Germany Investment MAGAZINE - Germany's 21st Century Energy Road Map - Global Innovation

 
Germany Investment MAGAZINE - Germany's 21st Century Energy Road Map - Global Innovation
Germany Investment
                     MAGAZINE
                     Germany’s 21st Century Energy Road Map
VOL 1 | April 2011

                       Germany: More Attractive than before the Crisis
                     	Europe’s Stronghold for Plastics
                       Financing the Business Dream
Germany Investment MAGAZINE - Germany's 21st Century Energy Road Map - Global Innovation
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in accordance with a German Parliament resolution

Contents
Editorial                                                                        Top Science and Research Location
Dr. Jürgen Friedrich, Chief Executive .................................... 3     Global Leader Germany has Eyes on Nanotech Prize . .......                               24
                                                                                 Highly Effective Personalized Drugs Thanks Biotech . .......                             25
Cover Story                                                                      What’s the Big Idea? Germany Invests in R&D
Germany’s 21st Century Energy Road Map ............................. 4           to Beat the Crisis . .................................................................   26
                                                                                 Silicon Saxony: Pioneering in Nano Research . ...................                        28
Foreign Direct Investment
Indian Investments Flourish in the East ............................... 10       Innovative Germany
                                                                                 Innovation News .................................................................... 29
Germany and Its Competitors                                                      High Value Products Directly from CO2................................ 30
Germany: More Attractive than before the Crisis ................ 12
                                                                                 About Us
Industry Report                                                                  Check in to Eastern Germany for Business Success ........... 32
None But the Brave Deserve the Fair ................................... 13       Our Publications . .................................................................. 33
Organic Electronics Get the Green Light .............................. 14        The Germany Way – Best Practice Example: Slovenia ....... 34
Franchising Gathers Pace in Germany ................................. 16         What is Smart? ...................................................................... 35
Europe’s Stronghold for Plastics .......................................... 17
High-Tech Germany Attracts Call Centers ........................... 18
IT Competence from Central Germany ................................. 19

German Business
                                                                                 On the cover
Germany’s 2010 Entrepreneurs of the Year . ........................ 20
                                                                                 © RWE; 2008 MT-Energie GmbH & Co.KG; danielschoenen.Fotolia.com
Small Firm Sector a Winner in Eastern Germany ................ 21                Montage: comcontor, Horst Hinder
Financing the Business Dream ............................................. 22

Publisher:                                            Chief Executives:                                         Notes:
Germany Trade and Invest                              Dr. Jürgen Friedrich, Michael Pfeiffer                    © Germany    Trade & Invest, April 2011
Gesellschaft für Außenwirtschaft                      Managing Director Marketing &                             All information provided by Germany Trade
und Standortmarketing mbH                             Communications: Peter Alltschekow                         & Invest has been put together with the
Friedrichstraße 60                                    Director Publications: Andrea König                       utmost care. We assume, however, no
10117 Berlin                                          Editor: Eva Forinyak                                      liability for the accuracy of the informa-
T. +49 30 200 099-0                                   Copy Editor: William MacDougall                           tion provided. Articles published under
F. +49 30 200 099-111                                 Layout: comcontor, Horst Hinder                           specific names do not necessarily reflect
office@gtai.com                                       Print: Chudeck Druck Service, Bornheim                    the opinion of the publisher. No reprints
www.gtai.com                                                                                                    may be made without the prior consent of
                                                      Circulation: 18,000                                       the publisher.

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                                                      Germany Investment Magazine is jointly
                                                      distributed in North America and Asia by
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                                                      Magazine” and solely distributed by the
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2 Magazine
Germany Investment MAGAZINE - Germany's 21st Century Energy Road Map - Global Innovation
Editorial

                                  Germany has a long tradition of environmental protection. The government’s
                                  ambitious energy concept continues to cultivate the country’s pioneering role
                                  in this area. Greenhouse gas emissions are expected to decrease by 40 percent
                                  by the end of the decade and at least 80 percent by 2050. At the same time,
                                  renewable energies should account for 18 percent of gross final energy
                                  consumption in Germany by 2020, increasing to 60 percent by 2050.

                                  These goals confirm the magnitude of Germany’s ongoing energy revolution.
                                  The government’s energy road map will significantly influence the German
                                  economy in the coming decades, which is why we are dedicating our cover
                                  story to this crucial topic. We are happy to bring to you the highlights of the
                                  federal government’s “Energy Concept for an Environmentally Sound, Reliable
                                  and Affordable Energy Supply” as well as the latest news from the main
                                  renewable energy segments in Germany.

                                  Our agency works diligently to assist international companies looking to
                                  expand their business activities to Germany and enter our thriving renewable
                                  energy market. In recent years we have supported several international
                                  renewable energy companies in establishing a presence in Germany. The
                                  numerous new projects we have in the pipeline show that enthusiasm for
                                  Germany’s renewable industry remains strong.

                                  Germany’s solar and wind energy sectors are not the only magnets for
                                  investors. As the fluctuating renewable energy supply continues to increase
                                  in Germany and elsewhere, there is a growing need for storage capabilities to
                                  compensate for off-peak energy generation gaps. As a result, the fuel cell and
                                  energy storage segment is set to take off in Germany, including the market for
                                  automotive batteries and fuel cell technology. Both are backed by dedicated
                                  initiatives and generous funding.

                                  This issue shines a spotlight on the innovative character of the Germany
                                  economy with several stories about research and development in industries
                                  such as biotechnology and nanotechnology. We are also bringing you exciting
                                  industry features on organic electronics, plastics and IT. I wish you
                                  informative and entertaining reading.
                                  Yours,

                                  Dr. Jürgen Friedrich
                                  Chief Executive
Photo: Anno Dittmer

                                                                             Germany Trade & Invest www.gtai.com 3
Germany Investment MAGAZINE - Germany's 21st Century Energy Road Map - Global Innovation
Cover Story

Germany’s 21 Century               st

Energy Road Map
The German Federal Government’s “Energy Concept for
an Environmentally Sound, Reliable and Affordable Energy
Supply” promises to transform Germany’s energy supply –
and provides a road map to a truly genuine “renewable age.”

                                                              Photo: Greenvalue

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Germany Investment MAGAZINE - Germany's 21st Century Energy Road Map - Global Innovation
Cover Story

Officially launched in fall 2010, Germa-      Germany: A Renewable Energy                 In order to increase energy efficiency in
ny’s “Energy Concept” is a long-term en-    Pioneer                                       buildings, energy standards were set at
ergy strategy for the period up to 2050.    Germany has been blazing a renewable          50 kWh/m2/a in 2009. It is planned to
The aims of the plan are ambitious in       energy expansion trail for decades now,       tighten these efficiency standards by a
their sweep but simple in their intent:     firmly establishing the country as both a     further 30 percent in accordance with
the securing of a reliable, economically    European and international pioneer in         the Energy Saving Ordinance (EnEV) by
viable and environmentally sound ener-      energy, climate, and innovation policy        2012. Complementary to these acts and
gy supply to make Germany one of the        matters. The creation of landmark             ordinances, several incentive programs
most energy-efficient and green econo-      framework conditions like the Renew-          promote efficient and renewable heating
mies in the world. To do so, ambitious      able Energy Sources Act (EEG) has laid        and cooling technologies.
renewable energy targets of 30, 45, and     the security of investment groundwork
60 percent of gross energy consumption      for the current levels of growth in all re-   Energy efficiency is also crucial to ques-
have been set for the years, 2030, 2040     newable energy sectors. As such, the way      tions of global market competitiveness
and 2050 respectively. According to Fed-    has been paved for renewable energies         and industry innovation levels. Reports
eral Minister of Economics and Technol-     to enjoy a growing role as an increasing-     show that German industry could save
ogy Rainer Brüderle, the central message    ly important pillar of energy supply and      up to EUR 10 billion a year through en-
of the country’s visionary Energy Con-      a driver of innovation in a changing en-      ergy efficiency measures. This in mind,
cept is simple, “we can make the age of     ergy infrastructure (e.g., flexible power     the German government is supporting a
renewable energy a reality.”                plants, smart grids, energy storage, and      number of industry-led initiatives (e.g.
                                            other new technologies).                      Climate Protection and Energy Efficiency
The pressing challenge of sustainable en-                                                 Partnership of the Association of Ger-
ergy provision is one born of long-term     The defining activity areas of the for-       man Chambers of Industry and Com-
global trends and harsh energy realities.   ward-looking Energy Concept road map          merce) in order to promote increased ef-
Transforming this energy vision into a      are as follows: The extablishment of re-      ficiency.
renewable energy age reality is one of      newable energies as a cornerstone of fu-
the greatest challenges of the 21st cen-    ture energy supply and energy efficien-         Energy Storage
tury, with global demand for energy ex-     cy. The creation of an efficient grid         Dwindling natural resources, environ-
pected to lead to a dramatic increase in    infrastructure for electricity and integra-   mental issues and the thorny problem of
energy prices in the medium to long         tion of renewable energy sources. Ener-       guaranteed and affordable energy sup-
term. As a result, dependence on energy     gy upgrades for buildings and energy ef-      ply form the triptych of problems that
imports will also increase significantly.   ficient new buildings, and the country’s      bedevil notions of sustainable energy de-
This in turn leads to increased green-      mobility challenge (one million electric      livery. The fundamental shift to creating
house gas emissions – the current ener-     vehicles on the road by 2020 and six mil-     a truly sustainable world can only be
gy mix accounting for 80 percent of all     lion by 2030). As Federal Chancellor          achieved by developing new ways of
emissions at present.                       Merkel has put it: “Through the list of       combating these difficulties – energy
                                            measures of this energy concept we sub-       storage technologies have emerged as a
For these reasons, renewable energy         stantiate the age of renewable energies.”     potential solution to questions of sus-
sources form the bedrock of the future                                                    tainable energy delivery. Renewable en-
energy mix, with renewable sources in-        Energy Efficiency                           ergies are all well and good, but they are
crementally superseding conventional        The foreseen increase in renewable ener-      subject to fluctuations – energy storage
energy sources. Intrinsic to the Energy     gies will be allied to comprehensive en-      technologies allow these to be harnessed
Concept is the need to ensure that the      ergy efficiency measures, the expansion       for the effective stabilization of the en-
appropriate energy security and effective   of power grids, and the construction of       ergy grid.
environmental and climate protection        new energy storage facilities. Newly con-
checks and balances are in place. Accord-   structed buildings which incorporate en-      The German government will renew the
ingly, the Energy Concept foresees the      ergy efficiency measures are one area         Energy Act and exempt new storage
need to radically transform the present     with enormous potential.                      plants – particularly pumped storage
energy supply structures in Germany.                                                      hydroelectricity and other forms of elec-
                                            The use of renewable energy-based heat-       tricity storage – from grid access charg-
                                            ing (including heat pumps) in new build-      es and open up the market regulatory
                                            ings is a requirement laid out in the Re-     powers for energy storage technologies.
Windmill near Neustadt-Aisch                newable Energies Heat Act (EEWärmeG).         Adequate provision will be made to

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Germany Investment MAGAZINE - Germany's 21st Century Energy Road Map - Global Innovation
Cover Story

ensure that sufficient incentives for bio-   aged, the domestic and European power         alone. In many cases planning has not
gas installations to temporarily store or    grids (i.e. a German overlay grid or “elec-   only been completed, but the projects
feed biogas into the gas network in high     tricity highway” integrated into an inter-    have already been approved by the
wind periods – thereby shifting genera-      connected European grid) will require         responsible authorities. In November
tion to low wind periods. This will be       expansion on a similar scale.                 2009, the first offshore wind park – al-
complemented by government support                                                         pha ventus with twelve turbines – was
for existing biogas facilities which will    In order to support the future power          completed in the German North Sea,
allow installations to be equipped with      grids, energy storage technologies will       45 kilometers north of the island of Bor-
additional generator as well as gas and      be established and smart metering sup-        kum.
thermal storage capacity.                    ported. Moreover, the strategy also
                                             makes provision for a transparent and         The German government is stepping up
  Grid Infrastructure                        modern energy certification system and        its support of offshore wind farm con-
The forecast scenarios show that wind        extensive energy saving regulations. “Se-     struction. Although offshore operations
energy will play a major role in electric-   curing the grid infrastructure is the most    incur more installation, maintenance
ity generation in 2050, creating the need    important strategic task for the develop-     and energy transportation costs than
for massive expansion of onshore and         ment of renewable energies” says Nor-         their onshore counterparts, the energy
offshore wind power capacity. If the re-     bert Röttgen, Federal Minister for the        yield is significantly higher thanks to
newable energy mix envisioned for 2050       Environment, Nature Conservation and          more full-load hours. Further offshore
is to be effectively integrated and man-     Nuclear Safety.                               incentive is provided in the form of at-
                                                                                           tractive EEG-regulated tariff payments.
                                               Wind energy
                                             Wind power is an important component          Nevertheless, the electricity still has to
                                             of the energy mix in Germany. The Ger-        be transported from the wind parks to
                                             man Federal Government intends to             the mainland and beyond. Current bot-
                                             massively expand wind power potential         tlenecks will be ironed out with the cre-
                                             by the year 2030. It is forecast that off-    ation of high-performance electricity
                                             shore wind park developments will gen-        transmission grids commensurate with
                                             erate power output of 25,000 MW by            wind energy generation expansion
                                             that time. Together with land-based           plans. Around 3,600 kilometers of new
                                             wind energy farms, it will be possible to     transmission lines are required – equiv-
                                             cover 25 percent of Germany’s energy          alent to four times the distance between
                                             consumption needs according to the Ger-       the city of Kiel in the north and Munich
                                             man Wind Energy Association (BWE).            in the south. Another pressing task is the
                                                                                           networking of household customers and
                                             With over 21,600 wind energy farms, a         large industrial sites, cities, and rural re-
                                             cumulated output of 27.2 GW and more          gions with differing power generation
                                             than 46 GWh of potential energy yield in      capacities.
                                             2009, Germany is the largest consumer
                                             of wind energy in Europe. According to          Bioenergy
                                             German Wind Energy Institute (DEWI)           Central to the Energy Concept is the no-
                                             statistics, wind energy represents a share    tion of sustainable and efficient use of
                                             of almost 7.6 percent of gross electricity    bioenergy. As bioenergy offers a broad
                                             consumption – making wind energy              spectrum of uses and good storability, it
                                             the largest of the renewable energy           will play an important role in future en-
                                                                                                                                           Photo: Windpark Wallroth/Stork

                                             sources in this field.                        ergy supply. The use of bioenergy as an
                                                                                           important renewable energy source will
                                             Massive investments are being made in         be further expanded in all three areas of
                                             offshore wind energy. Ninety wind park        heating, electricity and fuel. The German
                                             projects are planned in the North Sea         government plans to press ahead with its
                                             and the Baltic Sea in the next 20 years       policy of promoting sustainable biomass
                                                                                           use for an environmentally friendly and
                                             Inside of a windmill in Wallroth/Stork        secure energy supply.

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Germany Investment MAGAZINE - Germany's 21st Century Energy Road Map - Global Innovation
Cover Story

                                   The Silent Giant                             cluding photovoltaics, solar thermal and      between 2007 and 2009. In this context
                                                                                geothermal energy – totaled 0.7 percent       biodiesel sales fell but bioethanol sales
                                   In Germany, biomass currently contrib-       according to the Federal Ministry for the     increased, partly due to the introduc-
                                   utes more to the supply of energy than       Environment.                                  tion of E10 fuel on January 1, 2011.
                                   other renewable energies. This is set to     In terms of primary energy production,        According to the youngest regulations,
                                   remain the case for the foreseeable fu-      the bioenergy sector was able to increase     a 6.25 percent share of (second genera-
                                   ture, as biomass offers many advantag-       its 2009 share to 6.2 percent – almost        tion) biofuels is to be used from 2010
                                   es in terms of availability and possible     one percentage point higher than the          onwards. Within this policy frame-
                                   uses.                                        2008 total of 5.3 percent. At the same        work, Germany is constructing the first
                                   Biomass has an important position in         time, the production of electricity from      commercial-scale BtL (Biomass-to-Liq-
                                   terms of the supply of energy, as it not     biogas particularly increased – reaching      uid) plant in the world. This will pro-
                                   only provides electricity and heat but       approximately 12 billion kWh in 2009.         duce biofuels from renewable raw ma-
                                   also provides a basis for fuels. More-       The supply of biogas electricity is remu-     terials (i.e. materials which are not used
                                   over, it is also possible to provide ener-   nerated with attractive tariffs set accord-   as food products or as animal feed).
                                   gy around the clock without the need         ing to the renewable energies law. This is    Biomass doesn’t only have relevance as
                                   for intermediate storage.                    leading to strong expansion in the num-       a fuel in the area of direct driving op-
                                   According to the National Biomass Ac-        ber of biogas systems. According to infor-    erations. It also plays an important role
                                   tion Plan, renewable energies should         mation from the German Biogas Indus-          in the mobile future. In this context,
                                   account for at least 18 percent of all fi-   try Association, around 5,000 systems         with electric vehicles, the traction cur-
                                   nal energy consumption in 2020. Bio-         were installed by the end of 2009 with        rent is set to be covered with additional
                                   energy produced from biomass should          approximately 6,000 forecast for the end      renewable energies as part of the na-
                                   account for roughly 11 percent of this       of 2010.                                      tional development plan for electrical
                                   amount. The German Bio-energy Indus-         In terms of heat production, biomass –        mobility. This also applies to supplies
                                   try Association (BBE - Bundesverband Bio-    with a 92 percent share in 2009 – is          with hydrogen, which can be produced
                                   Energie) and the Agency for Renewable        clearly far ahead of the other renewable      with highly efficient electrolysis sys-
                                   Energies (Agentur für Erneuerbare Ener-      energies. According to data from the Fed-     tems – powered by renewable energy
                                   gien) each forecast a 13 percent share.      eral Ministry for the Environment, Na-        – which is the current goal of the Fed-
                                   Based on this projection, the BBE ex-        ture Conservation and Nuclear Safety,         eral Association of Biogenic and Renew-
                                   pects annual turnover on a scale of EUR      biomass combustion and biogas repre-          able Fuels.
                                   20 billion by 2020.                          sent the most important sources. As Ger-      Indeed, vehicles can also be powered
                                                                                many specifies the compulsory use of          with biogas. However, this remains
                                   Growing Bioenergy Market                     renewable heating in cogeneration in          very much a niche sector. The feeding
                                   In 2009, renewable energies accounted        the new buildings sector, both biomass        in biogas into the natural gas grid offers
                                   for 10.3 percent of final energy con-        combustion and biogas are set to become       a high level of potential growth –once
                                   sumption in Germany, primarily as a          increasingly important in the German          the raw biogas has been prepared to the
                                   result of the contribution made by bio-      heating market.                               required quality level. At present, only
                                   energy. This accounted for 7.2 percent                                                     a few of these systems have been in-
                                   alone. Wind energy provided 1.6 per-         World’s First Commercial Scale                stalled. However, the interest from lo-
                                   cent, and water power 0.8 percent of         Biomass-to-Liquid Plant                       cal public utilities is considerable. The
                                   the final energy consumption. The re-        A falling share was recorded for the pro-     government is planning to extend sup-
                                   maining renewable energy share – in-         duction and sale of biofuels. The share of    ply with bio natural gas to over 1,000
                                                                                biofuels in terms of total fuel consump-      systems in the year 2020.
Photo: Green GECCO GmbH & Co.KG

                                   Biogas facility in Güterglück                tion fell from 7.2 percent to 5.5 percent

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Germany Investment MAGAZINE - Germany's 21st Century Energy Road Map - Global Innovation
Cover Story

 Norwegian Solar Producer Discovers                               Laying the foundation stone of the new Innotech production site in Halle

 Eastern Germany
                                            This minimizes the energy and raw ma-          quality products, a well established in-
 One of the highlights of last year’s in-   terials used for the production of high-       dustrial infrastructure, large equip-
 vestment decisions in the field of re-     quality solar cells. Innotech Solar is the     ment supplier base, and qualified
 newable energies was that of the Nor-      only company world-wide specializing           workforce.
 wegian company Innotech Solar to set       in this type of process. The company           So once again, supporting the develop-
 up its second European production site     works with well-known producers such           ment of estates in areas with good in-
 in Halle (Saale), Saxony-Anhalt. The so-   as Q-Cells or Bosch.                           frastructure while creating an ideal
 lar company will invest around EUR 20                                                     environment for research and develop-
 million into the first expansion step,       Competitive advantage                        ment through the establishment of the
 providing 80 new jobs. A further 50        “Germany provides us with the ideal            Fraunhofer Center for Silicon-Photovol-
 jobs are expected to be created as a re-   conditions to strengthen our business          taics in Halle and Schkopau has paid
 sult of future expansion steps. The pro-   activities”, said Innotech Solar CEO Thor      off.
 duction site is going to have a total      Christian Tuv at the groundbreaking            “Our decision was based on the infra-
 floor space of 7,000 square meters.        ceremony in October 2010. “A thriving          structure, such as the direct connec-
 Innotech Solar, headquartered in Nar-      photovoltaic industry cluster and out-         tion to the highway, state and munici-
 vik, Norway, purchases solar cells and     standing infrastructure here are essen-        pal funding, availability of trained
 uses industrial production techniques      tial for us. We are sure the Halle site        personnel and the efficient solar com-
 to increase the power output and guar-     gives us a unique competitive advantage        petence network in the region” – em-
 antee the quality of the cells. The new    that will allow us to continue our com-        phasized the Innotech Solar CEO.
                                                                                                                                                    BASF Ziegler

 factory is going to process up to 20.000   pany’s extraordinary growth”. The deci-        Innotech Solar was assisted in the in-
 solar cells per hour from various man-     sion to invest in Germany is a testament       vestment process by Germany Trade &
                                                                                                                                             Photo: Thomas

 ufacturers. In this process, contamina-    to the country’s well-developed PV in-         Invest and the Investment and Market-
 tions of the cells are isolated and re-    dustry. Manufacturers benefit from the         ing Corporation (IMG) Saxony-Anhalt.
 moved, restoring their full efficiency.    “Made in Germany” reputation for high

8 Magazine
Germany Investment MAGAZINE - Germany's 21st Century Energy Road Map - Global Innovation
Cover Story

                           World’s Leading Solar Energy                 ects in Germany in 2010. All of these
                          Producer                                      new investments will be made at sites in
                          Germany is the world’s leading producer       Eastern Germany, a major manufactur-
                          of solar energy. With around 7 GWp of         ing hub for the country’s globally re-
                          new photovoltaic (PV) installations in        nowned photovoltaic industry.
                          2010, demand for PV systems has nearly
                          doubled compared to 2009. This is no            Sustainable Mobility
                          mean feat, considering the fact that Ger-     Germany’s electric mobility strategy will
                          many was already home to nearly half of       be consistently pursued in line with the
                          the solar modules in operation world-         joint statement issued by industry and
                          wide at the end of 2010.                      the German government on May 3, 2010.
                                                                        The aim is to have a million electric ve-
                          According to the latest figures, total ac-    hicles on the road by 2020 and six mil-
                          cumulated PV capacity in Germany is ap-       lion by 2030. As part of the National De-
                          proximately 17 GWp. There are over 70         velopment Plan for Electric Mobility, the     Charging an electric car
                          manufacturers of silicon, wafers, cells,      government will consistently push for
                          and modules active in Germany. In addi-       the expansion of electric mobility and        automotive batteries in Germany is ex-
                          tion, there are over 200 PV material and      create the conditions for rapid market        pected to boom in the coming years.
                          equipment suppliers, more than 100            penetration.                                  Electric mobility in Germany is backed
                          balance-of-system component manufac-                                                        by over EUR 500 million in federal fund-
                          turers, and hundreds of project develop-      Electric vehicles reduce oil dependence.      ing through the National Development
                          ment, system integration and installa-        However, electric vehicles only become        Plan for Electric Mobility. At the same
                          tion companies. These currently employ        virtually zero-emission vehicles when         time, industry players are also playing
                          around 133,000 people in the German           coupled with renewable energies. The          their part. All German manufacturers
                          PV industry. PV manufacturers generat-        image associated with a zero-emission         will have an alternative drive vehicle on
                          ed turnover of EUR 10 billion last year.      vehicle (renewable electricity) is an im-     the market this year and a fully electric
                                                                        portant purchasing incentive for both         vehicle by 2013.
                          In order to meet strong future growth,        fleet operators and first-time private buy-
                          the German PV industry made net in-           ers. The development of the National Hy-      There are currently eight model regions
                          vestments of around EUR 1.8 billion in        drogen and Fuel Cell Technology Innova-       testing the application of battery-driven
                          production capacities in 2009. A further      tion Programme will continue. Thanks          mobility within Germany. Thirteen ad-
                          investment of EUR 1 billion in R&D is         to their expanded range, fuel cell vehi-      ditional locations are focusing on the
                          planned for the period through 2013 –         cles can make an important contribution       smart grid infrastructure as well as infor-
                          twice as much as the sum invested in the      to environmentally friendly and sustain-      mation and communications technology
                          last four years.                              able mobility in the long term – as long      for electric mobility. Partners range from
                                                                        as the hydrogen used is produced from         carmakers (like Daimler and Volkswa-
                          The country is home to some of the            renewable sources.                            gen) to utilities, national and federal
                          world’s biggest solar names including                                                       state ministries, and renowned research
                          First Solar, Solarworld, Q-cells, Bosch So-     Paradigm Shift                              institutes. Pilot projects currently have
                          lar, Centrotherm, and Roth & Rau. First       Germany’s automotive industry stands          several fleets of electric vehicles and are
                          Solar and Avancis – as well as German         on the verge of a paradigm shift away         already building a charging infrastruc-
                          PV companies SolarWorld and Juwi –            from the internal combustion engine to-       ture and testing applications including
                          announced large-scale expansion proj-         ward electric mobility. The market for        mail and cargo delivery. German re-
                                                                                                                      searchers are addressing a wide range of
                                                                                                                      electric mobility topics, covering such ar-
                                                                                                                      eas as battery capacity and light materi-
Photos: RWE; Greenvalue

                                                                                                                      als for auto bodies.

                                                                                                                                 renewables@gtai.com

                                                                                                                      Solar panels

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Germany Investment MAGAZINE - Germany's 21st Century Energy Road Map - Global Innovation
Foreign Direct Investment

Indian Investments Flourish
in the East
Indian investors are learning that Eastern Germany is a place where
business can thrive.

A number of Indian projects in Germa-        A Kenersys spokesman added that in the      Opening ceremony of the Kenersys plant in
ny’s new federal states highlight Eastern    mid-term, the company expected to em-       Wismar
Germany’s strength in combining the          ploy as many as 100 people at the plant
benefits of western and eastern Europe       which should eventually produce some        tronics, machinery and equipment, and
in a unique way. The recent opening of a     180 turbines annually. The new complex      the automotive sector. The best-per-
wind turbine production plant in the         features two assembly bays that are 18      forming industries in Eastern Germany
state of Mecklenburg-Vorpommern pro-         meters in height and equipped with          at present are renewable energies, mi-
vides an excellent example. Last Novem-      crane bridges that can heft up to 100       croelectronics, machinery and equip-
ber, Kalyani Group subsidiary Kenersys       tons. According to Weick, the plant built   ment, and the automotive sector. East-
inaugurated its first European plant in      nine turbines destined for Sweden and       ern German growth areas match well
the port city of Wismar.                     Germany at the end of 2010, and 30          with Indian expansion plans.
                                             more were expected to be finished this
At the time, Kenersys spokesman Jochen       year.                                       Rajnish Tiwari confirms this assess-
Weick told reporters that the decision to                                                ment. At the Hamburg University of
invest at least EUR 7 million to build in    Speaking in an interview with Manager       Technology, the researcher has been
the 800-year-old harbor town was all         Magazin, the head of the Kalyani Group’s    studying the investment behavior of In-
about “location, location, location.”        flagship company Bharat Forge, Baba         dian companies in Germany for years.
Weick said that the port facilities meant    Kalyani, explained the motivation for       In a 2010 study of Indo-German invest-
wind power generators could easily be        India’s investment in Germany succinct-     ment and cooperation, he noted that In-
shipped from Wismar to other Europe-         ly: “We want to grow with high technol-     dian firms prefer to invest in developed
an countries or the rest of the world.       ogy, and to do that, we need Germany.”      western countries. The report says that
Moreover, Mecklenburg-Vorpommern             The company’s activities reflect this.      “the largest economy in Europe provides
provided plenty of space for the testing     Bharat Forge has manufacturing opera-       not only attractive market opportunities
and demonstration of wind turbines           tions in 11 locations in five countries:    – but with its established technological
and ready access to a highly qualified la-   four in India, three in Germany, and the    prowess, high-quality infrastructure
bor pool. Studies indicate that com-         rest in the UK, the USA, Sweden, and        and reliable institutional set up, Germa-
pared to Western Germany, labor costs        China.                                      ny is considered an excellent investment
                                                                                                                                     Photo: Kenersys GmbH

are some 30 percent lower, though the                                                    target by many Indian firms in their
training and educational level of the          Perfect timing                            pursuit of the newest technologies and
workforce is high. There also exist a        Some of the attraction has to do with       commercially viable cutting-edge inno-
number of incentive programs for in-         timing. India’s growing economy is ex-      vations.”
vesting in new and existing businesses       panding abroad, particularly in the ar-
in the east.                                 eas of renewable energies, microelec-

10 Magazine
Foreign Direct Investment

The story of Bharat Forge Aluminum             Indian Projects in Germany                               Indian Projects in Germany
Technik GmbH (BFAT) reflects not only          by Business Activity (2003-2009)                         by Sector (2003-2009)
India’s need for German high-tech and
                                               Logistics,        Research &     Customer               Transportation,         Electronics &   Hotel, Tourism,
engineering; it also illustrates the in-
                                               Distribution &   Development   Contact Center           Storage &              Semiconductors    Entertainment
creasing tendency among Indian inves-          Transportation       3%             2%                  Logistics                    2%                      2%
tors to expand into firms that can cover       5%                                       Technical      3%
                                                                                                                                                   Renewable
                                                                                          Support
specialized niches in areas where the                                                                  Chemicals,                                     Energy
                                               Design,                                     Center
                                                                                                       Plastics, Paper
parent firm wants to grow. Many Indian         Development                                    2%
                                                                                                                                                         2%
                                                                                                       5%
investors have done this by acquiring          & Testing
                                               7%                                                      Business &                                         ICT &
struggling and obsolete German plants.                                                                 Financial                                       Software
BFAT is located in Brand-Erbisdorf, near       Manufacturing                                           Services                                             41%
                                               10%                                                     8%
Dresden. The company says its acquisi-
                                                                                           Sales,
tion of CDP Aluminiumtechnik in 2004           Headquarters                             Marketing
                                                                                                       Energy,
                                                                                                       Minerals,
marked the entry of Bharat Forge into          11%                                      & Support
                                                                                                       Metals
                                                                                                                                                   Automotive,
                                                                                             43%                 Healthcare, Pharma,      Industrial Machinery
the aluminum auto component busi-                                 Business Services                    10%
                                                                                                                 Biotechnology
                                                                        18%                                                                       & Equipment
ness. The plant now supplies parts for                                                                           11%                                      16%
car manufacturers such as BMW, Audi,
                                               Note: FDI projects refer to greenfield and expansion investment projects.                 Source: fDi Markets,
Volkswagen, and Ford. BFAT describes
                                               M&A projects are not included.                                                                  November 2010
itself as a significant player in Europe in
the area of high-end aluminum forged
components used in passenger cars and         than six centuries, it was taken over by                 Indian FDI Stocks in Germany
other automotive applications.                Sanmar Metals Corporation, a Chennai-                    (2003-2008)
                                              based group, just over four years ago.
                                                                                                       in EUR million
The operation employs some 100 people
in the town, has an annual turnover of        The operation employs more than 250                       350
                                                                                                                                                         310
EUR 30 million, and is considered one of      highly skilled workers. Among its cus-                    300
the most important employers in the           tomers are Borg Warner, IHI, Audi,                                                                 242
                                                                                                        250
area. It produces 1.7 million aluminum        BMW, Honeywell, MAN, and Liebherr.
parts annually. Almost all of the people      The plant’s annual capacity is 21,000                     200

who work at the plant are local.              tons of castings.                                         150
                                                                                                                                         131

                                                                                                        100
  Long-term aims                              Dietmar Hahn is the senior managing                                        79       79

BFAT plant manager Peter Hopp believes        director of Eisenwerk Erla. Speaking to                    50

it was a major stroke of luck that Baba       the engineering publication VDI Nach-                       0      0
Kalyani bought the company six years          richten two years ago, he talked about                            2003     2004    2005   2006    2007     2008
ago, after its predecessor CDP Alumini-       Sanmar’s investment in the plant. He
                                                                                                                                   Source: Bundesbank, 2010
umtechnik went into insolvency. In an         explained that Sanmar was not working
interview with the Frankfurter Allgemeine     on a specific time frame, and explained
Zeitung, Hopp explained, “He [Kalyani]        the division of labor between the San-                  Since then, Sanmar’s Ferrotech Ltd.
didn’t come as a profiteer, he came with      mar’s foundries in Chennai and the                      Plant has been built in Chennai. It
long-term aims. He wants us to earn our       plant in Germany. The investment may                    serves both the German automotive in-
money here and reinvest it.” Hopp added       come from India, but the benefits of the                dustry and India’s emerging market.
that “Baba” can produce better parts at a     cooperation go both ways.
lower cost in Brand-Erbisdorf than he                                                                                asha-maria.sharma@gtai.com
can in India, and that is why he chose to     “Here in Saxony we planned a new
locate and keep the operation running         foundry in India. It will carry out some
in the region.                                of the finishing that would previously
                                              have been done at Erla, leaving the east-
Another specialized automotive suppli-        ern German operation to focus more
er and Indian subsidiary in the east is       strongly on strategic, high-value prod-
Eisenwerk Erla, of Schwarzenberg. A           ucts, for which the know-how is local,”
German foundry with a history of more         said Hahn.

                                                                                                        Germany Trade & Invest www.gtai.com 11
Germany and Its Competitors

Germany: More Attractive
than before the Crisis
International studies praise effective government strategies during the crisis

Germany chalked up excellent “crisis                             Core area of investment in Europe in the next years
management” scores in a number of in-                             Quota of maximum points in percent
ternational business studies at the end                                             80
                                                                   80
of 2010. The government’s swift han-
dling of the global economic crisis also                           60

had a positive effect on the country’s
                                                                                              38
                                                                   40
overall image.                                                                                          32        32
                                                                                                                            28
                                                                   20
                                                                                                                                    11        10
According to the AmCham Business Ba-                                                                                                                  8         7    5
                                                                    0
rometer 2010, the annual publication of                                        Germany Eastern Eastern            GB        F       I         E    Benelux Scandi-   CH
the US Chamber of Commerce in Ger-                                                     Europe Europe                                                        navia
                                                                                               (Non-EU)
many, the country’s attractiveness as a                          Ranking with points; grades 1-5 could be assigned only once             Source: AmCham Business Barometer 2010
place to make investments has im-
proved. In the same survey, Germany                             most attractive investment location in                           A further positive factor in Germany’s
secured first place as the location for fu-                     Europe. According to Ernst & Young,                              favor is a healthy domestic market and
ture main areas of investment in Eu-                            managers questioned consider Germany                             its central location in Europe. The Am-
rope. The country extended its lead as                          to be the global leader in environmental                         Cham names stable domestic demand as
the most important European destina-                            technology, the center of research and                           an “essential seal of quality for the loca-
tion for US overseas investment, with 80                        development and the internationally                              tion Germany.” As well as this, “the size
percent of the companies surveyed nam-                          leading center of education in the next                          and the maturity of the German mar-
ing Germany as their first choice. “Be-                         10 years. “The knowledge pool of excel-                          ket” plays a significant role.
sides the high process and product qual-                        lently trained employees is one of the
ity, US companies value the high quality                        important bases for future success of                            Proximity to domestic customers is seen
of employees in Germany,” explains Dr.                          Germany.”                                                        as an important source of innovation.
Christian Veith, Head of BCG Germany.                                                                                            For example, direct contact to automo-
“During the crisis, the German domestic                         AmCham Germany emphasizes the im-                                tive manufacturers carries significant
consumption, which is less vulnerable                           portance of German productivity to                               weight for foreign automotive suppliers
than other international counterparts,                          these findings. “German virtues such as                          who choose to locate in Germany.
also had a positive effect on the propen-                       hard work, dedication and diligence”
sity to invest.” Fred B. Irwin, President of                    are also responsible for the country’s                             Effective government policies
AmCham Germany, adds: “Our survey                               strong showing, which also benefited                             While these are all reasons cited for ex-
shows that US companies plan a long-                            from a high level of security and quality                        cellent German performance in normal
term commitment in Germany.”                                    ratings. Productivity is consolidated by                         circumstances, a special factor has made
                                                                Germany’s performance in the “best in-                           itself felt during the global economic
  Europe’s top location                                         frastructure of a less densely populated                         crisis: government policy. Both the Am-
Ernst & Young’s annual European At-                             country with enormous distances” cate-                           Cham and Ernst & Young emphasize
tractiveness Survey arrives at a similar                        gory. In a global ranking, only the city                         that the measures implemented by the
conclusion. As was the case in the previ-                       state of Hong Kong is above Germany.                             German government since the begin-
ous year, Germany came out top as the                                                                                            ning of the crisis have been positive and
                                                                                                                                 effective in stimulating the economy.
 Planned changes in value creation in Germany                                                                                    Measures made in the labor market were
                                                                                                                                 singled out for special praise by the Am-
                                       Reduction                        Extension
                                                                                                                                 Cham, whose respondents were particu-
 Sales                                                  6                                                              47
                                                                                                                                 larly satisfied with the country’s “short-
 Service/After Sales                                8                                                        35
                                                                                                                                 time” labor policy which allowed the
 Marketing                                          8                                              28
                                                                                                                                 existing labor force to be maintained de-
 Research and Development                                   3                                      29
                                                                                                                                 spite the downturn. Forty-five percent of
 Production                             18                                               21
                                                                                                                                 companies surveyed were able to main-
 Administration        39                                                  7
                                                                                                                                 tain their labor base in this way, prepar-
                                             Quota of mentions in percentage
                                                                                                                                 ing them for the next economic upturn.
 Quota of mentions of grade 1 and 2 (“Reduction”) and of grade 4 and 5 (“Extension”);
 scale from grade 1- “substantial reduction” to grade 5- “substantial extension”
                                                                                                                                              invest@gtai.com
                                                                          Source: AmCham Business Barometer 2010

12 Magazine
Industry Report

                              None But the Brave Deserve the Fair
                              Germany is the recognized world leader in international conference events –
                              with two thirds of all internationally leading industry exhibition and trade fair shows
                              taking place on German soil.

                              This is in no small part thanks to the
                              attractiveness of Germany to interna-
                              tional exhibitors. According to the Insti-
                              tute of the German Trade Fair Industry
                              (AUMA), foreign exhibitors have ac-
                              counted for more than 50 percent of all
                              “national trade fair” events for a num-
                              ber of years now. In 2009, 135 national
                              trade fair events took place in Germany,
                              attended by more than 150,000 exhibi-
                              tors – of which 53 percent were over-
                              seas based. German trade fairs are wide-
                              ly considered to be an excellent platform
                              for developing international business
                              connections.

                                Strong EU Presence
                              International trade fairs in Germany are
                              dominated by European Union (EU)
                              companies: EU member state-based
                              companies enjoy a 54 percent “foreign
                              participation” share; their non-EU Euro-      Messe Frankfurt
                              pean counterparts a modest nine per-
                              cent. Around one in four exhibiting             World Trade Fair Leader                       said Detlef Braun, member of the Board
                              companies are southeast central Asian         Germany’s position as an undisputed             of Management of Messe Frankfurt,
                              in origin.                                    leader in the international trade fair sec-     summarizing the results of the world’s
                                                                            tor remains secure.                             biggest trade fair for home and contract
                              Companies from the USA and Canada                                                             textiles. “Important for us, however, is
                              had a share of six percent, followed by       The country performs well in the large          not just the growth in participant num-
                              the regions of Latin America (two per-        scale trade fair site (hall space of at least   bers but also the increased quality of the
                              cent) and the Middle East and Africa          100,000 m 2) category, with a total hall        fair, which both exhibitors and visitors
                              (two percent respectively).                   space of 2.21 million m 2 at ten locations.     rated as being very good.”
                                                                            In comparison, Asia has a total hall area
                              The German trade fair business was nat-       of 1.03 million m 2, the majority (0.79         The significance of the German trade
                              urally affected by the economic crisis,       million m 2) is in China at five locations,     fair industry to the wider economy is
                              recording a 4.3 percent downturn in           with the remaining space in Bangkok             considerable. A study conducted on be-
                              2009, but the situation has since stabi-      and Singapore.                                  half of AUMA by the Munich-based Ifo
                              lized. Preliminary results for the first                                                      Institute provides an analysis for the pe-
                              half of 2010 point to an imminent end         There are an impressive seven German            riod 2005 to 2008. On average, 821 na-
                              to the downturn, although exhibitors          trade fair companies in the group of the        tional/international and regional trade
                              remain cautious. “There is an un-             24 leading international organizers (an-        fairs and events – with more than
                              changed sensibility for the costs. Exhibi-    nual turnover in excess of EUR 100 mil-         331,100 exhibitors and 26.6 million visi-
                              tors look very closely to the efficiency of   lion). According to AUMA, the Messe             tors – took place during this period.
                              the fairs. They want to continue control-     Frankfurt was the strongest German
Photo: Messe Frankfurt GmbH

                              ling the costs very tightly further on,       trade fair organizer in 2009, with a            www.auma.de
                              even in times when turnovers are in-          turnover of EUR 424 million. 2011 start-
                              creasing after the crisis” –says Hans-        ed very promisingly too, with the Heim-
                              Joachim Boekstegers, Chairman of              textil trade fair in Frankfurt. “The home-
                              AUMA.                                         textile highlight at the beginning of the
                                                                            year was a great success with five per-
                                                                            cent more exhibitors and three percent
                                                                            more trade visitors from 136 countries”,

                                                                                                                             Germany Trade & Invest www.gtai.com 13
Industry Report

Organic Electronics Get the Green
Light
Organic technologies are on their way to becoming a breakthrough commercial
success in Germany.

                                                            Colored OLED-cube with three green and three orange OLED panels made by IAPP

We’ve already seen the lower case “e”           The OLED technology                          not the case for conventional screens
and “i” prefixes appended to all kinds of     But what exactly are these technologies?       and monitors, whose liquid crystal tech-

                                                                                                                                           Photo: Carsten Wolf, IAPP-Institut für Angewandte Photophysik, TU Dresden
21st century technological innovations,       OLED (organic light-emitting diode)            nology requires a permanent back light.
such as in the area of online services (e-    technology is helping revolutionize the
mail, e- government etc.) and consumer        world of display lighting. OLEDs are al-       These are still early days, but OLED
electronics goods (as in Apple’s ubiqui-      ready being used in MP3 players, mobile        lights developed in Germany will illu-
tous “i” product palette). Now another        phones and for signage. But these appli-       minate our houses and be implemented
letter is aiming for individual fame, as it   cations are just the tip of a large iceberg,   into our vehicles in the near future. Ac-
seeks to establish itself as a worthy com-    as the work being conducted by chemi-          cording to some forecasts, approximate-
petitor to its fellow vowels: the “o”. And    cal company Merck in Darmstadt high-           ly one third of all light sources will be
it’s not just any “o.” It’s the big “O,”      lights. Since 2010, the company’s re-          LED-based by 2025. A number of compa-
meaning “organic.” After a (significant)      search facility houses the world’s biggest     nies are working hard to develop proce-
R&D phase, organic technologies are           OLED display (produced as part of the          dures for OLED light mass production,
well on their way to becoming a break-        Mitsubishi OLED Diamond Vision Series          with prototypes already exhibited at last
through commercial success thanks to          and fitted with Merck technology), mea-        year’s “Light+Building” trade fair in
innovative developments taking place          suring in at an impressive 3.8 x 2.3 me-       Frankfurt. In a radical break with con-
in Germany. They might mean nothing           ters (12 ft 5 in x 7 ft 6 in). OLEDs’ suit-    ventional lighting production, OLED
to you now, but the “OLED” and “OPVC”         ability for large displays promises better     lamps can be manufactured using mass
abbreviations will, in time, enjoy the        picture contrast, increased pixel count        printing processes. These are incredibly
sort of widespread cultural cachet cur-       and lower production costs. Moreover,          flexible and more energy efficient than
rently afforded to the O’s better known       they also promise energy efficiency ben-       current energy-saving bulbs – an im-
siblings “e” and “i”.                         efits: self-emitting OLED materials only       portant selling point for the significant
                                              use energy when illuminated. This is           R&D investments being made. Steven

14 Magazine
Industry Report

                    Parker, President of SLV Lighting in           But it’s not just OLEDs that are trying to
                    North America, has participated in and         claim the “O” limelight. OPVCs (organic
                    exhibited at the trade fair in Frankfurt       photovoltaic cells) represent a fine ex-
                    several times over the last years. The         ample of a technology’s journey from
                    main benefits for Parker, a member of          the research lab to the commercial mar-
                    the American Lighting Association’s En-        ket. Dresden-based photovoltaic compa-
                    gineering Committee, are the insights          ny Heliatek, in cooperation with the In-
                    the show offers on the comparatively ad-       stitute of Applied Photophysics of the
                    vanced technologies available on the Eu-       Technical University Dresden, has re-
                    ropean market. Parker’s lingering con-         ceived international acclaim for its
                    cerns about LED light sources were             high-performance cells. The photovolta-
                    diminished once he witnessed the prog-         ic calibration laboratory at the Fraun-
                    ress that had been made, especially in         hofer ISE has independently corroborat-
                    regards to light levels defined by the         ed an efficiency level of 8.3 percent on
                    color rendering index (CRI). Parker told       an active surface of 1.1 cm 2 – a result
                    US magazine Residential Lighting: “We          that is the first of its kind worldwide.
                    definitely see [solid-state lighting] as the   The cells represent an international
                    future [and this] as a pretty exciting         milestone in efficient low-cost solar
                    time to be in the industry. Before, there      modules. Potential future areas of appli-
                    were just compact fluorescent, halogen         cation include use in mobile electronic
                    and incandescent [light sources], noth-        devices and in the field of membranes
                    ing really new and exciting. Now we can        for extremely flat and lightweight roofs.
                    really think outside the ‘bulb’ with sol-      The first products are expected on the
                    id-state lighting and take advantage of        market by 2012.
                    the uniqueness of the technology and
                    [the possible] shapes to come up with          The European Union (EU) is also hitch-
                    some very different light fixtures.”           ing its wagon to the growing “O” cara-
                                                                   van. Research funds to the tune of EUR
                      New design possibilites                      12.5 million have been set aside for the
                    Even light designers are discovering the       OLED100.eu project to speed up the de-
                    story of “O”. OLEDs allow completely           velopment of OLED technology. Accord-
                    new design possibilities for surface           ing to the project’s participants, the ef-
                    lighting, because they can be used as          ficiency of OLEDs – believed to be five
                    transparent wafer-thin layers on all sur-      times greater than that of incandescent
                    faces. Munich-based light manufacturer         lamps – could greatly contribute to re-
                    OSRAM, a subsidiary of Siemens, has de-        ducing greenhouse gases. Some 15 re-
                    veloped a marketable solution in its “Pi-      search and industry institutions from
                    rOLED” product. This hybrid light com-         across Europe have joined forces under
                    bines a directed LED-share with a softer       the OLED100.eu umbrella – nine of
                    OLED light. The company presented the          which are based in Germany. The net-
                    pioneering concept in Berlin (Bauhaus-         work is coordinated from Aachen in
                    Archiv Museum of Design) and Milan             Germany by the research laboratories of
                    (SuperPui Design Trade Fair) in 2010 and       the Philips Technologie Corporation and
                    is currently building a first product line     is the largest of three EU OLED research
                    for OLEDs in Regensburg. “We hold a            programs.
                    leading position in the young and prom-
                    ising OLED market,” says Martin Goet-                    evelyn.moeck@gtai.com
Photo: OSRAM GmbH

                    zeler, CEO at OSRAM. “We want to use
                    the pilot production line to extend our
                    lead, quickly [move] ahead with develop-
                    ment of the technology and prepare for
                    mass production [as soon as possible].”                           OSRAM’s first OLED lamp

                                                                                                                Germany Trade & Invest www.gtai.com 15
Industry Report

Franchising Gathers
Pace in Germany
Franchising in Germany is taking off – thanks in no small part to international brands

Rapid company expansion with low cap-      of EUR 48 billion. Curiously enough, the     the German market, particularly in ar-
ital expenditure and shared risk levels    global downturn of 2009 has spurned          eas like nursing services. Plans are afoot
– that is the basic philosophy of fran-    many – uncertain about their long-           to establish franchise concepts also for
chising. The franchisor carries out the    term job prospects – on to the path of       other services in the health care system
developmental work for products, tech-     self-employment as a franchisee (paral-      such as doctors, nursing homes, hospi-
nology and services, which are then pro-   leled by a year-on-year sales growth of      tals and pharmacists.
vided to the franchisee for economic       EUR 4 billion). The franchising trend is
exploitation at an agreed fee.             continuing throughout the current eco-         Europe catches up
                                           nomic upturn in Germany: 20,000 more         At present, a predominant proportion of
The growth of this business model in       employees were working in the fran-          German companies are still represented
Germany is borne out by 2010 figures       chise sector in 2010 than were in 2008.      in Germany as franchisors. However, ten
provided by the Deutsche Franchise-Ver-                                                 percent of the franchise systems already
band (DFV – German Franchise Associ-       The service industry accounts for the li-    come from abroad: these are predomi-
ation) which show that there are cur-      on’s share of franchise market growth,       nantly the major fast-food chains, of
rently 64,000 franchisees in Germany.      with almost half of all franchises with a    which some such as McDonalds and
According to the DFV, this is 3,000 more   wide range of services – ranging from        Burger King have been active in Germa-
than the previous year. The number of      private tutoring services and estate         ny for a very long time. In the past years,
franchisors has also increased – from      agents to opticians and fitness centers.     more and more fast-food companies
980 in 2009 to one thousand in 2010.       This is followed by trade and the hotel      have sprung up, such as Subway and
This development is connected to a         and gastronomy industry. Particular          Starbucks. A trend which is lasting: For
clearly recognizable expansion of the      growth opportunities still exist in the      example, in November 2010, Domino’s
franchise system to a wide spectrum        handicraft sector, for which there is pro-   Pizza opened its first branch in Germa-
of business models, accompanied by a       nounced demand in Germany.                   ny – the chain is one of the market lead-
noticeable increase in the number of                                                    ers of international fast-food chain gas-
employees and a massive growth in            New Franchise Concepts and Trends          tronomy, with more than 9,000
turnover. “In the franchise-economy in-    The leading suppliers of franchising sys-    franchisees in over 60 countries.
novative business ideas are multiplied     tems in Germany include travel provid-
by motivated franchisees. We expect        ers like TUI and fast food outlets such as   In comparison to the USA, the homeland
also in the future an increasing number    McDonalds, as well as companies in the       of franchising, there is a series of region-
of franchisors in Germany” – says the      education sector such as student coach-      al characteristics in Europe which for-
managing director of DFV, Torben L.        ing. The Franchise Direkt industry portal    eign franchising companies must take
Brodersen.                                 lists more than 30 industries, in which      into account. For example, the Interna-
                                           would-be franchisees can search for          tional Franchise Association (IFA) with
  A Decade of Market Growth                business opportunities. The scope rang-      its headquarters in Washington D.C.
By the end of the 1990s, franchise turn-   es from “Cars and Other Vehicles” to         makes reference in an analysis of the
over within Germany was still less than    “Cosmetics,” “Sports,” and even “Pet Sup-    French market to the lack of English lan-
EUR 20 billion. Fast forward to 2010 and   plies.” For 20 years, the German eco-        guage skills of possible franchisees. The
that figure has more than doubled, with    nomic journal Impulse has been award-        IFA evaluates the trend in Germany to
the DFV estimating a total market value    ing a prize for the best franchise system.   be positive overall: constant growth in
                                           Suppliers from a huge range of indus-        the sector can be clearly seen. This is
Franchise business in Berlin               tries have been awarded the prize: from      also how Birgir Thor Bieltvedt, manag-
                                           specialized baby shops, to tea dealers       ing director of Domino’s Pizza Germany,
                                           and pet food distributors. Household         sees it. “Germany is an ideal location for
                                           names including Backwerk, Burger King        our expansion plans,” he said at the
                                           and Fressnapf make up the running in         opening of the first franchise branch of
                                           Impulse’s 2010 list of the top 100 fran-     his chain in November 2010 in Berlin.
                                           chise systems in Germany. However, 14        The market is large and Germans appre-
                                           new systems including American tool          ciate comfort and quality. This provides
                                           provider Snap-on Tools and the German        good opportunities for franchisees from
                                           Tchibo retail brand have moved up the        abroad.     www.franchiseverband.com
                                                                                                                                       Photo: GTAI

                                           ranks. DFV’s Brodersen observes a
                                           strong increase in franchise concepts in               daniel.lindel@gtai.com

16 Magazine
Industry Report

                                         Europe’s Stronghold for Plastics
                                         From production to processing and recycling, German companies are
                                         European leaders thanks to their competitive and innovative products.

                                         Germany accounted for approximately         mer production. On this basis, the com-
                                         7.5 percent of world plastics production    plete plastics and rubber industry
                                                                                                                                   “K” Trade Fair in Düsseldorf
                                         in 2009, producing 17 million tons of       achieved a turnover volume of roughly         The positive market trend was clear-
                                         the versatile material. The country is      EUR 88 billion in 2009.                       ly felt at “K 2010,” the world’s biggest
                                         also the European center for plastics –                                                   trade fair for the plastics and rubber
                                         not only in terms of production and         According to PlasticsEurope Deutsch-          industries held in Düsseldorf at the
                                         turnover, but also in terms of invest-      land e.V., plastics production in 2009        end of last year. The 3,102 exhibitors
                                         ment in production capacity and R&D         generated turnover of EUR 34 billion (or      and 222,000 trade visitors were in an
                                         activities. German companies are also       volume of 9.9 million tons). Production       excellent mood: companies reported
                                         the European leaders when it comes to       levels have recovered swiftly from the        an overwhelming volume of con-
                                         new patent applications.                    collapse in demand experienced in             tacts, a marked willingness amongst
                                                                                     2009.                                         trade visitors to invest, promising
                                           Industry attracts foreign investment                                                    new customer contacts, and many
                                         As the impressive number of projects in     The plastics processing industrial seg-       new business deals. Our agency was
                                         recent years amply demonstrates, Ger-       ment alone achieved turnover of ap-           represented at the booth of the asso-
                                         many has long since established itself as   proximately EUR 48 billion. As the Ger-       ciation PlasticsEurope Deutschland
                                         an attractive foreign investment loca-      man Association for the Plastics              e.V. Germany Trade & Invest introduced
                                         tion. According to figures from the Ger-    Processing Industry (GKV) reported at         the new brochure “The Plastics In-
                                         man Federal Bank, between 2000 and          the “K 2010” industry event in Düssel-        dustry in Germany,” which was pro-
                                         2008, foreign companies invested EUR 6      dorf last year, turnover increased by 15      duced together with the association.
                                         billion on average in the plastics and      percent in the first half of the year.        The brochure shows how foreign
                                         rubber industry each year.                                                                companies benefit in Germany from
                                                                                     More than 72 percent of the plastics pro-     the advantages of the single Europe-
                                         The German plastics producers, process-     duced in Germany are sold within the          an market, the existing structures
                                         ing industries, the industry-related re-    European market. The biggest buyers           along the entire value chain and ex-
                                         search institutions and centers of excel-   are France, Italy, the Netherlands, and       plains the good access to innovative
                                         lence are setting the international         Poland. Conversely, German companies          clusters and high-quality research.
                                         standards with their excellent infra-       purchase 92 percent of their plastics
                                         structure, know-how and their results       from the member states of the EU. In          Around 57 percent of “K” visitors
                                         in research and development. Their in-      2009, plastics exports totaled 10.9 mil-      came from outside Germany. The
                                         novative plastics and special products      lion tons compared with import levels         biggest group here came from Asia
                                         are developed and manufactured at over      of 7.2 million tons over the same period.     – with approximately 30,000 ex-
                                         40 chemicals and plastics clusters and                                                    perts. With 10,500 guests, the Indian
                                         28 chemical parks – with full R&D in-                peggy.padur@gtai.com                 subcontinent again accounted for
                                         frastructure – that specialize in poly-                                                   the largest share of Asian visitors.
                                                                                                                                   Some 7,600 trade visitors came from
                                                                                                                                   the USA and Canada.

                                                                                                                                   Plastics can look forward to a bright
                                                                                                                                   future as a material for creative
                                                                                                                                   ideas, particularly in the field of en-
                                                                                                                                   ergy efficiency and saving resources.
Photo: PlasticsEurope Deutschland e.V.

                                                                                                                                   The next K Düsseldorf event will be
                                                                                                                                   held from October 16 to 23, 2013.

                                                                                                                                   www.k-online.de

                                                                                                                                 “K 2010“ trade fair in Düsseldorf
                                                                                                                                  Stand of PlasticsEurope: “Visions in Polymers”

                                                                                                                                  Germany Trade & Invest www.gtai.com 17
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