the German word for

“organic,” and “Limonade” is a generic

term for “soft drink.”) The idea was to

make a drink with an intoxicating taste

that was not intoxicating. With no adver-

tising at fi rst and relying only on word of

mouth, Bionade managed to quickly strike

a chord with health-conscious consum-

ers.

One crucial breakthrough for Bionade

came in the late 1990s, when a bar in

Hamburg – Germany’s second-largest

city and home to many of the country’s

largest publishing companies – started

offering Bionade on its list of drinks.

Some journalists wrote about the new

drink and its unusual selection of fl avors

and colors. And, with the help of a new

marketing campaign started in 1999,

sales have rapidly climbed from 2 million

bottles in 2002 to about 250 million in

2007.

The rest is history. Sold in 0.33-liter bot-

tles and made from malt, water, sugar,

and fruit essences, Bionade comes in

four fl avors: lychee, elderberry, orange-

ginger, and herb. After shunning adver-

tising for a long time, Bionade took the

plunge in 2007 with a modest, initial cam -

paign on bill boards and the radio in 15

German cities.

It picked a slogan that underscored its

motto of being something different: “Bi-

onade. Das offi zielle Getränk einer

besseren Welt” (“Bionade. The offi cial

beverage of a better world”).

Kowalsky says Bionade’s expansion will

continue in 2008. “The next countries are

places like Canada and the United States,”

says the young manager, who studied

brew engineering in Weihenstephan. He

is not worried about the name “Bionade”

being pronounced differently in English-

speaking countries or the possibility that

the meaning of the drink (“organic soft

drink”) gets lost in translation. “Bionade

represents ‘Made in Germany,’” Kowal-

sky says proudly. “Why shouldn’t a prod-

uct like that be able to keep its German

name around the world?”

German Business

A German brewer in rural Bavaria had serious problems with

a crowded market, a mature product, and its poor image.

This is the story of how he not only rescued his

family-owned business but also made it rich.

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The Stunning Rise of a Healthy Drink

20 Invest in Germany Magazine

German Business

Germany Celebrates Its Best Entrepreneurs

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The winners with the anchorwoman of the event

and the prime minister of Hessen

What do Sixt, Q-Cells, Alnatura and Inter-

hyp all have in common? It goes without

saying that they are all major German

business household names. But they also

share something else in common. They

have all been prizewinners at the annual

“Entrepeneur of the Year” awards first in-

troduced 11 years ago. Each year the

event crowns winners in five different

categories. Since the competition’s in-

ception there have been more than 100

winners, with many previous winners go-

ing on to make a big splash in the German

market.

The main criteria listed by the jury this

year in their search for the top five entre-

preneurs (out of the 350 who entered)

were: the future potential of the company;

its ability to innovate; its entrepreneurial

input; and its employee orientation. Many

attributes and skills are needed to be a

successful entrepreneur. This year’s win-

ners impressed with their staying power.

(See the list of winners in our chart.)

As always, having a good idea was impor-

tant. But, without staying power, the ideas

would have stayed just that – ideas. The

2007 winners had to persist with their

ideas in the face of skepticism, vested in-

terests, competition, and the “newness

factor.” All fought their way through. For

instance, the founders of 360 Treasury

Systems and Vanguard had to convince

hospitals and financial institutions, re-

spectively, that there were different ways

of doing things. In both cases it took a

while for the messages to get through,

but in the end they did.

The “Entrepreneur of the Year” competi-

tion is administered by the accounting

firm Ernst & Young and supported by a

number of companies and publications,

including manager magazin. In a multi-

step process, Ernst & Young and a jury

gradually draw the net closer. In the end,

the five winners are selected from a list of

98 semi-finalists. This list of semi-final-

ists also makes for interesting reading.

When excellent candidates such as Basic

(a bio supermarket chain), Air Berlin (Ger-

many’s second largest airline company

after Lufthansa), Pixelpark (a listed IT and

communications company), and Tipp24

(an innovative online gambling site) are

only “second best,” it’s clear just how

tough competitions of this kind are in

Germany.

Category

Industry

Trade

Services

IT

Startup

Profile of Company

Conergy is a prominent manufacturer in the sun, wind,

and bio-energy sector. With 2,600 employees, the company

had sales of about €1.2 billion in 2006.

Tegut is a supermarket chain with a focus on bio products

and 2006 sales of €1.1 billion.

Vanguard is a recycler of medical products and

service provider for clinics and hospitals with 2006 sales

of €100 million.

Sedo is a world leader in the resale of registered Internet

domains with sales of €41 million in 2006.

The listed company 360 Treasury Systems operates an online

forex trading platform for companies and had 2006 sales

of €3.2 million.

Name, Company

Hans-Martin Rüter (41),

founder and chairman of the board of

Conergy AG

Wolfgang Gutberlet (63),

head of Tegut Gutberlet

Robert Schrödel (49),

founder and chairman of the board of

Vanguard AG

Tim Schumacher (30), Ulrich Preisner (29),

Marius Würzner (31), and Ulrich Essmann

(37), co-managing directors of Sedo GmbH

Carlo Kölzer (35),

founder and chairman of the board of

360 Treasury Systems AG

The Winners of the Competition 2007

21

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Foreign and domestic companies alike are (re-)discovering why it pays

to base businesses in Germany.

The Tides of Offshoring Turn Back to Germany

Germany or, in a sense, reshore. While

abroad, they had to deal not only with ex-

tra costs resulting from language and

cultural differences but also with legal

uncertainty, a lack of worker loyalty, un-

reliable supply chains, and limited logis-

tical opportunities.

…and a Big Boost from the Government

Germany’s government is taking concrete

steps to further these trends. Its “High-

Tech Strategy” will devote €15 billion to

cutting-edge research by 2009. At the

same time, it will boost R&D funding for

small and medium-sized enterprises by

40 percent to over €850 million. And, by

2010, it will dedicate 3 percent of GDP to

R&D. These measures reinforce other

improvements, such as a progressive

dismantling of bureaucracy and red tape

and, as of January 2008, a corporate tax

reform making Germany competitive with

other major European economies. Taken

together, these improvements will en-

hance Germany’s reputation as an excel-

lent place to do business and an ideal set-

ting for companies seeking to maximize

their innovative and economic potential.

Globalization has led many companies to

offshore production. To stay competitive,

several German companies have moved

manufacturing facilities to locations of-

fering lower labor costs. But wages aren’t

the only factor worth considering. In many

industries, wages make up only a small

percentage of overall costs. As more

companies learn the true costs, there has

been a steep decline in offshoring based

solely on labor costs. In fact, several

companies – both foreign and German –

have realized that the real qualities they

need are in Germany. As a result, more

foreign companies are coming to Germa-

ny and the tide of offshoring by German

companies has turned, leading many of

them to bring their businesses back.

Germany’s Unique Investment Landscape

Many foreign companies – particularly

those in knowledge-intensive and high-

tech industries – have based facilities in

Germany in order to exploit advantages

unique to the investment landscape: ex-

pertise in R&D; innovation clusters with

concentrated expertise; and skilled spe-

cialists at numerous research centers

and universities. They also know that

German employees lead Europe in skill

level, productivity, and company loyalty,

and that “Made in Germany” commands

respect worldwide.

Two Stars in the Constellation of Expertise

Germany is especially attractive to the

renewable energies and logistics sec-

tors. With annual turnover of €22.9 bil-

lion, over €6 billion in exports, and nearly

€9 billion in investment volume, Germany

is the place to be for key players in the

renewable energy sector. In July 2007, for

example, the American photovoltaic mod-

ule producer First Solar opened its first

German factory in Brandenburg because,

as the company’s president stressed,

Germany is the world’s largest solar-

power market and leader in related sci-

entific expertise.

Germany is Europe’s top destination for

logistics companies too. DHL, for exam-

ple, relocated its EU hub from Belgium to

Halle-Leipzig. DHL’s decision means that

the attractiveness of the Halle-Leipzig

region has increased not only for logistics

companies but also for companies that

depend on logistics service providers. In

today’s global economy, that means all

businesses.

Re-discovering Germany’s Benefits…

Foreign companies aren’t the only ones

discovering these advantages. Many Ger-

man companies that had offshored pro-

duction have been deciding to return to

Marketing Germany

The Economic Development Agencies

of the Federal States advertise the

advantages of their own regions world-

wide. We asked them to send us the

ads that they think are especially witty

or interesting. See this “best of” selection

on the next four pages.

“Best of” Federal Creativity

Bavarian Ministry of Economic Affairs, Infrastructure, Transport and Technology

Invest in Bavaria Prinzregentenstrasse 28

80538 Munich, Germany

Phone (+49 89) 21 62-26 42

Fax (+49 89) 21 62-28 03

E-Mail info@invest-in-bavaria.com

Internet www.invest-in-bavaria.com

www.invest-in-bavaria.comInvest in BavariaMax knows where he wants to go: to the top!

For this, Bavaria is the right place to be. Bavaria offers the best opportunities for all, be theysummiteers in the Alps or successful researchers. One of Europe’s best education and trainingsystems might enable Max to co-shape the future of us all, for instance in one the high-tech sectorsin which Bavaria enjoys global leadership. It is no accident that global players such as Siemens,BMW, Audi, MAN or Linde are headquartered in Bavaria. Or Max might some day work for majorinternational high-tech companies of which 1,300 are operating in Bavaria. Perhaps your companyas well, shortly?

If you want Max to contribute to the success of your enterprise, you know where to find him. In Bavaria.

Development BoardBrandenburg Economic

Germany’s numberone Biotech Region

Cluster ofaerospace

Importantchemistry sites

Large assortment ofproperties – just call

High qualityof life

Contact your central partner forpromoting business in Brandenburg:

Brandenburg Economic Development Board (ZukunftsAgentur Brandenburg GmbH)Steinstrasse 104-106, D-14480 Potsdam

Phone: +49 (0)3 31/6 60-30 00, Fax: +49 (0)3 31/6 60-38 40, E-Mail: info@zab-brandenburg.de

www.invest-in-brandenburg.com

The perspectives:

Proximity to the growth markets of Central and Eastern EuropeMotivated and highly qualified specialistsThe most favorable labour cost + working time in GermanyOptimal investment subsidies (EU target area 1 + 2)Enterprise networks and competence centresLow municipal taxesHigh quality of life

•••••••

Germany’sCapital Regionis waiting for you

Germany’sCapital Regionis waiting for you

22 Invest in Germany Magazine

Marketing Germany

The Federal State of Bremen is a place for world trade. Needlessto say international trade always requires logistical know-how.Over 1,000 companies with more than 20,000 employees specia-lized in logistics, achieve top performance, and set new standardsin Bremen’s logistic sector everyday.

Within a commodity flow area of 3,158 acres, contacts and relation-ships are established directly. Minolta, DaimlerChrysler, and Tchibo,one of Europe’s leading coffee distributor, are shining examples of successful companies “docked” at Bremen. They share Europe’s biggest high-rise warehouse, run by the BLG Logistics Group.

The transportation turnover is breaking records in Bremerhaven,Bremen’s large port, where one can find specialists for every logisticalassignment imaginable in Europe’s unique Cargo Distribution Center.

Interested in the logistics location Bremen? We are knowledge-able representatives for efficient, individualized economicdevelopment initiatives.

Big Ships Need Big Ports – Excellent Products Need Excellent Locations!Ride the Wave. Come to Bremen.

Dock at Germany’s top logistic Hub

Bremer Investitions-Gesellschaft mbH75 Broad Street, 21st FlNew York, NY 10004

Phone 212.974.1883rene.hoevel@big-bremenwww.big-bremen.com

Saxony Economic Development Corp.Bertolt-Brecht-Allee 22 , D - 01309 DresdenPhone +49-351-2138 0 info@wfs.saxony.dewww.invest-in-saxony.com/machine

Each generation continues to develop the heritage of its parents. For more

than 175 years, Saxons have been identified with innovation, quality, and

productivity in mechanical engineering throughout the world. Whether it

be machine tools, printing and textile machines, or complete industrial

plants: More than 35,000 employees in about 440 companies are already

working on the next generation. If you also wish to "proliferate", you'll find

the best partners right here in Saxony - guaranteed!

It’s a Saxon!

The metropolitan region of Hamburg with its more than four million inhabitants is one of the European regions to have

gained the most from the fall of the Iron Curtain and from globalisation. Today Hamburg is one of the most dynamic

commercial centres in Northern Europe. Modern services in the logistics, aviation industry, technological and media

sectors have taken their place alongside modern industrial production and traditional trade in shaping Hamburg´s

economy.

Let us talk about your success.

We will open markets for you.

Success with Hamburg Your Partner for Success

Industry-specifi c HWF support is offered in cooperation with:

“Schleswig-Holstein is convincing not only with

world-class music, but also with harmonies in industry.”

23

Marketing Germany

24 Invest in Germany Magazine

In the heart of Europe, at the center of Germany, a strong federal state is growing. Not least due to the support from LEG – the State Development Corporation of Thuringia: In the past years we have successfully based well over 400 companies there. Centrally located and with a first-rate connection to international markets, Thuringiaoffers excellent conditions for making very promising investments.

w w w. i n v e s t - i n - t h u r i n g i a . d e

gwSaarSaarland Economic Promotion Corporation

ATRIUM Haus der WirtschaftsfoerderungFranz-Josef-Roeder Strasse 17D-66119 Saarbruecken, GermanyPhone +49 / 681 / 9965-400info@gwsaar.comwww invest-in-saarland com

S e a r c h f o ra l o c a t i o n

Marketing Germany

We have a tradition of building

skyscrapers.

Invest in Mecklenburg-Vorpommern GmbH

Schlossgartenallee 15 D - 19061 Schwerin

T: +49/385/59225 - 0 F: +49/385/59225 - 22

Info@invest-in-mv.de www.invest-in-mv.de

Room to Grow

Where living and working are fun.

Join Caterpillar, Nestlé, Unilever and

enjoy the benefits of working in a region

where global players spend their holidays.

MV - The Place to Be

“We are developing the future

with the bilingual industrial real estate database of Rheinland-Pfalz.“

“Lower Saxony’s state costume? The lab coat.”

25

26 Invest in Germany Magazine

Innovative Germany

+++++ Innovation News +++++

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T-Shirts That Glow and Warm

Print your message on a T-shirt? No way!

That’s so 20th century! Well, then, why

not have a T-shirt broadcast your mes-

sage using LEDs or electroluminescent

foils integrated into the fabric, instead?

You say that, even though your factory

floor is cold, workers still have to lie on it

sometimes while performing their tasks?

Instead of halting production so you can

rip the place up and install heaters, how

about having the workers’ uniforms pro-

duce heat?

It might sound a bit like it’s out of the

space-age, but rest assured – it’s a real-

ity. Textile Interfaces, a company based in

Gotha (Thuringia), has been developing

ways to integrate cloth and advanced

technology in ways that use the best of

both worlds. The business is also devel-

oping textile products for its customers

that are exclusively made of recyclable or

renewable materials and are therefore

sustainable.

Possible applications are all over the

map, from glowing logos on shirts to be

worn at trade fairs to rip-proof pockets

and integrated heating on a prototype for

the uniforms of people working in Opel

factories. Philips required textile inter-

faces for the product development of the

Lumalive jacket with integrated pro-

grammable monitors on an LED basis.

These have been marketed for events and

promotions throughout Europe over the

last year.

Textile Interfaces is only a couple years

old, and clearly they’re just beginning to

figure out innovative solutions to meet

their clients’ demands. A company that

shows up at fashion shows and computer

conferences? That’s so 21st century!

Nuts for Oil – a 21st Century African Tale

Jatropha is a shrub with red flowers that

can grow just about anywhere in tropical

countries. It also produces nuts with an

oil content of 40 percent. That fact – along

with the fact that African farmers have

been using the bushes to serve as borders

between different fields – has brought a

stable source of electricity to villages in

Ghana, Mali, and the southern part of the

Tanzanian territory of Tanganyika.

Using a hybrid photovoltaic-and-oil-burn-

ing system, the Cologne-based firm En-

ergiebau Solarstromsysteme GmbH has

partnered up with InWEnt, a development

corporation based in Bonn, to enable vil-

lages to have reliable electricity day in

and day out. During times of low usage,

the photovoltaic solar collectors suffice

to meet energy needs. But when usage

increases, they can be supplemented

by Jatropha-oil-burning generators. The

whole package is so simple that it takes

no specialized knowledge to run. As a re-

sult, the villagers – or, in the case of the

Tanganyikan project, a convent of Vincen-

tian Sisters of Charity in Mbika – can keep

the thing going.

Another advantage of systems using Jat-

ropha oil is that, unlike biodiesel, which

needs processing, Jatropha nuts only

need to be crushed. Once their oil has

drained out, it is ready for immediate use.

As a result of using this system, not only

has productivity and income increased in

the villages in which the system has been

installed, but some farmers, who’ve al-

ready had the Jatropha shrubs around

their fields, are supplementing their in-

comes by gathering and selling the nuts.

Jatropha seeds

27

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Innovative Germany

+++++ Innovation News +++++

Visual Impressions for Blind People

A subretinal chip implant produced by

Retina Implant AG in Reutlingen, Baden-

Württemberg, gives new hope to blind

people suffering from retinitis pigmento-

sa or macular degeneration. The compa-

ny – a spin-off of the University of Tübin-

gen – has just received the 2007 STEP

Award for its fantastic development. The

jury agreed that the development will

soon find success on the market.

Medical experts from the University Eye

Hospital in Tübingen have succeeded in

giving blind people simple visual impres-

sions by implanting chips beneath their

retinas. Seven patients have already re-

ceived the subretinal chips, says Prof.

Eberhart Zrenner, head of the Depart-

ment for Pathophysiology of Vision and

Neuro-Ophthalmology at the University

Eye Hospital of Tübingen. The chip helps

allow people to perceive sources of light

such as lamps and windows. Some of the

patients could even locate bright objects

on a dark surface.

The retina chip takes over the functional-

ities of the rods and cones of photorecep-

tors. The therapy is appropriate for peo-

ple who were able to see at one time as

well as for those whose visual nerves and

related areas of the brain are still work-

ing.

Approximately 130,000 blind individuals

live in Germany and an additional 17,000

people go blind each year. One fourth of

these new cases is caused by a degener-

ative retinal disease.

Among these diseases number retinitis

pigmentosa (RP) and age-related macu-

lar degeneration (AMD), as a result of

which the retina’s photoreceptors cease

to function.

Ophthalmologists are still unable to use

therapeutic drugs or medical products to

help patients who have gone blind as a

result of degenerative retinal diseases.

Retina Implant AG aims to change this sit-

uation. The company defines itself as an

innovative “development and production

company” offering medical products for

visually handicapped and blind patients,

and it aims to be the first company in the

world to market functioning subretinal

implants. The development is based on

the results of a research project in which

numerous university hospitals and re-

search institutes have been participating

since 1996, most of which are located in

Baden-Württemberg.

In close cooperation with their partners

– the University Eye Hospital of Tübingen,

the University Eye Hospital of Regens-

burg, the Natural and Medical Sciences

Institute at the University of Tübingen, the

Institute for Microelectronics Stuttgart,

and the Institute for Physical Electronics

at the University of Stuttgart – Retina Im-

plant AG plans to bring to the market the

first fully functional electronic retinal im-

plant, so as to partially restore vision to

those who have gone blind. This is a great

example of the innovative and application-

oriented research activities in Baden-

Württemberg.

For more information, please contact

Dr. Birgit Spaeth; birgit.spaeth@bw-wfk.de

Injecting CO2 Into the Soil

Greenhouse gases, global warming, au-

tomotive emissions, and the dangers they

all pose to our planet: these are things

very much in the news these days. What’s

pretty much a consensus is that some-

thing has to be done about carbon dioxide

(CO2) the most common gas contributing

to the so-called “greenhouse effect.”

One suggested solution has been to plant

more trees, which transform carbon di-

oxide into oxygen, but there’s just so much

a tree can do and so many places to plant

them. What if you could just grab the CO2

and park it somewhere instead of releas-

ing it into the atmosphere? What if, for

instance, you could repurpose an old East

German natural gas storage facility and

fill it with the carbon dioxide collected

from factory emissions?

Would it work? And would the stored gas

degrade the minerals in the surrounding

site? The European Union has joined up

with Germany’s federal government to in-

vestigate these questions. They’ve also

dedicated a combined €38.7 million to a

pilot project in Ketzin, a village northwest

of Potsdam, which will be coordinated by

the city’s GeoForschungsZentrum. The

project will entail a detailed study of what

happens when 60,000 metric tons of CO2

– the annual output of 40,000 cars – are

injected into a saltwater aquifer some 800

to 850 meters beneath an old gas plant in

Ketzin.

CO2SINK, as the project has been dubbed,

will be an important test. The EU has

pledged to reduce carbon emissions by

30 percent by 2020, and if this project

succeeds, a new and relatively inexpen-

sive method of capturing and storing CO2

will have been found.

28 Invest in Germany Magazine

Germany has had a world-class research and

innovation landscape for decades. The economic weekly

WirtschaftsWoche recently presented the best

ideas to come out of Germany thus far. Read the most

interesting examples below.

120 Years of Liquid Crystals

Over the past few years, liquid crystal

displays (LCDs) have become so ubiqui-

tous that we’ve begun taking them for

granted. Thin, energy-efficient (especially

compared to the previous generation of

television-set-like displays, which were

also incredibly heavy), and capable of

sharp resolution and amazingly accurate

color, LCDs are taking over the comput-

er-monitor and television industries more

and more. In fact, it’s estimated that over

$100 billion will be spent on them in 2008,

up 12 percent from 2007. Germany has

led the way in liquid crystal research

since botanist Friedrich Reinitzer first

detected them in 1888 at the German Uni-

versity of Prague while extracting cho-

lesterol from carrots. Since then, much

research has been done on how heat and

electrical impulses cause crystal com-

pounds to change colors as well as on the

best chemicals to crystallize for these

purposes. LCDs were originally only mo-

nochrome and used in products such as

early digital watches, but they were soon

refined enough for more complex appli-

cations. Today, Merck Chemicals in Darm-

stadt is the leading manufacturer of these

crystal compounds, providing 70 percent

of the world’s supply of liquid crystals

and holding over 2,500 patents, with

around 100 more being added each year.

The Lotus Effect: Self-Cleaning Surfaces

The lotus is a powerful metaphor in Bud-

dhism. It’s a plant that sits atop swampy

water and produces a beautiful flower. It’s

also remarkable – scientists have discov-

ered – in that its leaves are absolutely im-

pervious to dirt. Any impurity that lands

on the leaf will just roll off with the help of

a little water. In 1971, Wilhelm Barthlott,

a professor of botany in Bonn, became

fascinated with this phenomenon. With

the help of a microscope, Professor

Barthlott discovered that the seemingly

smooth upper surface of the lotus leaf

was, in fact, quite rough and had incredi-

bly tiny crystals of wax only nanometers

(that’s billionths of a meter!) wide. By

1994, he’d learned enough about the lo-

tus’s surface to be able to patent a meth-

od of manufacturing similar self-cleaning

surfaces. Since then, dozens of applica-

tions of this technology have been brought

to market; from a spray for automobile

brakes, to tents, awnings, and shades

made out of treated fabrics that repel

dirt. Another innovative spray has been

marketed that gives metal a “lotus ef-

fect,” too. The Buddhists probably knew it

all along: There’s more than one jewel in

the lotus. You just need the time, patience,

and concentration to find it!

“No Fatty” from Germany

Germany, perhaps more than other coun-

tries, has to contend with all number of

dated stereotypes. Many might still con-

sider Germany to be the land of the high

carbohydrate (potatoes, dumplings, beer

and bread), salt and fat (pork, goose and,

of course, sausages) diet, but this couldn't

be further from the truth. Thanks to peo-

ple like Mannheim butcher Josef Point-

ner, who has developed a special low-fat

sausage, the German diet and German

foods are enjoying a resurgence and are

healthier than ever before.

The Best of German Innovations

Innovative Germany

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The lotus effect

Pointner was very proud of both the vari-

ety and quality of the wurst (or, sausages)

he sold, but the fat content had to go.

There was a big problem, though: fat is

one of the primary ways to convey flavor.

Collaborating with the Fraunhofer Insti-

tute for Process Engineering and Pack-

aging, Pointner set about finding ways to

make very low-fat sausages – without us-

ing chemical additives – that were still as

tasty as the ones made in the traditional

way. Calling the new line “No Fatty,” he

trimmed the fat away from the ham or

cutlet meat he began with, leaving be-

tween 2 and 3 percent fat, and then he

chopped the remaining meat extremely

fine. Preparing the sausages at very low

temperatures, he came up with products

that he tested on 2,600 volunteers includ-

ing star chef Alfons Schuhbeck. Everyone

raved, and now “No Fatty” is available at

Edeka supermarkets in southern Bavaria.

By the end of this year, it’ll also be avail-

able throughout Germany.

Socks That Never Smell

Unpleasant odors are a fact of life. Our

bodies produce them, and they leach into

our clothes. Cooking odors are nice while

you’re cooking, but less so several days

later. Cloth, in particular, seems to at-

tract and hold them, and getting them out

has spawned a billion-dollar detergent

industry producing substances that don’t

always get the job completely done.

Socks, undergarments, curtains – all re-

tain odors we’d rather not smell!

29

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osch

Measuring the injection jet in diesel injection systems. Bosch researchers are working on improving diesel injection systems.

The picture shows laser-based technology being used to measure an injection jet.

But thanks to research into a curious

family of chemicals called cyclodextrins

by the German Textile Research Institute

in Krefeld, the Munich-based company

Wacker Chemicals has been able to pro-

duce cloth that neutralizes unpleasant

odors and to integrate their product into

many fabrics with practical, everyday

uses. Cyclodextrins have the unusual

ability to form a “host-guest” relationship

with hydrophobic (or water-resistant) mol-

ecules by encasing them and significantly

speeding their rate of decomposition. This

process can work with many substances,

including toxic waste, sewage, and cho-

lesterol. In the case of odors, many of

them are caused by hydrophobic oils. The

oils exuded along with sweat, for in-

stance, quickly turn rancid, which causes

an unpleasant odor. When the sweat goes

into a fabric – a shirt for instance – which

has been treated with cyclodextrins, the

oil undergoes a chemical change that

transforms it into a compound that can be

easily washed out using detergent and

water.

Piezoelectric Fuel Injection for Non-Diesel Engines

As any automobile enthusiast will tell you,

German cars are famous around the

world for their superb engineering – and,

in particular, for their engines.

With the rising cost of oil, though, these

engines have to be designed not only for

speed and endurance but also for the

conservation of fuel, which can lower

both of these factors. But, since the EU

has issued strict rules about reducing

emissions, it has to be done. As a result,

German automakers have headed into

the lab to see what they can do. One of the

more revolutionary results of this re-

search has been the development of

Piezoelectric fuel injection systems by

the companies Bosch and Siemens. The

science behind this is fiendishly difficult

to explain, but the results aren’t: With the

extreme precision this technology af-

fords, exact measurements of fuel can be

injected into the engine through the rapid

opening and closing of the injector, a pro-

cess which results in the production of

far less exhaust. The results: fuel is

saved, pollution is minimized, and effi-

ciency is maximized. Piezoelectric fuel in-

jection has been a standard component of

diesel engines for seven years. Daimler

and BMW will soon make available cars

with standard gasoline engines with the

Piezoelectric system. Moreover, as the

manufacturing technology is refined, oth-

er carmakers will offer similar vehicles

as well.

The Ultrasound Scan

Is it going to be a boy or a girl? The ques-

tion that expectant parents have asked

since the dawn of time is answered easily

enough these days: just have an ultra-

sound scan and find out! But, of course, it

wasn’t always this easy. The previous

method of looking into the human body –

x-rays – involved an amount of radiation

that could imperil the developing fetus.

And radiation made x-rays hazardous for

a lot of other medical applications as well.

But in 1961, Richard Soldner, an engineer

at Siemens, discovered how to use ultra-

sound frequencies to deliver pictures in

real time and, in doing so, revolutionized

diagnostic medicine. Exposure to x-rays

for long enough to see things happening

would be too dangerous, but an ultra-

sound scan was perfectly safe. In 1967, a

doctor in Erlangen named Gerhard Ret-

tenmaier was the first to use ultrasound

to look at developing fetuses. Another ad-

vantage that ultrasound has over x-rays

is that it is able to retrieve better images

of soft organs, such as the pancreas or

thyroid glands. With improvements in

miniaturization and computer analysis of

data collected by ultrasound, the range of

diagnoses made possible by this tech-

nique has only grown – and to the point

that, today, there’s scarcely a place in the

body that can’t be visited, observed, and

analyzed.

30 Invest in Germany Magazine

Future Germany

Managing Ideas

Employees who come up with clever ideas to improve products and processes can

help their careers as well as earn extra money. Furthermore, integrating and

making use of their ideas is of fundamental importance for the competitiveness

of a business location.

ABB, Audi, Siemens and others have expe-

rienced that idea management is ex-

tremely profitable. The average return on

investment is 1:9.6. This is why they try to

shorten the implementation of a specific

software for describing their ideas, en-

tering in the mask the potential use for

the company and the estimated invest-

ment cost too.

Valuable ideas range from the simple to

the technically demanding. An employee

at RWE Systems, for example, suggested

installing flooring with velcro, as he saw

in a hotel while on vacation, making dis-

mantling floors at a later point much eas-

ier. An employee at the tourism industry

giant TUI developed a portable travel ki-

osk, making it possible for people to book

vacations in places like shopping centers.

Industrial powerhouse ThyssenKrupp uses

express wire transfers to save €40,000 in

interest payments, and a new driving

route for its trucks helped the smel-

ting company Krupp Mannesmann save

€200,000.

Everyone at Deutsche Post has heard of

Michael Redsch and recognizes his photo

on the company’s intranet. Redsch, who

works in the letters department in Berlin

Hennigsdorf, is a minor celebrity within

the company. He has submitted more

ideas than any other employee on how the

company can save money. On average, he

comes up with nearly 225 ideas per year,

and he has done so for the last 10 years.

“I enjoy it,” he says.

One of Redsch’s best inventions involves

using water in fire extinguishers instead

of foam. The German postal company

uses the equipment for fire prevention

exercises and saves €50,000 per year by

not having to refill them with expensive

extinguishing chemicals. Redsch profits

with an additional €5,000 in his bank ac-

count.

According to a recent study of EuPD Re-

search Bonn, most of the big German in-

dustrial companies have recognized the

growing importance of idea management.

Its predecessor had been on the agenda

for decades, under the humble name

“company improvement.” The new “idea

management mix” though, is not only the

administration of the ideas of employees

but also the systematic fostering and ac-

tive steering of their creativity. When it

comes to new solutions, better products,

and faster processes, employee knowl-

edge is the key to success.

Factory and office workers often know

the weak spots in their equipment or

working methods and how these can best

be rectified.

“Idea management has no catch,” says

Christiane Kersting from the German In-

stiute for Business Studies, the umbrel-

la organization for ideas management.

“There is no argument against it, only for

it.”

31

Foreigners Dream the “German Dream”

Which positive, optimistic dreams do you have for Germany? That was the question

posed to 30 prominent foreigners interviewed by journalists Wolfgang Blau and

Alysa Selene in cooperation with the German television station ZDF. The journalists

selected people who also dream big when it comes to their own lives – and who live

their dreams. Here are a few interesting answers from the book “German Dream.”

ago. In this respect, Germany is far ahead

of everyone else. As I see it, it is Germa-

ny’s destiny to take the lead in issues con-

cerning the environment, to share its

knowledge and power with others, and to

show others what they can still do better,

how they can better look after their bod-

ies of water and their environment and

build machines – whether automobiles or

complete industrial facilities – that are

more energy efficient.”

Joi Ito, Internet entrepreneur, Japan

“My impression is that Germany is the

country best-equipped to organize Eu-

rope. Every country has a number of

advantages and strengths and – as ste-

reotypical and superficial as it may sound

– the Germans have a proven success

record when it comes to the construction

and operation of big organizations and

structures… In the 21st century, the In-

ternet is the cornerstone of the open

community and open democracy. Without

open source there is no Internet. The In-

ternet brings real freedoms – the free-

dom to participate, to innovate, to in-

crease value, to make contact – and these

are the values on which, in my view, Eu-

rope should focus its attention. In this re-

spect, Germany is the country with the

technical know-how, the necessary mar-

ket size, and the influence to coordinate

such an effort.”

Hunter Lovins, corporate consultant, USA

“The Germans, German companies, and

the German government bring together

the different currents and tackle environ-

mental problems, such as global warm-

ing, in a way that enables individual citi-

zens to find higher value in their lives.

Use Germany’s huge technical capacities,

use the sectors which already earn their

money with solar and wind energy, and

use the German ability for intelligent pol-

icy-making to design an ecologically sus-

tainable future for Germany, Europe, and

the whole world… Germany’s auto-tech-

nical excellence and the creativity of the

German people should be used to build

beautiful, exciting cars of superior quali-

ty, which also save enormous amounts of

energy. These cars should be driven on

fuels produced by a regenerating agricul-

ture sector, or they should have fuel-cell

engines, or they should use technologies

that we haven’t even thought about yet!”

Wangari Maathai, scientist and environmental conservationist, Nobel Peace Prize winner, Kenya

“I love the fact that Germany is a country

that works very hard. The Germans are

known all over the world for their work

ethic. They are very committed to every-

thing they do… I believe Germany has the

chance to play a very important role in the

G8 countries and the EU when it comes to

the promotion of sustainable develop-

ment in other countries. I would welcome

it very much if Germany would invest

more in the intelligent management of

our environment.”

Jeremy Rifkin, economist, USA

“I think Germany is positioned very well to

lead the third industrial revolution, thanks

to Germany’s expertise in the chemical,

engineering, and automotive engineering

sectors. Germany also leads in the field

of renewable energies required for hy-

drogen production. Germany is the leader

in wind energy and is, in international

comparison, very well positioned for the

switch to renewable energies. Already to-

day, Germany fulfills the general techno-

logical, scientific, and commercial condi-

tions to actually become the leader of this

third industrial revolution.”

Simon Anholt, marketing expert, Great Britain

“It is one of the characteristics the world

loves of the Germans, namely the fact

that their products are reliable, that their

systems, structures, organizations, and

administrators are reliable and well-or-

ganized. People like that, especially given

the fact that this characteristic becomes

more precious every year, as the world

turns into an ever more chaotic, ever

more unpredictable mess.”

Anne Cameron, author, Canada

“It is a fact that you have a reputation all

over the world for manufacturing the

best equipment, the best machines, cars,

and motor bikes. Even the best bicycles

still come out of Germany! Therefore, it is

my dream that Germany pushes forward

as an example to others and develops the

alternative technologies we all need now

to make us independent from crude oil.

Already today, Germany is the leading

developer of wind energy and tidal power

stations, and you have the population re-

quired for the task and the production

capacities. I would, therefore, really wel-

come it if Germany’s industry could make

a special effort to develop alternatives to

the internal combustion engine. Of

course, everyone is already playing

around with these technologies, but no

one is really serious about them, as can

be seen from the amount of capital still

clinging to the gas and crude oil indus-

try.”

Jean-Michel Cousteau, ocean conservationist, France

“As far as environmental issues in Eu-

rope are concerned, I think Germany has

shown the direction in which we should

have already been heading a long time

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32 Invest in Germany Magazine

Web 3.0: Germany’s Flagship Project Hyperlinks in the WorldWideWeb

More than a billion people log on to the

Internet worldwide and that could double

over the next decade. And we’re not just

passively eyeballing websites. We all

want our own part of it.

Today’s Web 2.0 is all about user-gener-

ated content and social networking sites.

The Internet has got personal, genuinely

interactive, but also rather unwieldy.

Navigating it can be like rummaging

through the undergrowth.

Now the world’s scientists are working

on solutions for the next Internet genera-

tion, and Germany is competing to be at

the forefront of the latest innovations.

Here, scientists from over 30 institutions

and companies, such as Siemens and SAP,

have put their heads together under the

poetic umbrella of “Theseus” to work on

the new Internet technology.

“Theseus is the beginning of the end of

the conventional search in the web,” says

Lutz Heuser, the chief development ar-

chitect at SAP.

The heart of the project is an intelligent

set of search tools that will optimize our

access to knowledge from the Internet

and Intranet. They are working on con-

verting this technology into commercially

viable services and profitable business

models.

Current search engines see websites as

meaningless groupings of letters. They

match letters, throwing up random lists

of sites, and then hand the baton to the

user. Users can spend hours picking

through the hotchpotch of relevant and ir-

relevant sites.

A Search Tool that Classifies Content and Leads to New Application Opportunities

The answer to that will be Web 3.0, a new

semantic technology, or, in other words, a

new infrastructure for information on the

Internet. The key will be a sort of smart

search tool that is able to recognize and

classify content because – crucially – it

will understand the meaning of the infor-

mation. Ultimately, processing and re-

trieving knowledge will become faster,

more efficient, and more cost effective.

“Theseus” is testing this out in six spe-

cific project areas relating to specific

working environments.

“Medico,” for example, is looking at how

to help doctors identify and diagnose

medical conditions. It then suggests pos-

sible treatments. At a click, new technol-

ogy will enable a doctor’s computer to

analyze X-rays and scans, pick out abnor-

malities, catalogue data, and compare it

to similar diagnoses taken from a global

database.

The “Processus” project will put invalu-

able information at the fingertips of com-

panies by scouting out specialist infor-

mation and advising on how to source

manpower or materials. And “Alexandria”

is looking at cataloguing or tagging the

mass of unstructured data lurking in our

computers – from emails to training tuto-

rials – in order to make it accessible and

useful.

(See also www.theseus-programm.de)

Race Against Time

Current web technology, Web 2.0, was

largely inspired by small American start-

ups and subsequently taken over by larg-

er corporations. This time, Europe is vy-

ing with the US to set the standards for

the new technology. And governments

are getting involved.

The German government has injected the

bulk of the funding into “Theseus.” The

Federal Ministry of Economics and Tech-

nology announced last year that it will in-

vest €90 million over the next five years.

This will be matched by another €90 mil-

lion from industry and business.

Germany doesn’t want to repeat previous

mistakes. It was over 10 years ago that

the Fraunhofer Research Institute in Ba-

varia invented the MP3, only to see it

brought to the market by US companies.

Dr. Andreas Goerdeler, from the Federal

Ministry of Economics and Technology,

says now is a crucial time for Germany.

“This is a unique opportunity to take the

lead in the global competition to create

the future of Internet technology and to

put our stamp on the market.”

The next giant leap for the Internet could

be just a few years away.

Future Germany

No Fear and a Fighting Spirit

Future Germany

“Managing the Future” was the theme of an event that brought 42 of Germany’s top

young managers to Frankfurt to reflect on the shape of the future.

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The German publication manager magazin

invited the cream of the crop of Germa-

ny’s young business elite to a discus-

sion about the future of globalization. The

world economy is passing through a deli-

cate and very restless phase marked by

crises in the real estate, banking, credit,

and oil industries, the renationalization of

economic policy, and erosion of the WTO’s

multilateral world trade system.

The questions posed were: What is the

future of globalization? Will the open

world economy survive a resurgence of

protectionism? What will the world look

like in 2030? And how should companies,

states, and communities position them-

selves in anticipation of this world? Par-

ticipating in the discussion were men and

women in their 30s and 40s who will play

a significant role in shaping the German

economy over the next three decades.

Since they are the men and women who

will help manage Germany’s future, their

responses to these questions were of

particular interest and importance.

In the end, all participants agreed that

the pace of global development will once

again pick up and will, in turn, significant-

ly increase risks. And they agreed, that

they are ready to take the challenges and

go on the offensive.

What are the challenges?

They estimated that the number of peo-

ple offering services has doubled since

1990 to more than 2 billion. Many of these

people have only been competing for their

slice of the international job pie for a short

while. In the future, a growing number of

them will have an opportunity to special-

ize, to study, to invest, and to become

more productive. As globalization shifts

into a higher gear, the competition will get

even tougher. As the catchphrase goes:

You ain’t seen nothing yet.

The anticipated “turbo-globalization” will

bring social dislocation. In fact, more

than 20 percent of the event’s participants

believed that social unrest poses the big-

gest danger to the open world economic

order. Next to social unrest, the other

risks are: protectionism, commodity

shortages, financial crises, the conse-

quences of climate change, imbalances

on the foreign exchange markets, a

worldwide recession, and rising energy

and transportation costs.

In the course of the discussion, it became

obvious that many citizens and experts

entertained different visions of globaliza-

tion. For one thing, many had expected

that people would develop into world

citizens as economic globalization ran its

course. Contrary to this expectation, how-

ever, this has not been happening, and we

are paradoxically experiencing growing

levels of cultural and religious fragmen-

tation.

The vast majority of tomorrow’s manag-

ers held that German companies and the

German state should attempt to be among

the leading decision makers in develop-

ments and thereby further improve the

country’s future prospects. The young and

elite group doubt the effectiveness of

protection from competition as a strategy

for the future. Instead, they believed that

companies should put even more empha-

sis on innovation, research and develop-

ment, education, and employee motiva-

tion.

The predominant view was that Germany

is in an extremely good position to benefit

from continued globalization, and the

group seemed eager to engage in the

battle of global competition.

The event “Managing the Future” in Frankfurt

Financing

34 Invest in Germany Magazine

Financing Germany’s Industries of Tomorrow

Due to the fast pace of development and

the continuously expanding production

capacities in the fields of photovoltaics

and biofuels, more and more foreign

firms are showing an interest in locating

their companies in Germany. For the

same reason, in these and other growth

sectors, a rising number of large projects

are being implemented in Germany.

As a result of this increased interest,

many investors are turning their attention

to the European Investment Bank (EIB) and

its financing programs.

As part of the EU’s “Action Plan 2007–

2009” energy policy, it was decided that

the EIB should step up its efforts aimed at

reaching the defined goals under the

themes of “renewable energy” and “en-

ergy efficiency.”

The European Investment Bank (EIB)

was created in 1957 by the Treaty of

Rome and launched the following year.

With assets exceeding €164.8 billion,

the EIB serves as the long-term

financing bank for the European Union.

The lender aligns its activities with

the political goals of the EU and uses

its financing operations to support

the European government’s key goals

as well as the integration and social

cohesion of its 27 member states. The

EIB is co-owned by all 27 member

states of the European Union. The size

of each country’s stake in the bank

is determined by its economic strength

– calculated using Gross Domestic

Product – when the country first joined

the Union.

More information: www.eib.org

The central element of the EIB’s financing

program is the so-called “single loan,”

which aims to tailor itself to the specific

needs of investors. On the one hand, this

loan is attractive due to the conditions of

the interest rate, which is lower than the

LIBOR (London Interbank Offered Rate)

and fixed for the complete duration – up

to 20 years – of the loan. On the other

hand, the EIB is a public bank that does

not charge any borrowing fees, as profit

is not its goal.

The loan can amount to up to 50 percent

of a project’s total costs. Furthermore,

cooperating with private banks to finance

projects is possible and even welcomed

by the EIB. The EIB only uses this instru-

ment to support investment projects val-

ued at more than €25 million. The appli-

cation procedure is simple and non-

bureaucratic, and it only takes around six

weeks.

Many other industry sectors (e.g., the au-

tomobile, aviation, pharmaceutical, and

chemical industries) also fall within the

EIB’s target market and are therefore eli-

gible for project financing.

"Solar tree" in Gleisdorf

Project Cycle

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DW-WORLD.DE for the insights that will make a difference.

A closer look at Germany

First port of call:

The German Chamber Network

Spread over 80 countries in six

continents.

Support of thousands of German

companies operating abroad.

Fully integrated into the economy

of the host countries.

More than 40,000 member companies,

of which two thirds originate in the

local markets.

Assisting foreign companies that want

to enter the German market either by

trade or through investment.

Providing contacts, information and advice,

particularly in the fields of:

market opportunities and marketing

strategies

investment conditions and support

import and export regulations

customs duties

currency regulations

Closely cooperating with Invest in Germany,

the inward investment promotion agency of

the Federal Republic of Germany.

More and more foreign companies consider Germany to be a leading market and the best gateway

to the European Union. To be successful, foreign companies need a strong partner.

DeutscheAuslandshandelskammern

AHK - Your Bridgeto the German MarketAHK - Your Bridgeto the German Market

The German ChamberNetwork | AHKAll Around the Globe:

The German Chamber Network

Contact:

Association of German Chambers of Industry and Commerce

D-11052 Berlin | Germany

Tel. ++49-(0)30-20308-0 | Fax ++49-(0)30-20308-1000

Internet: www.dihk.de, www.ahk.de

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