Location

Frankfurt Confirmed as EU’s Leading Financial Center

The latest Global Financial Centres Index sees Frankfurt shoot up seven spots to number nine and is now the top-ranking city in the European Union.

The traditional German financial capital and home to the German stock exchange is profiting from Britain’s exit from the bloc. City officials estimate that some 3600 financial jobs have been created, and the German Finance Ministry has registered 60 new financial institutions. Estimates of the amount of assets transferred from London to Frankfurt during Brexit range from EUR 644 million to EUR 675 million – far more than, for instance, to Paris.

“Germany is increasingly gaining international significance as a financial location,” says Germany Trade & Invest Financial Services Senior Manager Josefine Dutschmann. “We’re proud of the fact that for the first time five German cities are among the top fifty in the Global Financial Centers Index.”

Stuttgart also moved up seven places in the twice-yearly index to number 30, Hamburg came in number 43, Berlin cracked the top 50 for the first at number 45, and Munich ranked 49. Berlin is also a new entry in the index’s list of the top 45 global fintech locations.

Germany Trails Only US in European Patents

The European Patent Office (EPO) says that Germans filed more applications in 2020 than people from any other nation except the United States.

Germans registered 25,954 inventions and ideas compared with 44,293 for the US and 21,841 for third-ranked Japan. The next highest-ranked European country was France with 10,554. All told, Germany accounted for 14 percent of all EPO patent applications.

German inventors were particularly active in the electric machinery, appliance and energy sectors. In the transportation industry, German company Continental led the way, with Siemens ranking third, Bosch fourth and Volkswagen eighth.

Samsung came out tops in number of patents of all types, with Siemens placing sixth, Bosch seventh and BASF tenth. The largest growth areas in 2020 were medications (+10.2 percent) and biotechnology (+6.3 percent).

AmCham Germany Says 2021 Transatlantic Business Outlook Positive

2020 wasn’t bad, and 2021 looks to be much better – that’s the upshot of this year’s American Chamber of Commerce in Germany Transatlantic Business Barometer.

According to the annual survey, despite the coronavirus restrictions, more American subsidiaries in Germany increased than decreased their revenues, workforces and investments. A majority expect to increase revenues and investment in the coming year, and a plurality of 46 percent say they’re hiring.

Those aren’t the only positive signs for the future. 62 percent of US businesses said they would be expanding their activities in Germany, 63 percent rated investment conditions in Germany very good or good, and a whopping 74 percent expect conditions to improve in the next three to four years.

One factor driving the optimism is the expectation of greater internationalism from the Biden administration in the United States. Members anticipate improvements across the board, and in particular in the areas of energy and climate, digital policy, and healthcare and life sciences.

"The joint vaccine development of our members BioNTech and Pfizer has proven how strong the transatlantic will for cooperation and collaboration is,” commented AmCham Germany President Frank Sportolari in a statement. “It is imperative that we build on this effort."

Respondents were also asked various aspects of Germany as a business location. A perfect 100 percent said the quality of employees was good to very good, while 91 percent praised the quality of R&D and 89 percent Germany’s potential as a sales market.

All in all, the barometer forecasts sunny skies ahead for German-American business relations.

“It’s very encouraging that despite all the challenges last year business for the vast majority of US companies in Germany remained stable or even improved,” says Germany Trade & Invest CEO Robert Hermann. “For a variety of reasons, the mood is looking up, and everyone involved is viewing 2021 with optimism.”

Read the 2021 AMCham Germany Transatlantic Business Barometer 

Germany’s “Future Fund” – Questions and Answers

The German government has begun allocating money under last’s year’s highly touted EUR 10 billion “future fund” to supercharge VC investment in start-ups and other promising young businesses. The first categories include an expansion of KfW Capital, EIF growth facility and a deep tech future fund. But what’s behind these names and acronyms? We ask Germany Trade & Invest consultant Danny Stephens.

In which sectors are start-ups most likely to be able to access this fund?

Using these new monies, Germany will be looking to keep itself at the forefront of emerging technologies such as AI, automated driving/transport, and the multi-faceted monster that is digitalization.

How complicated is it to apply for assistance? Roughly speaking, what are the chances for success?

Generally this is pretty easy. Most applications for grants and for financing by Germany’s economic development bank, the KfW, are made through the company or start-up’s house bank, or through direct applications to the financing program involved (eg. High-Tech Gründerfonds). The chances for success depend entirely on the quality of your business case.

Are we talking about grants here? 

Very few start-up funds are actually grants. Much of the start-up funding for the most interesting projects is public-private VC, with money from the Ministry for Economic Affairs and the state development bank the KfW, together the European Investment Bank in some cases, as well as contributions from large private companies or private investors. Because state instruments are used, the risk profile is lowered significantly and therefore the expected return, which eases pressure on a start-up.

The most prominent two start-up investment funds on a federal level are coparion and High-Tech Gründerfonds, the former focussing more on companies looking for A,B, and C series funding and the latter on start-ups in a more conceptual seed phase. The money in coparion itself is all from state instruments, but any start-up getting money from it must get at least the same amount in the same series from a private investor. HTGF is financed by both state and private investors, who also take an active role in incubating the start-ups in the program.

The money is to be doled out “pari passu” – what does that mean?

It means that the investments by KfW Capital are made on an equal footing with those of private investors, i.e. neither KfW Capital nor other investors nor any other investing program receives preferential treatment during the course of the investment.

Is the fund available to international companies that have expanded to Germany?

Sure. It all depends on a realistic investment and business case, and realistic expectations of the technology.

And finally, what does it mean for Germany that the future fund is now getting started in earnest?

In uncertain economic times, the availability of venture capital can be at the most risk from over-cautious investors, usually just as industry needs more of it. This fresh funding is a further sign of Germany’s willingness not only to address the short term but also to maintain its risk-friendly approach to the business future.

ESA Tasks German Firms with Challenging Space X

The future of the space economy, often called New Space, will be as much about getting leaner and more economical as making things larger and more powerful. With this in mind, the European Space Agency ESA has commissioned a study from Bremen company EHB and its subsidiary Rocket Factory Augsburg to predict the future demand for space transportation systems as of 2030.

“These system concept studies will include services that prioritize the future needs of Europe’s space programs but also allow us to address global market needs,” said Daniel Neuenschwander, ESA Director of Space Transportation, in a statement.

“The study is about what course Europe needs to set and when, in order to be future-proof in the commercialization of European spaceflight,” added Marco Fuchs, CEO of OHB. “The task now is to investigate the different space transportation systems and solutions which private initiatives can propose to make Europe a globally sought-after partner for the future of space transportation as well.”

Currently, Europe’s primary launcher is the Ariane 5. It’s scheduled to be replaced in two years’ time. But private companies may be able to provide launch services more economically.

European space experts are keeping close tabs on developments at Tesla founder Elon Musks’s Space X project. Rocket Factory Augsburg is already developing a rocket that can carry payloads of up to 1360 kilos at cost of EUR three million per start – less than what SpaceX charges.

In any case, the market for launching satellites is dramatically expanding. As market analyst Euroconsult points out, 1000 new satellites could soon be put up into space annually – the same as the total number orbiting the earth only seven years ago.

Digitalization – A Panacea for the Economy in Corona Times?

A new report concludes that digital technologies have helped Germans deal with the Covid-19 pandemic – as well as creating new opportunities for digital providers.

Digital technologies provide a lifeline in pandemic

Digital technologies have played a significant part in helping the German population deal with the coronavirus pandemic according to digital association Bitkom. The representative study provides a reflection of digital behavior of more than a thousand people aged 16 years of age and over one year into Germany’s Covid-19 lockdown. Digital technologies have helped ensure that life could go on to a large extent despite lockdown restrictions on public movement and widespread closures.

8 out of 10 households using digital technologies more

Around eight out of ten households state that they have used digital technologies, services and devices more frequently in the last year, with 50 percent of those surveyed having spent more or significantly more money on digital goods than in the previous year. Digital technologies are mostly used to support working from home (60 percent), with communication, shopping, health, sport and fitness as well as financial and insurance-related matters being other important areas of live.

Average German screen time has increased from 8 to 10.4 hours daily as a result of coronavirus-related restrictions on movement. This is in part due to the sharp uptake of home working across the country, but also explained by increased use of video conferencing services for communication with family and friends.

Sixty-five percent of Germans spent more money on digital goods including notebooks and printers as well as entertainment streaming services, faster internet connections, and smart device applications. This equates to an annual per capita surplus of EUR 482 on digital devices and services in 2020.

Public services in digital transformation

The digital transformation of the public sector in Germany is part of a longstanding and far-reaching reform focused on the digitalization and de-bureaucratization of public services. In January, federal and state governments signed the Online Access Act (OAA) – itself part of the nine-point plan for a digital Germany – to expand online administrative services. The act obliges federal, state and local governments to offer their administrative services digitally by the end of 2022.

Digital learning market shows the way ahead

A recent German Economic Institute (Institut der Deutschen Wirtschaft, IW) study of further training reports that more than 90 percent of companies active in continuing education used at least one digital learning medium in 2019, compared to 84 percent in 2016. This trend towards the use of digital media prior to the current coronavirus pandemic is likely to have contributed significantly to training activities not experiencing a slump despite lockdown measures.

The conventional reasons for the use of digital learning materials cited in the study – cost- and time-effective deployment of resources – has gained more relevance during the current crisis, with remote accessibility and flexibility further important factors.

New digital horizons have been created for companies and investors in an array of industry sectors during the coronavirus pandemic. Germany Trade & Invest’s industry experts will help you in identifying opportunities for your business in Germany. Contact us!

Digital geodata solutions for life after the pandemic

Digital applications like the “Corona Dashboard” created by the Robert Koch Institute make use of geodata to help decision makers properly orient themselves in order to react quickly and effectively to the Covid-19 pandemic. Similarly, geodata is also being used to monitor, plan and improve decision-making processes in hospital environments in terms on intensive care bed occupancy rates, vaccinations and vaccination centers. Data protection-compliant sensor technology and geodata can also help in the post-pandemic phase to record and control flows of people in public spaces including, for example, shopping centers and other public spaces.

“IT-based business models among the most attractive in Germany”

Germany’s days as a digital straggler are over. The country is getting up to speed, and both international companies and foreign IT specialists are discovering Germany’s advantages as place to do business and work. Germany Trade & Invest Director for the Digital and Service Economy Marc Rohr tells us why.

Recent surveys show a surge of interest among international IT specialists in German cities like Berlin and Munich. Why is that?

They increasingly see Germany as a modern, cosmopolitan business location. That’s thanks in part to the “blue card” program that makes it easier for highly skilled people to get work and residence permits. In addition, English is now the working language at many SMEs and listed companies, and it’s easier to integrate into Germany’s bigger cities without knowing German. German cities have a high quality of life. Berlin is the country’s start-up capital and still has low rents and living costs – especially when compared to Silicon Valley. Munich is attractive because a great number of industry leaders, for example, Siemens, BMW, Celonis and Microsoft, have their German headquarters there.

Why have companies like Apple stepped up their activities in Germany?

The main reason is access to highly qualified employees – a recent AmCham Germany survey returned a 100 percent rate of satisfaction with the available workforce. Germany’s practically oriented dual education system, which combines education with apprenticeships, is also a plus. Then we have a number of IT clusters and an excellent research infrastructure, for instance in quantum computing, with the Max Planck and Fraunhofer Institutes and other public and private bodies. As Europe’s largest IT market, Germany is a good place to test out new products and applications, and its logistical infrastructure means that companies can access other EU markets as well. Germany’s legal system and emphasis on data protection means that companies can plan and develop products securely. Finally, Germany has an attractive landscape of subsidies for knowledge-intensive and research oriented businesses and partnerships.

Can you tell us about the government’s role in bolstering Germany as an IT location?

Around ten years ago the government recognized IT as a crucial industry for Germany and increased its support. That’s reflected in the fact that we now have a Minister for Digitalization directly attached to the Chancellor’s Office. Since around 2014, the government has intensively promoted the digitalization of industrial production, and in the past two to four years it has formulated concrete state strategies for digitalization, AI and data. We also have national, state-supported programs like the Digital Hub Initiative and the clusters that support start-ups and attract IT companies to Germany.

How do you see things developing in the coming five to ten years?

We expect increased investment in new technologies, for example in start-ups working in AI and data security. The government has already allocated new funds to support this sector. Work will continue on Gaia-X to ensure Europe’s sovereignty with data and platforms. There are also EUR 5 billion in support available for AI between now and 2025 and EUR 2 billion under the Quantum Computing Roadmap.

Who are the major domestic and international players in the sector in Germany, and what do they have in common?

There are important IT players in almost every segment of industry, as a rule offering specific technologies and applications. The mobility sector has proven to be very open to new IT solutions in recent years in areas like electric autonomous vehicles. Companies like Tesla and Google have committed themselves to the German market. On top of that a number of German companies in the ecommerce sector like Zalando, Lieferheld and HelloFresh have grown to such an extent that they have become part of the German leading indexes. In the software sector we could name SAP and Software AG as well as medium-sized international companies like Init.  And of course giants like Amazon, Google. Facebook, IBM and others all have large German subsidiaries and are constantly expanding.

Will Germany continue to produce IT unicorns at the rate it has in the past few months?

We see this development continuing in 2021. Amidst the coronavirus pandemic, IT-based business models remain among the most attractive investment alternatives. The run of high valuations is exclusively down to the companies themselves. Internationally and generally, we’re seeing an increase in high valuation, and I think German start-ups are profiting from that.

Drone Mission Planners are Tesla’s New Neighbors

In 2021, the US-Portuguese drone infrastructure company EVA was looking to expand its business in the fast-growing, future-oriented sector of unmanned aerial vehicle (UAV) sector. Germany Trade & Invest helped the young firm set up shop in Germany – in the town of Wildau in the state of Brandenburg near Berlin. We asked EVA spokesperson Isabel Nacke about the company’s new home.

Where does EVA see itself in the German UAV market?

It’s anticipated that drones can substantially drive down the costs of transporting goods and hopefully people. What we at EVA saw in the past is that of the 3 billion euros that have been invested overall in the UAV industry, only one percent has directly gone into infrastructure. This is where we want to come in. We want to build the foundation for successful drone missions. You have a tremendous amount of different use cases right now: transporting goods last mile, but also critical goods, hospital management and obviously all sorts of inspection and surveillance. All these missions will need the place where they can be controlled from, where drones can charge and land. This is ultimately what we would like to provide.

Why did EVA settle on Germany?

Essentially German quality speaks for itself. Now that we’re trying to streamline production, it was extremely important for us to find manufacturing partners and suppliers that truly know what they’re doing. Here in Germany we found a vast land of all different technologies. We’ve got all the hardware companies. We have a strong software side. What’s beautiful is that our innovation is like a plug-and-play model. We can really onboard a lot of future-of-technology, future-of-mobility innovations. And that’s why we believe that Germany right is the perfect location for us. To build a foundation here, to build a foundation for the UAV industry and then slowly but maturely expand all across Europe and abroad.

And how did you decide upon Wildau? Were you attracted by the new Tesla gigafactory and the new Berlin-Brandenburg airport?

We ended up here in Wildau on the outskirts of Berlin rather by chance. But now we believe that this location offers the perfect mix of being in such close proximity to the capital but giving us so much space to explore our R&D capabilities, to do drone test flights, and to invite other drone companies to come and fly with us and engage in all sorts of research and development. The entire area here in the entire southeastern part of Berlin…it’s exhilarating what’s happening with Tesla coming in, with the new airport finally opening up. You can really feel the buzz around here that innovative companies want to come in and change the status quo. So this kind of energy is quite contagious. And we love to be a part of it.

German Tug Boat Helped Unblock Suez Canal

The good news came after the container ship “Ever Given” had been stuck in one of the world’s major waterways, disrupting global supply chains, for a week. A team of tugboats, led by the German-made “Alp Guard” finally managed to free the massive shipping vessel, which is roughly the size of New York City’s Empire State Building.

The Alp Guard was made in the northern German port of Cuxhaven, with four engines produced in the city of Kiel even further to the north. Together the engines generate 18,000 kilowatts, giving the boat has a pulling power of 285 tons – more powerful than any of the boats that had previously tried to free the Ever Given. The Kieler Nachrichten newspaper called it “the most powerful tug boat in the world.”

The Alp Guard was on its way from Turkey to Far East on Sunday, when it received a request for emergency assistance from the Dutch company in charge of the Ever Given recovery operation in the Suez Canal.