Sector Report: Logistics VOL 01 | 04.2008
INVEST IN GERMANY MAGAZINE The global IT giant IBM is well-known for its innovativ
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German Engineering – The Quiet Giant
Content
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Major Investment
Current Issues
Irish Investment with Japanese Technology in Germany ...................................... 3
The Tides of Offshoring Turn Back to Germany ............................................... 21
Welcome Address
Marketing Germany
The Members of the New Supervisory Board of INVEST IN GERMANY ........ 4/5
“Best of” Federal Creativity ................ 22/23/24/25
Cover Story
Innovative Germany
Mechanical Engineering: Germany’s Industrial Backbone ....... 6/7 Robotics and Automation: Smart Machines..................................... 8
T-Shirts that Glow and Warm; Nuts for Oil – a 21st Century African Tale .......................................... 26 Visual Impressions for Blind People; Injecting CO2 Into the Soil ................... 27 The Best of German Innovations ... 28/29
Success Story
Chinese Capital Meets German Tradition ................................... 9 Industry Report
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Fighting Half a Trillion Plastic Bags ..........................10 Perpetuum Mobilae .............................. 11 Roaring Red Biotech ............................. 12 State and Venture Capital Financing for German Biotech ..............................13 Chemical Industry Powers Innovation .............................. . 14 Dow Wolff Cellulosics Focuses on Research in Germany ...................... 15 The New Alchemy: Turning Corn into Plastic ..................... 15 Destination Germany............................ 16 Our Events
Turning the Silver Society into Gold .... 17
Innovation Management
Managing Ideas .................................... 30 Future Germany
Foreigners Dream the “German Dream” ............................31 Web 3.0: Germany’s Flagship Project ............... 32 No Fear and Fighting Spirit................. 33 Financing
Financing Germany’s Industries of Tomorrow ............................................. 34
On the cover:
Escalator production: assembly unit for escalator balustrades at ThyssenKrupp Fahrtreppen GmbH in Hamburg
German Business
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World Leaders in Small Business ...... 18 The Stunning Rise of a Healthy Drink ..................................... 19 Germany Celebrates Its Best Entrepreneurs............................. 20
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Major Investment
Irish Investment with Japanese Technology in Germany One of the single biggest investments in Germany is currently being made in Leuna, a chemical-manufacturing location in Saxony-Anhalt. Ireland’s Quinn Group is building a new factory for €260 million in order to produce special synthetic materials starting in 2009. This is also the group’s first venture into the chemical business. The company decided it should be a German-Japanese-Irish cooperative effort, with the technology coming from East Asia, the experience for building and operating the new factory from Germany, and the company management and financial resources from Ireland.
appliance production utilities were added all over Europe. In the meantime, the family business also made a name for itself as a financial services provider and operator of hotels and shopping centers. According to the group, it now employs more than 6,000 people. One of Quinn’s mottos is: “It’s better to make 10 decisions in a day – of which two are wrong – than no decision at all.” According to Carey, however, the move into
For that reason, one-third of the workforce will be sent to Japan for a few weeks in order to familiarize itself with the processes at an existing production facility. Quinn will be linked to the central supply of electricity, steam, and water used by the nearly 100 firms – including Linde, Dow, and BASF – located in Leuna’s 1,300-hectare chemical production area. Carey sees this as another positive point.
Quinn had been planning to move into the chemical business for a long time. To begin with, the group bought the license to a process for the production of methymethacrylate (MMA) from a Japanese company. MMA is a light-transmissive, synthetic material used in the production of plastic glasses and foil. “The applied process is very cost-effective and environment-friendly,” says Dermot Carey, head of Quinn Chemicals in Leuna. The planned initial production volume of 100,000 tons will mostly be delivered to Quinn’s existing plastic factories all over Europe. “It is part of our philosophy to open new business areas, which are extensions of existing fields, with new technologies and products,” Carey adds.
Photo: Maik Schumann
This is the formula for success of Sean Quinn, founder and owner of the company and today one of the richest men in Europe. In 1973, Quinn started out in the sand and gravel business. Shortly thereafter, he built new cement factories in the vicinity of his hometown Derrylin in Northern Ireland. Thanks to Ireland’s economic boom in the ’90s, the Quinn Group grew fast. Glass factories, synthetic material businesses, and heating
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the chemical business is one of the biggest and most important investments the group has recently made. Owing to its importance, a number of locations were considered in Europe. Leuna, with its rich tradition of chemical production, convinced the Irish. “Here we found the skilled employees who were able to build a new factory with an applied manufacturing process not yet used in Europe,” Carey said about his employees, whom he affectionately calls his “gray-haired engineers.” It is one thing to design a factory on paper, but a lot of experience is needed to properly align all the processes in the facility.
“Our production costs must be competitive,” he says. The markets in Western and Eastern Europe must be supplied from Leuna. More investment in the business location and, for example, in the processing of synthetic materials has already been included in the current plans. By operating fast in the market, the Irish family business wants to remain on the road to success – and with its chemical business too. www.infraleuna.de
Welcome Address
Invitation to a Top Location Statements from the Members of the New Supervisory Board of INVEST IN GERMANY
Chairman of the Supervisory Board:
Deputy Chairman of the Supervisory Board:
Deputy Chairman of the Supervisory Board:
Michael Glos, Federal Minister of Economics
Wolfgang Tiefensee, Federal Minister of
Dr. Heinrich v. Pierer,
and Technology
Transport, Building and Urban Affairs;
Chairman of German Chancellor Merkel’s
Commissioner for the New Federal States
Council for Innovation and Growth
Excellent education, stellar productivity, outstanding infrastructure, and a high quality of life are just some of the many reasons to make an investment in Germany. Additionally, there are numerous possibilities for incentives, especially for investments in eastern Germany. In this region, there are attractive opportunities to be found in innovative and futureoriented sectors, such as renewable energies.
Germany, with its proven ability to innovate and its determined drive for excellence, offers unique opportunities today to shape the future.
Germany is once again a major world leader in business! Our location in the heart of Europe combined with our stable political conditions, highly qualified workforce, and legendary innovative spirit make Germany the first choice for every international investor.
Dr. Reiner Haseloff, Minister of Economics and Labor of Saxony-Anhalt Prof. Frieder Mayer-Krahmer, State Secretary at the Federal Ministry of Education and Research
Today’s global businesses seek to locate close to research institutes and institutions of higher education as these locations provide both highly qualified partners for new developments and creative minds. With its Internationalization Strategy, the Federal Government therefore wants to make Germany one of the most attractive and efficient locations for international research investment and research services.
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Georg Boomgaarden, State Secretary in the Federal Foreign Office
Germany is the industrial nation located in the geographic center of Europe with an outstanding infrastructure, high education level, and excellent quality of life. Germany’s reliability and high level of competitiveness in future technologies make it one of the most attractive investment and innovation locations in the world. These are our strengths, as communicated to potential investors all over the world by INVEST IN GERMANY in close cooperation with the Ministry of Foreign Affairs and its foreign representatives.
As a business location, Germany offers prime conditions to investors. Entrepreneurs from here and abroad appreciate above all the excellent location in the heart of Europe and the well-developed infrastructure – which enables ideal access to markets and suppliers all over the world – the highly qualified work force as well as innovative research fields, which lay the foundation for close cooperation between business and research. The excellent quality of life, with its high standards of health care and education, the high level of arts and culture, and the scenic landscape complete the factors that make Germany a good economic location and a country where you can live a good life.
Welcome Address
Christa Thoben, Minister of Economics and Energy of North Rhine-Westphalia
Companies wanting to invest in Germany will find the most important commodity for a sustainable business location here: creativity. All over the world, “Made in Germany” stands for highly innovative products conceived and manufactured by creative minds. Here you will find the ideal environment – a creative economy – which takes its energy from the triad of talent, technology, and tolerance. In the future, we also want to campaign internationally with this new concept of the creative economy for North Rhine-Westphalia and the creative minds of tomorrow.
which is underlined by the high level of German investment in and exports to these countries. As a business location, Germany is known for its extremely welleducated people, high level of competitiveness, strong commitment to technology and innovation, and highly productive industrial and service sectors.
Dr. Hubertus Erlen, Deputy Chairman of the Supervisory Board of Bayer Schering Pharma AG
Investing in Germany provides access to a very attractive market and takes advantage of the highly skilled and efficient workforce in Germany.
Prof. Dr. Siegfried Englert, State Secretary, Ministry for Economic Affairs, Transportation, Agriculture and Viniculture of RheinlandPfalz
Thanks to its central location in Europe and its outstanding infrastructure, Germany attracts companies large and small. The labor pool, excellently trained in technology, natural sciences, and medicine, supplies the prerequisites for entrepreneurial success in all endeavors.
Prof. Dieter Stolte, Editor, Axel Springer AG
Good news about Germany as a location for doing business – there is plenty of it! The challenge is making sure people know about it. INVEST IN GERMANY has the responsibility of communicating Germany’s good performance to the world and making sure that this information is being received.
Dr. Michael Militzer, CEO of MITEC Automotive AG
As a business location, Germany is innovative, internationally competitive, environmentally oriented, and uses its central geographical position in the EU to be the door to Eastern Europe from the heart of Europe.
Dr. Klaus Mangold, Executive Advisor to the Chairman, Daimler Chrysler Bank AG
The German market is the biggest in the European economy and offers perfect access to Central and Eastern Europe and to other western European countries, a fact 5
Prof. Gerhard Schulmeyer, Former CEO, Siemens Corporation USA
For American companies, Germany remains a leading investment location. Companies are using Germany’s excellent infrastructure and outstanding R&D capacities to access the European continent and establish worldwide centers of expertise.
Werner Sülzer, Chairman of the Supervisory Board of NCR GmbH
Germany is a country that creates innovative solutions from ideas. Thanks to their quality and lasting benefits, these innovations are valued worldwide. As a result, we have become the world’s export champion – a title that can only spur us on to further innovations. A well-educated workforce, rising labor productivity, a high level of automation, internationally competitive corporate taxation rates, and a world-class infrastructure all guarantee that Germany will remain an attractive and dynamic location for investment.
The new, bright annealing line of ThyssenKrupp Mexinox, a subsidiary of ThyssenKrupp Stainless AG
Mechanical Engineering: Germany’s Industrial Backbone From precision tools to production lines, from robots to power plants, Germany supplies the mechanical engineering products that drive the wheels of global commerce. All around the world, wherever there’s a mission-critical mechanical task to be performed, demand for German engineering is growing.
Yes, Germany does export more mechanical engineering products than any other country, including the United States and 6
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Japan (the second and third biggest exporters in the sector). According to the German Engineering Federation (VDMA), foreign sales of German-made machinery and equipment in 2006 amounted to €123 billion. These exports accounted for nearly 20 percent of all global trade in the sector. Altogether, factoring in domestic sales, German-based machinery and equipment manufacturers sold €167 billion worth of products in 2006. That’s equivalent to the gross domestic product of Portugal. Unlike other cyclical industries that have been buffeted by market fluctuations over the past few years, Germany’s mechanical engineering sector has been growing by leaps and bounds. Between 2004 and 2007, production increased by a total of
about 30 percent. This expansion drive is expected to continue in the current year, with the VDMA predicting a 5 percent increase in sales. Assuming 2008 fulfills expectations, that will make for five consecutive years of growth. 2007 was an especially productive year for the German mechanical engineering sector. The VDMA is expecting to record for the period an 11 percent sales increase. Despite the effects of the weak dollar, demand for certain types of products, such as machine tools, has risen dramatically. During the first nine months of 2007, foreign orders for German machine tools increased 29 percent. Domestic demand in this product segment was even stronger, with the order volume leaping a full 35 percent.
Photo: ThyssenKrupp AG
From Beijing to Bangalore, from Boston to Buenos Aires, the key components of industrial commerce are being supplied by German companies. These firms – nearly 6,000 in all – design and build the manufacturing systems that factories rely on for round-the-clock production. They furnish the essential valves, turbines, and fittings that assure a continuous flow of utilities to the world’s population centers. They make the motors, transmissions, and hydraulics that allow us to harvest the earth’s resources and erect tall buildings. In short, German firms provide the machinery and equipment that keep the world working.
Cover Story
Many German companies are now working extremely hard to fill their customers’ orders. Some of these companies already have enough contracts on their books to keep them busy for the rest of 2008. In an effort to keep up with growing demand, in 2007, German machinery and equipment manufacturers added about 50,000 new employees to their workforce. This year, staff levels are expected to rise by a further 15,000. It’s hard to overstate the significance of Germany’s mechanical engineering industry, both domestically and internationally. In terms of employment, it provides more jobs than any other manufacturing sector in Germany, where 873,000 people are employed in making machinery and equipment. That’s more jobs than in Germany’s electrical engineering and electronics industries combined.
Virtual product development and simulation are being utilized in 58 percent of German mechanical engineering firms, far more than in other manufacturing sectors. And more than half of all German firms in the industry are collaborating with external research facilities. The essential role that innovation plays in the success of Germany’s mechanical engineering sector is underscored by another recent report about the industry published by Deutsche Bank Research (dbresearch). The report notes that, by 2005, nearly a third of all revenues from German companies in the sector were being generated by new products. The variety of those products, says dbresearch, is “unparalleled anywhere in the world.” It is now estimated that half of all mechanical engineering products from German companies are made to order.
creasing number of countries are now depending on German-made machinery and equipment to drive their own industrial advancement. Viewing mechanical engineering as a “backbone” technology, equipment and machinery buyers are insisting on German quality standards. Many, having experimented with alternatives, are realizing that the only reliable source for that quality is Germany itself. This also explains why some German engineering companies that moved production to low-cost countries are now returning home. After a year or two of operating in those alternative locations, these firms discovered they simply could not produce the quality there that their customers demanded. As dbresearch points out: “The main strengths of German engineering companies thus lie in non-price competition factors.”
With regards to manufacturing sector output, mechanical engineering is second only to Germany’s mighty automotive industry. Together, these structurally independent but related industries represent the twin engines of the German industrial economy.
Photo: Gerber/Frauenhofer IuK
So, what makes German machinery and equipment manufacturers so remarkably successful? One answer is found in the results of a study published last November by the Fraunhofer Institute for Systems and Innovation Research. Announcing its findings, the Karlsruhe-based institute observed that “German mechanical engineering is the best in the world thanks primarily to its ability to develop customer-specific production facilities meeting the highest requirements for quality, precision, and flexibility.” The institute also found that German companies in this field display an extraordinary degree of clientoriented adaptability, which they use to propagate a culture of continuous innovation. The study concludes that the key component in the success of these companies is not their R&D expenditure, which is actually relatively modest. Instead, the decisive factor is their ability to “link their research and development resources in a special manner with the use of new product development concepts.” Specifically, says the institute, German machinery and equipment suppliers are making the most of “simultaneous engineering, virtual reality, and cooperative development.” 7
CAD (Computer Aided Design) models can be edited using the "Cyberstilo" tool virtually
All these products, of course, are designed by people in Germany – teams of engineers whom dbresearch describes as the industry’s “guarantors” of success: “In Germany today,” says the report, “the cosmopolitan elites of the engineering world work hand-in-hand with welltrained, skilled personnel to ensure global technological leadership.” The industry’s rapid expansion, the report notes, is also reflected on the personnel side, with the number of mechanical engineers in Germany doubling during each of the last two 10-year periods. With 70 percent of German-made machinery and equipment being shipped abroad, this national champion of an industry is having a global impact. In much of the world, German engineering has attained a benchmark status, representing the competitive standard for industrialbased economic development. An in-
When quality, reliability, and innovation are the critical factors in a market – as they are with mechanical engineering – moving production abroad to save on nominal labor costs makes little sense. dbresearch is forecasting that, between now and 2015, German machinery exports to China, India, and Russia will grow by 7 percent to 12 percent each year. Given those kinds of numbers, it is understandable why the business magazine Wirtschaftswoche predicts that the decade ahead could become the “golden age of German mechanical engineering.” For more information about this industry, please contact Mr. Richard Offermann, offermann@invest-in-germany.com
Cover Story
A star of the “Humanoide League” of the “RoboCup German Open”
One of the most exciting branches of Germany’s mechanical engineering industry is robotics and automation. Encompassing a broad range of sophisticated products, this industrial sub-sector represents the cutting edge of technological development. German firms working in this field have been utilizing the country’s advanced research and development resources to come up with new applications for markets clear across the economic spectrum, from the automotive sector to medicine.
Robotics and Automation: Smart Machines
Over 60 percent of sales in this sub-sector are generated by handling and assembly products, followed by robots (23 percent) and industrial imaging – or “machine vision” – technology (15 percent). The largest export markets for German handling and assembly equipment are the United States, France, Italy, and China. Among the most prominent trends in the German robotics and automation sector is the broadening of the customer base beyond the automotive industry. The VDMA cited this development as the chief factor responsible for sales growth in 2006 within the German robotics sector. 8
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Particularly noteworthy was the increased demand for robots from the metalworking, furniture, and plastics industries. Some 48 percent of all sales by German robot suppliers in 2006 went to buyers from outside the automotive sector. The fastest growing product segment for German robotics and automation companies in 2006 was machine vision technology. This small but important segment recorded a 9 percent sales increase across the board. Most of that growth was generated by a surge in demand for “configurable” systems, which can be adapted to support changing production needs. Sales of such systems – which integrate cameras, computers, and software – jumped a full 45 percent. Aside from its role as a supplier of topnotch robotics and automation products to the world, Germany itself also represents a huge market for such products. The country’s share of all industrial robots installed in Europe in 2006 amounted to 36 percent. Altogether, nearly 130,000 industrial robots are currently operating in Germany, more than in any other country except Japan.
Looking to the future, German engineers and researchers are actively shaping the industry’s development through a series of collaborative ventures with international partners. One of these promising projects was unveiled last October at the newly founded Research Institute for Cognition and Robotics (CoR-Lab) at the University of Bielefeld. In cooperation with the Japanese technology company Honda, CoR-Lab has become Europe‘s first university-based institution to utilize Honda’s state-of-the-art ASIMO humanoid robot as a research platform. The institute is focusing its research on artificial perception and neurological motion control systems. The CoR-Lab institute and dozens of others like it around Germany are being supported with generous public funding. Federal and state authorities in Germany are pouring millions of euros into research and development aimed at spawning viable industrial ventures. For more information about this industry, please contact Mr. Richard Offermann, offermann@invest-in-germany.com
Photo: Gerber/Frauenhofer IuK
The past two years have brought significant gains for German robotics and automation companies. From 2005 to 2006, sales rose 6 percent to €7.3 billion. That accounts for about 4.5 percent of total sales volume in the German mechanical engineering industry as a whole. For 2007, the German Engineering Federation (VDMA) estimated that sales of German-made robotics and automation technology would reach €7.9 billion, an increase of 8 percent.
Success Story
Chinese Capital Meets German Tradition One of Germany’s oldest producers of sewing machines, Dürkopp Adler AG, and China’s Shang-Gong Group (SGSB) are aiming to sew up the market with environmentally friendly industrial sewing and production technologies. The companies joined forces three years ago, when SGSB bought out the 150-yearold German manufacturing firm that specializes in industrial sewing machines. Since the takeover, little has changed in management and production at the Bielefeld-based company. In fact, rather than being shut down, SGSB has brought its acquisition’s finances back into the black and now plans to take its subsidiary’s earnings to new heights. The road out of the red began when SGSB, China‘s oldest manufacturer of industrial sewing machines, started making major injections of funds into technological innovation at Dürkopp Adler. That investment is now paying off. Dürkopp Adler recently began working in a field for which Germany is well-known – environmentally friendly technologies. At the end of last year, it introduced its new “green line” brand label. “The green line label is more than just a logo,” the company said in a statement. “It is a symbol for environmental protection and safeguarding resources in the sewing machine trade.” The statement adds that the new machines use automation to conserve energy and other re-
sources. The company also says that it continuously optimizes the production techniques it uses in order to make the production of sewing machines more environmentally friendly as well. According to Alfred Wadle, spokesman for Dürkopp Adler’s management board, the company has high aims. “Within one year,” Wadle says, “Dürkopp Adler will strengthen its leading position in the sewing machine trade even more.” The Dürkopp Adler facility in Bielefeld is a focal point of SGSB’s research and development. Tests are currently being devised to determine how much energy the company‘s machines consume. Engineers at the plant say they hope their testing methods will become an industry standard. A Chinese member of Dürkopp Adler’s board, Zheng Ying, said, that by becoming the majority stockholder, the Chinese company gained Dürkopp Adler’s brand advantage and development capabilities. With the reputable Dürkopp Adler name and German technology the Chinese group could enter a new market segment as well.
Dürkopp Adler’s future target customers are located far beyond western markets. The company’s designers say they are using more than a decade’s worth of experience in operating according to environmental guidelines so as to make their products attractive to customers in emerging economies. “We did not have to reinvent environmental protection,” Wadle says. SGSB’s familiarity with the Asian market is proving vital in shaping its subsidiary’s strategy. The German company says that, as the costs of resources rise, concerns about conservation and consumption are becoming increasingly important in Asia. “In China, energy efficiency is of the utmost importance,” Wadle says. “More and more enterprises make their purchasing decisions based on this factor.” Moreover, as one manager at Dürkopp Adler explains, “Our customers on the Asian market demand sewing machines characterized by trouble-free functioning as well as low energy consumption. So we’ve developed our Class 281 machine, which meets all customer requirements at an attractive price.“
Photo: Dürkopp Adler
Dürkopp Adler’s trade fair exhibition schedule shows that Asia is the target market for the company that is financially backed by SGSB in Shanghai. Adler machines have been featured at the Garment Technology Expo in New Delhi, India. Other expositions where they are scheduled to be shown in 2008 include: the India International Leather Fair in Chennai, India; the International Textile and Clothing Industry Fair in Dongguan, China; and JIAM, the Japan International Apparel Machinery Trade Show, in Singapore.
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Industry Report: Cleantech
Fighting Half a Trillion Plastic Bags Environmental and energy concerns have been fuelling the search for new materials
Searching for new alternatives
Half a trillion. That’s the total global output of plastic bags every year. Not only do they cause extensive environmental damage, but steep rises in the price of oil and polymers are making them more and more expensive to produce. So, it’s no wonder that companies and governments are desperately searching for new alternatives. One of them is bioplastics. Of course, bioplastics aren’t just about plastic bags. Catering products, gardening tools, and medical and automotive applications offer the largest potential markets apart from packaging. Bioplastics can be identified by the “compostability logo,” the European standard that certifies that the material is biodegradable. The global demand for biodegradable plastics is estimated at between 110,000 and 120,000 metric tons per year. Industry analysts expect the market to grow by as much as 30 percent over the next two years.
Although only 0.1 percent of plastic packaging in Germany is currently bio-based, the annual substitution potential for bioplastics is estimated at about 500,000 tons, and the sector is currently enjoying double-digit growth. One successful niche area is water-vapor-permeable bioplastic trays and films for packaging organic fruits and vegetables. The organic food market has grown 125 percent since 2000, and its total volume reached €4.5 billion in 2006. Research shows that over three-quarters of consumers will pay more for organic food, and, by implication, for sustainable packaging, too. Several major supermarket chains – including Aldi, Rewe, and Plus – have been testing biopackaging in some of their stores. Germany is Europe’s largest plastics market for both thermoplastics and overall packaging production. In particular, the country’s booming organic foods sector and growing consumer demand for environment-friendly packaging have been key growth factors. These factors, combined with the fact that there are relatively few established producers of bioplastics, give new entrants to the market significant first-mover advantages. Moreover, there is a wide range of regulatory, financial, and political support from both Berlin and Brussels. One particularly important step was the German government’s decision to exempt bioplastics producers from having to collect used plastic packages for reuse until 2012, which can generate annual savings over fossil-based plastics of as much as €1,500 a ton. Drink containers with a minimum of 75 percent bioplastic content are also exempt from the system until 2010, meaning that consumers will not have to pay the standard, mandatory deposit until then.
A concentration of skills and knowledge gives Germany the cutting edge Two other significant advantages Germany enjoys are a well-trained workforce and an extensive research landscape. Germany combines the advantages of a highly industrialized country with competitive production locations. There are more than 50 chairs in renewable energies at universities in Germany in addition to leading institutes for polymer design, production processes, and energy crops. Public funding is also available for R&D and to encourage the formation of industry-specific regional clusters. One example of this approach known as “BIO-PRO Baden-Württemberg” involves 54 companies and 34 research institutes. The German Association for Plastics Packaging and Films (Industrievereinigung Kunststoffverpackungen, or IK) believes that biodegradable plastics will still be used alongside traditional, fossilbased plastics for the foreseeable future. Moreover, the European Technology Platform recently designated bio-based materials as a “lead market.” For more information about this industry please contact Mr. Raphaël Winkler, winkler@invest-in-germany.com
European Thermoplastic Consumption 2006 (total: 40 million t) Rest of Eastern Europe Poland 7% Germany 5% 21% Rest of Europe 7% Skandinavia 5% Spain 9%
Italy 17%
Benelux 9% Great Britain 11%
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France 11%
Photo: BASF
A huge potential for organic growth
Industry Report: Cleantech
Our events Meet us at the Clean Moves Event in Hanover, featuring the entire spectrum of marketproven, energy-efficient mobility solutions! Come to our workshop on April 23rd from
Perpetuum Mobilae
10 a.m. till 1:30 p.m. in Hall 27 and learn more about investment opportunities in clean mobility in Germany. (see also program insert in this magazine)
Biofuels could be the key to clean, sustainable mobility Soaring oil prices and widespread concern about the environmental effects of fossil fuels have combined with the inexorable growth in road traffic around the world to make the search for clean, sustainable energy increasingly urgent. Transportation as a whole is responsible for 30 percent of energy consumption in the European Union. Given the automotive sector’s near total dependence on oil – much of it from politically unstable regions – it is no surprise that the EU and its member states are now paying a great deal of attention to biofuels. Biofuels (also called agrofuels) come as solids, liquids, or gases and can – at least in theory – be produced from any biological carbon source, although by far the most common source is photosynthetic plant matter. So-called “first-generation” biofuels are made from sugar, starch, vegetable oil, or animal fats using conventional technology. They include: biodiesel, which is usually blended with conventional diesel; alcohols such as ethanol, which is the most common biofuel worldwide and can be used instead of gasoline; and biogas or biomethane from biodegradable energy crops and waste matter.
Photo: FNR e. V.
“Second-generation” biofuels are derived from non-food crops, including waste biomass, wheat stalks, corn, wood, and special energy or biomass crops. These include biohydrogen, biomethanol, mixed alcohols, and Biomass-to-liquid (BtL). Biofuels are already a reality in Germany. Over 7 percent (by volume) of all fuel distributed in Germany in 2007 was biofuel. Most of that was biodiesel, although bioethanol accounted for about a sixth, and production capacity for bioethanol is scheduled to double by 2010. The company Choren is building the first biomassto-liquid production plant with an annual capacity of 15,000 t in Freiberg. Widespread use of biogas and a growing number of feed-in projects for biogas with natural gas quality are laying the foundations for the future use of biomethane in natural gas cars.
Germany offers optimal start-up conditions for biofuels The German government is aiming for a 17 percent market share (by energy content) in biofuels by 2020, or 7 percent above the EU target. This was given a boost by last year’s Biofuels Quota Act, which increased quotas for blending bio-
The majority of R&D institutions are located in the cluster of North Rhine-Westphalia, and there are also smaller clusters in Hamburg, Berlin, Hesse, Baden-Württemberg, and Bavaria. Together with a wide range of public-private partnerships, they provide a strong, innovative thrust in this relatively young – but rapidly expanding – field.
Over 7 percent of all fuel distributed in Germany in 2007 was biofuel
diesel and bioethanol into diesel and gasoline, and the Energy Tax Act, which set up tax exemptions for second-generation biofuels, pure biodiesel and E85, and instituted a range of financial penalties for non-compliance. By the end of 2014, at least 5 million tons of all distributed fuels must be biofuels. With more than 65 institutions – most of them university-based – carrying out research into fuel technology, Germany is Europe’s leading R&D location, spending over €40 million on fuel cell research in 2006, the third-highest amount worldwide.
Germany’s dynamic biofuels market offers huge potential investment opportunities. The relatively small number of established players offers significant first-mover advantages, and generous incentives are available. The country’s sophisticated transportation and logistical infrastructures also provide easy access to the large domestic and European markets as well as the extensive network of chemical parks, refineries, and sites with rail, road, and water access. In short, biofuels are already making their mark in Germany and, as the need for clean and sustainable energy sources grows in tandem with commercial transportation and private mobility, offer unparalleled scope for expansion. For more information about this industry, please contact Ms. Karolin Blattmann, blattmann@invest-in-germany.com
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Industry Report - Biotechnology
Roaring Red Biotech Thus, it should come as no surprise that – proportionally speaking – the country produces more Ph.D.s in the natural sciences than either the US or Japan, or that nearly a third of all worldwide biotech patent applications filed at the European Patent Office between 2000 and 2003 came from companies in Germany.
In all, 2006 saw 48 German biotech companies sign nearly 90 joint agreements, a 66 percent increase over the previous year. Many of these agreements involve marketing and operational aspects as well as R&D, and nearly two-thirds involve licensing agreements in one form or another. Beacon arrangements such as the multi-year cooperation agreements between Morphosys, Novartis, Silence Therapeutics, and Astra Zeneca demonstrate that the high quality of technologies and products developed by German biotech companies is recognized internationally.
As the German biotech sector grows increasingly more adept at channeling laboratory research toward the marketplace, sales of biopharmaceuticals in Germany have boomed. In 2006, sales totaled €3.13 billion, accounting for 12 percent of the total German pharmaceuticals market. Over 30 percent of all drugs with new active ingredients approved in Germany in that same period came from the biotech sector, often as the result of excellent international research cooperation within the industry.
The presence of 4SC, MediGene, Mologen, Geneart, MorphoSys, and Jerini among Germany’s strongest-performing biotech companies in 2006 highlights one of the major strengths of Germany’s biotechnology sector: the close ties between companies, universities, and research institutes. All of the companies mentioned above were originally spin-offs from research institutions. Indeed, arrangements of this nature are characteristic of Germany’s diverse biotech sector and play an important role in fostering innovation and specialized R&D across the industry as a whole.
Roughly 80 percent of German biotech companies work in the medical sector. The majority of them focus on proteins, genetics, or cell and tissue cultures, and nearly a third are actively involved in bioprocess engineering. Companies active in the sector range from small startups to huge multinational corporations, such as Bayer Schering Pharma, Boehringer Ingelheim, and Merck Serono. The big companies’ financial clout means that they play a key role in research and development as well as in manufacturing and marketing. More and more small companies are entering into commercial partnerships to develop technologies and products.
Over 300 universities and almost as many academic research organizations focusing on medical and life sciences – including the German Research Foundation (DFG) and the four main independent institutes: the Helmholtz Foundation, the Fraunhofer Society, the Leibniz Association, and the Max Planck Society – play a vital role in Germany’s scientific landscape in addition to carrying out cuttingedge research in other fields.
Distribution of biotech companies in Germany
Source: Biotechnology Company Survey 2006 by biotechnologie.de Geographical distribution of dedicated biotechnology companies. The size of the symbols is proportional to the number of companies located in the region. Clusters are shown cumulatively.
For more information about this industry, please contact Dr. Nicola Henneberg, henneberg@invest-in-germany.com, or Dr. Tilo Mandry, mandry@invest-in-germany.com
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Photo: Morphosys
Germany is the world’s second largest market for biopharmaceuticals after the United States, and there are more companies operating in the biotech and biomedical sectors here than in any other country in Europe. In 2006, over 500 biotechnology companies and 350 biopharmaceutical companies generated combined sales of more than €4 billion in Germany, an increase of 12 percent over 2005. From applied genomics to molecular medicine and biomedical nanotechnology, new products are flooding into the market.
Germany’s biotech landscape also has some clear regional characteristics, with the largest biotech clusters being located around Munich, Berlin, and Heidelberg. Almost 30 so-called “bioregions,” each with their own research capabilities, act as platforms for industrial development and public private interactions. Cooperating closely in a network that leverages their individual strengths, these “bioregions” also help investors solicit capital and gain access to a range of federal and state incentive programs in addition to those offered by the European Union. Biotech funding from the private sector is also growing in scale and importance (see our next article).
State and Venture Capital Financing for German Biotech
Photo: www.tuinkrant.com
Biotechnology is a very young business sector, and so are most of the companies in it. To begin a startup is expensive, and it takes time to turn an idea into a product. For that reason, readily available long-term financing – either from the public or private sectors – is vitally important. This is why the German government supports young firms to cover the costs of suitable premises, high-tech equipment, highly qualified personnel, and long development and trial phases for products. This makes ongoing operations possible despite low initial returns for sales. Grants from Germany’s Federal Ministry for Education and Research (BMBF) and other public sources have accounted for about 10 percent of total biotech financing in Germany until recently, and more than a third of the companies in the sector have taken advantage of these funding sources. With Berlin’s avowed aim to turn Germany into “the most research-friendly nation in the world by 2020,” there will most likely be a dramatic increase in such funding. For example, the BMBF alone will have allotted €430 million to various biotech-related initiatives and an additional €800 million to health research in the period between 2006 and 2009. 13
Additionally, private investment in the German biotech industry has also seen significant growth over the last few years. Many companies have been able to secure venture capital financing from private sources, which provided approximately €365 million in biotech financing in 2006. In fact, Germany currently attracts 40 percent of all biotech venture capital in Europe. A number of big names in German business have now entered the fray. SAP cofounder Dietmar Hopp has invested more than €250 million in biotechnology companies, including €40 million in Immatics and €20 million in Cytonet. Roland Oetker, another private investor, holds a 13 percent stake in Evotec and another five percent in GPC. A third major player, Santo Holding – set up by Thomas and Andreas Strüngmann, who are also the founders of Hexal (now part of Novartis) – has recently closed a €15.6 million deal with MediGene and invested nearly €17 million in 4SC, as well as putting a total of €37.2 million into GANYMED Pharmaceuticals.
While the larger international companies might be able to afford to finance their projects by themselves, smaller biotechnology companies still need solid and flexible financing if they are to succeed in getting their innovative ideas out of the laboratory and into the market place, let alone move into the black. This is why the healthy mix of government grants and private capital remain vitally important for their existence and, on the other hand, why an investment into a promising German biotech company or project often turns out to be a lucrative deal for the investor. State and Venture Capital Financing for German Biotech in Millions/Euro 600 500 400 300 200 100 0
56 126 101 258 venture capital IPOs capital increase via the stock exchange public subsidies
Source: biotechnologie.de, transkript; 2006
Chemical Industry Powers Innovation The German chemical industry is the most important supplier of innovative materials to industry. Foreign companies manufacturing and researching in Germany are playing an increasingly larger role as suppliers of innovative materials.
The chemical sector is also the driving force behind many new products in other sectors. About 10 percent of the overall industry demand for material and intermediary products emanates from the chemical sector. The strong position in research can mostly be attributed to the support of the large, tradition-rich companies, such as BASF, which was established in 1865 and is the biggest chemical company in the world today. The pharmaceutical and chemical company Bayer was established in 1863. The blossoming of the chemical industry with the production of coloring agents, fertilizer, and plant protective agents occurred hand in hand with the growth in knowledge and the rise in the number of graduates working in the chemical industry. To date, no fewer than 29 German researchers have received the Nobel Prize for chemistry. The most recent one was awarded last year to chemical engineer Gerhard Ertl for his work on surface chemicals. 14
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Moreover, there has traditionally been a close relationship between companies and universities. “The strength in research is the main reason why Germany is the leading location in Europe today, both for basic chemistry with raw materials and for special chemistry,” Rammer says. This position was strengthened in the recent years with an enormous increase in efficiency. Between 1991 and 2006, the turnover per employee rose from €148,700 to €372,000 per year. But this doubling came at a price, as the number of employees dropped in the same period from 716,700 to 436,000. The big German chemical companies compete on the international stage and continue to make investments abroad. On the other hand, many foreign chemical companies have discovered Germany as a place to locate company assets for both production and research. In fact, research has seen considerable growth and, in 2004, chemical companies with majority foreign ownership were responsible for 15 percent of all chemistry research expenditure in Germany. (1997: 6 percent). The companies behind this phenomenal growth are Dow Chemical, 3M, Akzo Nobel, and Celanese, to name just a few. Dow made the single biggest investment in the “Chemical Triangle” of Halle-LeipzigBitterfeld since German reunification. “Today, the plants at the center of Germany are among the safest, most modern, and most efficient in the entire Dow network,” says Markus Wildi, president of Dow Europe.
“Dow’s track record of success in Germany can be attributed to a number of factors. The highly qualified, motivated, and innovative German workforce is our most important asset,” says Wildi. With a turnover of more than €4 billion, Germany is Dow’s second most important production location after the USA. Another successful settlement is the young chemical company Dyneon, established in 1996 in Burgkirchen (Bavaria). The company, which specializes in fluorpolymers, grew out of a cooperation between the German company Hoechst and the American company 3M. Since 1999, Dyneon has been fully owned by 3M. “It was our German parent that gave us the technological strength needed to complement our American marketing skills,” says Dyneon managing director Michael Peters. Dyneon’s firm intention has always been to use Germany as a “base for further growth of the business.” Regular surveys of investors in the chemicals industry paint a clear picture of the strengths of German locations, namely the infrastructure and services offered in the chemical parks, the proximity to markets, well-educated experts, and the research environment. Conditions for production are important to companies, but to a growing extent the conditions for innovation are, too, as the most successful global chemical companies are those with the most innovative products. According to ZEW, almost half of all German chemical companies send new and innovative products abroad.
Photo: Ticona Site Kelsterbach
The chemical industry is playing a leading role in German innovation. It is by far the most important supplier of new materials to industry. Nine percent of all R&D expenditure in Germany is in the chemical industry and, in 2006 alone, this figure reached €4.5 billion. Four out of five chemical companies managed to bring at least one new product to the market within three years. “The chemical industry has the second-highest ratio of innovative companies after the pharmaceutical sector,” says Christian Rammer from the Center for European Economic Research (ZEW).
Industry Report: Chemical Engineering
Dow Wolff Cellulosics Focuses on Research in Germany “We’re combining the best of two worlds.” That was the declared goal of the Dow Chemical Company when it took over Wolff Walsrode AG, a subsidiary of the pharmaceutical company Bayer, a few months ago. Along with the Dow business unit Water Soluble Polymers, Dow Wolff Cellulosics (DWC) was created to be the world’s leading company for cellulose derivate. Unlike previous acquisitions, care was taken with this merger to link and develop the strengths in technology and to market the know-how of all participating parties. The Walsrode Industrial Park in Bomlitz in the state of Lower Saxony was chosen to be the location for the company’s head office. But that’s not all. Dow also decided to concentrate its research and development activities in the Walsrode Industrial Park. As far as DWC Global Manager Martin Sonntag is concerned, this was a good decision, as Bomlitz is not only the single biggest settlement of the new company, it
also has an excellent reputation for its innovative strength. For Dow, the skilled employees and close cooperation between production, marketing, and research were the crucial reasons why it chose to locate its research activities in Bomlitz (with 120 employees). Cellulose is an important renewable raw material. “From cellulose we extract high-quality additives with a sophisticated production process,” says Sonntag. The additives are invisible, but even in small quantities, they play a major role in many products found in everyday life. For instance, in building materials such as ready-mixed mortar, ceramics, and tile adhesives, cellulose products operate like small ball bearings, ensuring light, smooth processing. In this field, constant innovation is called for. For example, Dow Wolff Cellulosics supplied special additives for a tile adhesive with an especially high sticking abil-
ity that were used to tile the bathrooms and cabins on the luxury ocean liner Queen Mary 2. The food production and pharmaceutical industries are also fast-growing areas for application. In this case, pill production is the best known example. Methylcellulose in tablets ensures that there is a delay before the active agents are released. “It is the goal of our research and development services to develop new products to the point where they are ready to go to market,” Sonntag says. Toward that goal, the company has many cooperation partners, including the universities of Braunschweig and Jena and the Ecole des Mines in Paris. With its 2,200 employees worldwide and an annual turnover of a several billion dollars, Dow Wolff Cellulosics is one of the biggest companies in the sector worldwide. The company is confident that innovation will keep it on the growth path in the coming years.
The New Alchemy: Turning Corn into Plastic
Photo: Huhtamatik (european-bioplastics.org)
Many chemical companies in Germany work in close cooperation with research institutes. At the Fraunhofer Institute in Potsdam work is in progress to create the synthetic materials of tomorrow. The shortage of petroleum and natural gasoline and the associated steep rise in market prices for fossil raw materials in recent years have led to new concepts in plastics production. “One alternative to petroleum-based plastics is to produce synthetic materials from renewable resources,” says Dr. Mathias Hahn who is researching ways to manufacture plastic bottles from corn at the Fraunhofer Institute for Applied Polymer Research (IAP) in Potsdam-Golm.
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One IAP research project is to develop plastics based on polylactic acid (PLA). In a first step, starch is extracted from corn and then “broken open” by enzymes. The lactic acid formed during this process is then transformed into polyester which is entirely biodegradable. Products such as biodegradable garbage bags take advantage of this behaviour and are already commercially available. The biodegradability is a characteristic also of particular interest to the food packaging industry. “Foodstuff can be packaged in bio-based plastics foils,” says Hahn. From a technical point of view,
plastic bottles can already be manufactured from renewable resources such as PLA. However, before they can be established on the market considerable development work remains to be done as production at present is much more expensive than for conventional plastics. Nonetheless, experts assume that 5 to 10 percent of the synthetic plastics market will be replaced by bioplastics within the next 10 years. In order to achieve this goal, the Fraunhofer researchers equip bioplastics with new attributes and properties in cooperation with chemical companies.
Industry Report: Tourism
Destination Germany Germany’s tourism industry buzzing
Fortunately for the GNTB, Germany already enjoys a world-class travel and tourism environment. According to the recently published World Economic Forum’s second annual “Travel & Tourism Competitiveness Report 2008”, Germany has the third most conducive environment for travel and tourism industry in the world (behind Switzerland and Austria respectively). This is in no small part due to Germany's excellent ground and rail transport infrastructure and a policy culture which actively promotes and safeguards sustainable environmental regulations and high safety standards. Moreover, Germany scores better than both Switzerland and Austria for policy rules and regulation affecting the travel and tourism industry. No surprise then that Germany already enjoys an ever-increasing number of foreign visitors streaming into the country. In 2006 alone, US guests accounted for 4.7 million overnight stays in German ho16
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tels and lodgings. In the past US tourists used to visit "must-see" cities like London, Paris or Rome. However, in recent years, Berlin has moved up into third place. The number of visitors to the German capital has virtually exploded and the trend shows no sign of abating.
elsewhere in Europe to Germany: with almost 10 million hotel overnight stays making a remarkable 16 percent increase on 2005 results. This has helped make Germany the European market leader in the MICE (“Meetings, Incentives, Conferences and Events”) subsector.
It might come as no surprise to learn that the great majority of visitors are European; with statistics showing that 90 percent of the continent’s inhabitants remain
All the signs are that this positive development in the German tourist industry will continue, and that investment in this sector will continue to reap handsome dividends. Forecasts predict hotel and motel revenues reaching $38.9 billion by 2011 (a 16% increase on 2006), with hotel construction projects (228 projects to be completed by 2013) reflecting the growth in both the budget and high-end segments.
within Europe when travelling abroad. Germany has emerged as the third most popular destination for all travelers behind the more traditional tourist spots of Spain and France. As a cultural destination, Germany appears to have moved up into second place in Europe – directly behind France! Germany also occupies another very important third place in the tourism ranking scales. According to the World Economic Forum’s “Travel & Tourism Competitiveness Index” Germany occupies third position – behind Switzerland and Austria respectively – for its “regulatory framework, business environment, and infrastructure and human, cultural, and natural resources.” In 2006 – the most recent year for which statistics are available – Germany set a new record, with foreign tourists spending nearly 53 million nights in hotels and other lodgings. Particularly impressive was the growth in business trips from
A further indicator is the steadily increasing number of visitors from Eastern Europe and elsewhere who are spending a rising proportion of their disposable income on travel to take advantage of the variety of offerings available in the budget airline market. As a result, many visitors plough the costs savings made by flying budget into better and more expensive hotel accommodation and the local economy. It also pays to invest in the “health tourism” sector. Already today there are a large and wide variety of treatments being offered at health, wellness and beauty treatment hotels across the country as well as the more than 300 health resorts and spas dotted across Germany. As a growing number of guests increasingly require different and diverse services – from traditional massage to Qigong (Chinese energy-movement therapy) – the considerable growth potential in this blossoming sector remains relatively untapped. Here again, domestic tourism plays a major role with the demand for health treatment holidays growing as the German population also grows older. For more information about this industry. please contact Ms. Asha-Maria Sharma, sharma@invest-in-germany.com
Photos: Berlin Partner/FTB-Webefotografie; Presseamt Bundesstadt Bonn
The German National Tourist Board (GNTB) has a busy year ahead of it. A major part of the board's 2008 activities will be spent promoting Germany in the US market. This year has particular historical relevance, as the first German immigrants arrived in the New World in 1608 – exactly 400 years ago. With some 42 million Americans (or 15 percent of the current population) having German roots, the GNTB hopes to entice many Americans to visit the homeland of their ancestral fathers.
Our Events
Turning the Silver Society into Gold “Investment Opportunities in an Aging Society” was the title of Invest in Germany’s Third Japan-Germany Industry Forum held in Japan at the end of last year. Japan and Germany share a common problem. Their societies are aging. However, what might seem like a serious challenge at first sight also provides a golden opportunity for innovative ideas in a number of industries. With that in mind, INVEST IN GERMANY’s Third Japan-Germany Industry Forum in Japan focused on two industries which will have increasing importance to an aging society: robotics and food. A high divorce rate (51.9 percent in Germany in 2005), growing urbanization (approaching 90 percent of Germans live in cities), and an increase in the percentage of single households (38 percent in Germany in 2007) suggest that more and more people will depend on external help in their everyday lives. As a result, older members of the community will come to increasingly rely on robots around the home. So-called “functional,” “health” and “wellness” foods can help slow down the aging process. In Germany today, more than 20 percent of the population is over 60 years of age. Statistics show that this will reach 33 percent by 2050, creating a market of one third of the population potentially interested in new labor-saving machines and services which can support and improve their quality of life. The INVEST IN GERMANY event served as a forum for experts and business people from both countries to exchange ideas and explore possible cooperation, development and investment opportunities. More than 300 participants attended the events held in Tokyo and Osaka. The keynote address was provided by House of Representatives member, former Japanese health and welfare minister and great friend to Germany, Jiro Kawasaki. During his speech, Mr. Kawasaki emphasized the timely and significant nature of the forum event subject matter. A number of leading German and Japanese industry managers spoke of the new German tax regulations and a highly devel17
oped infrastructure which now extends to the eastern German federal states. Japanese guests were particularly keen to hear about the improved tax situation, the new law for limited companies, and the competitive and hard-working German workforce. In addition, they also had the chance to learn about the local offers from INVEST IN GERMANY’s federal state partner event organizers. The German Embassy and Consulates provided further support in the guise of their successful networking program. An executive from Japan’s leading producer of robots for industrial applications, Yaskawa Electric, presented the company’s newest developments and partnership with Takara Tommy, Japan’s leading toy manufacturer at the “Robotics Workshop." He reported that their machines are able to realize three generation dialogues, and are, as such, more than just toys. Fraunhofer IPA, one of Germany’s leading robotic systems research centers, presented its new developments in the field of robotics and welcomed the possibility of close cooperation with Japanese partners. At the health foods workshop, INVEST IN GERMANY highlighted the significant growth in functional and health foods sales across Germany as a result of increased consumer health and wellbeing awareness. Functional food products are widely considered to be the most important and dynamic segment of the European food market, as the functional foods concept is
a relatively new market development with great potential for further development. The current major industry segments are functional dairy products and non-alcoholic beverages, but the remaining food categories also provide potential to investors. Germany’s aging population continues to display a rising demand for products designed to boost their physical and mental energy reserves. This thriving market holds untold investment and business opportunities for foreign companies with experience in the functional food sector. Invest in Germany also noted that, despite the fact that the German food market is highly competitive, German consumers are very receptive to new and different products. This was particularly encouraging for those Japanese companies whose specialty products are not yet known in the German market. Individual examples of successful inward German investment were presented by Yakult (well-known Japanese functional food brand leader) and Suntory (one of the world’s largest beverage companies). A speaker from the IGV Institute for Cereal Processing also pointed to the growing import of functional foods in the German market. INVEST IN GERMANY’s next Japan-Ger-
many Industry Forum will take place in Japan later this year with the focus this time being “cleantech."
World Leaders in Small Business
According to a study of companies with sales of up to €50 million conducted by Bernd Venohr, a professor of strategic management at the Berlin School of Economics’ Institute of Management, there are 1,300 German firms leading their respective sectors. "On top of that, there are surely another 1,000 micro-world market leaders in even smaller niches” he said in an interview with Germany’s WirtschaftsWoche (Economy Week) magazine. Here we take a look at just a few of Germany’s small business world leaders. Glasbau Hahn (Glass Construction Hahn) Visit the Louvre in Paris or the Metropolitan Museum of Art in New York and one thing remains the same – the glass cabinets you’re looking at were most likely provided by Frankfurt’s Glasbau Hahn. Glasbau Hahn also enjoyed the rare privilege of being selected by the U.S. National Park Service to construct a glass cabinet for President Abraham Lincoln’s Bible. Founded in 1836 with a staff of 125, the company is the world leader in its market as well as manufacturing other glass products including the bulletproof glass used in banks. Dresdener Sportgeräte GmbH (Dresdener Sport Equipment) More than 40 nations have bobsled teams competing for Olympic gold, but only one company supplies most of the world’s two and four-man sleds. Germany’s Dresdener Sportgeräte GmbH.
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Around 36 of the world’s 42 teams buy the “made in Germany” sleds, which can often cost as much as a midsize car. Once part of East Germany’s VEB Flugzeugwerft (VEB Aircraft Works) which supplied East German teams with closely guarded state-of-the-art sled, the company fell upon hard times in the early 1990s. The company now finds itself firmly back on track thanks to the efforts of Karola Brauer and business partner Stephan Weber who acquired the company in its lean years and helped steer the business to its current success. Groz-Beckert The Swabian Alb in the southwestern state of Baden-Württemberg was once a hotbed for the textile industry in Germany before the sector fell into decline during the 1970s. However, some companies were able to adapt and even flourish. GrozBeckert KG is one such survivor. It has been making precision needles and applications for machinery, clothing, leather, shoe and carpet companies across the whole world. Founded in 1852, Groz-Beckert has 7,000 employees in 150 countries and annual sales of €480 million – with only 10 percent of these revenues coming from the domestic market. Klepper Faltbootwerft (Klepper Folding Canoe Works) For more than 100 years, canoeists around the world have been using the “Faltboot” or folding canoe made in Germany. In 1907, an inventor by the name of Alfred Heurich turned over the business to a master tailor from Rosenheim named Johannes Klepper. The boat’s wooden frame and canvas shell could be taken apart and stowed away in a backpack. A century later, Klepper’s company dominates the world with 70 percent market share.
Adco Umweltdienste (Adco Environmental Services) On first glance, it might not seem like the most glamorous of industries. But Adco Umweltdienste has proven there are market share and profits to be won wherever people come together. That’s because Adco is the world leader in portable toilets thanks to its Dixi and Toi Toi brands and operations in 31 countries. It has 56 subsidiaries in places as far flung as the United States and Hong Kong, Malaysia and Taiwan with a global workforce of 1,700. The company can look to annual revenues of around €160 million from its 160,000 portable toilets ranging from its basic Dixi Klo model right through to luxury container models with marbled walls, tiled floors and full-length mirrors used for VIP events. Pöschl Tabak (Pöschl Tobacco) 100 years ago there were 20 companies in the German town of Landshut producing “Schnupftabak” (snuff tobacco) which is popular in parts of Germany and ingested with a powerful snort into the nose. Of these companies, only one survived – the Pöschl Tabak Group. The 105 year old company only relies on snuff tobacco for 12 percent of its annual sales revenue of €230 million, but it still produces 240 tons of snuff tobacco a year – around one third of which is exported across the globe to 80 countries.
Photos: Glasbau Hahn; Klepper Faltboot AG; Dresdener Sportgeräte GmbH; Pöschl Tabak Group
Germany might be more famously known around the world for its car manufacturers, state-of-the-art technology, banking and insurance conglomerates and chemical giants, but it’s also home to a number of companies leading the world in small business sectors.
German Business
The Stunning Rise of a Healthy Drink A German brewer in rural Bavaria a crowded market, a mature This is the story of how he not family-owned business
had serious problems with product, and its poor image. only rescued his but also made it rich.
Photos: BIONADE GmbH
He launched an international trend with a hip, new fizzy drink called “Bionade” (pronounced “Bee-oh-NAH-da,” in German). Bionade CEO Peter Kowalsky, 39, and his stepfather Dieter Leipold, 70, have captured the taste buds of Germany, Austria, and Switzerland with an organic soft drink brewed the same way as beer – fermented with only natural ingredients and in accordance with Germany’s strict Reinheitsgebot (or “beer purity law”) dating from 1516. The drink – created after a lot of late-night tinkering – went on sale in the Benelux countries, Scandinavia, Italy, Spain, Portugal, and Ireland in the last two years, and there are plans for further international expansion to the United States, Britain, and Japan in 2008.
“The big question when we started out was: Is this a product that anyone will want to drink?” says Kowalsky, CEO of the Peter Brauerei, the brewery founded by his grandfather in the small northern Bavarian town of Ostheim in der Rhoen (population 3,370). “We just didn’t know. We only knew that we had to come up with something different and something better than what was already on the market,” he recently told Der Spiegel in an interview. “Our aim was to come up with a healthy, quality drink with better ingredients,” he added. "Beer has been falling out of fashion. And it’s the breweries’ own fault for squandering the chance to keep beer socially acceptable.”
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and colors. And, with the help of a new marketing campaign started in 1999, sales have rapidly climbed from 2 million bottles in 2002 to about 250 million in 2007. The rest is history. Sold in 0.33-liter bottles and made from malt, water, sugar, and fruit essences, Bionade comes in four fl avors: lychee, elderberry, orangeginger, and herb. After shunning advertising for a long time, Bionade took the plunge in 2007 with a modest, initial campaign on billboards and the radio in 15 German cities. It picked a slogan that underscored its motto of being something different: “Bionade. Das offizielle Getränk einer besseren Welt” (“Bionade. The official beverage of a better world”).
After about eight years of experimenting with the alcohol-free brew and testing different recipes of the low-sugar, lowcalorie carbonated beverage on family and friends, Bionade finally went into production at the failing, 28-employee brewery in 1995. (“Bio” is the German word for “organic,” and “Limonade” is a generic term for “soft drink.”) The idea was to make a drink with an intoxicating taste that was not intoxicating. With no advertising at first and relying only on word of mouth, Bionade managed to quickly strike a chord with health-conscious consumers. One crucial breakthrough for Bionade came in the late 1990s, when a bar in Hamburg – Germany’s second-largest city and home to many of the country’s largest publishing companies – started offering Bionade on its list of drinks. Some journalists wrote about the new drink and its unusual selection of fl avors
Kowalsky says Bionade’s expansion will continue in 2008. “The next countries are places like Canada and the United States,” says the young manager, who studied brew engineering in Weihenstephan. He is not worried about the name “Bionade” being pronounced differently in Englishspeaking countries or the possibility that the meaning of the drink (“organic soft drink”) gets lost in translation. “Bionade represents ‘Made in Germany,’” Kowalsky says proudly. “Why shouldn’t a product like that be able to keep its German name around the world?”
German Business
Germany Celebrates Its Best Entrepreneurs
and the prime minister of Hessen
What do Sixt, Q-Cells, Alnatura and Interhyp all have in common? It goes without saying that they are all major German business household names. But they also share something else in common. They have all been prizewinners at the annual “Entrepeneur of the Year” awards first introduced 11 years ago. Each year the event crowns winners in five different categories. Since the competition’s inception there have been more than 100 winners, with many previous winners going on to make a big splash in the German market.
As always, having a good idea was important. But, without staying power, the ideas would have stayed just that – ideas. The 2007 winners had to persist with their ideas in the face of skepticism, vested interests, competition, and the “newness factor.” All fought their way through. For instance, the founders of 360 Treasury Systems and Vanguard had to convince hospitals and financial institutions, respectively, that there were different ways of doing things. In both cases it took a while for the messages to get through, but in the end they did.
The Winners of the Competition 2007 Category Name, Company
The “Entrepreneur of the Year” competition is administered by the accounting firm Ernst & Young and supported by a number of companies and publications, including manager magazin. In a multistep process, Ernst & Young and a jury gradually draw the net closer. In the end, the five winners are selected from a list of 98 semi-finalists. This list of semi-finalists also makes for interesting reading. When excellent candidates such as Basic (a bio supermarket chain), Air Berlin (Germany’s second largest airline company after Lufthansa), Pixelpark (a listed IT and communications company), and Tipp24 (an innovative online gambling site) are only “second best,” it’s clear just how tough competitions of this kind are in Germany.
Profile of Company
Industry
Hans-Martin Rüter (41), founder and chairman of the board of Conergy AG
Conergy is a prominent manufacturer in the sun, wind, and bio-energy sector. With 2,600 employees, the company had sales of about €1.2 billion in 2006.
Trade
Wolfgang Gutberlet (63), head of Tegut Gutberlet
Tegut is a supermarket chain with a focus on bio products and 2006 sales of €1.1 billion.
Services
Robert Schrödel (49), founder and chairman of the board of Vanguard AG
Vanguard is a recycler of medical products and service provider for clinics and hospitals with 2006 sales of €100 million.
IT
Tim Schumacher (30), Ulrich Preisner (29), Sedo is a world leader in the resale of registered Internet Marius Würzner (31), and Ulrich Essmann domains with sales of €41 million in 2006. (37), co-managing directors of Sedo GmbH
Startup
Carlo Kölzer (35), founder and chairman of the board of 360 Treasury Systems AG
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The listed company 360 Treasury Systems operates an online forex trading platform for companies and had 2006 sales of €3.2 million.
Photo: Enterpreneur des Jahres e.V.
The winners with the anchorwoman of the event
The main criteria listed by the jury this year in their search for the top five entrepreneurs (out of the 350 who entered) were: the future potential of the company; its ability to innovate; its entrepreneurial input; and its employee orientation. Many attributes and skills are needed to be a successful entrepreneur. This year’s winners impressed with their staying power. (See the list of winners in our chart.)
The Tides of Offshoring Turn Back to Germany Foreign and domestic companies alike are (re-)discovering why it pays to base businesses in Germany. Globalization has led many companies to offshore production. To stay competitive, several German companies have moved manufacturing facilities to locations offering lower labor costs. But wages aren’t the only factor worth considering. In many industries, wages make up only a small percentage of overall costs. As more companies learn the true costs, there has been a steep decline in offshoring based solely on labor costs. In fact, several companies – both foreign and German – have realized that the real qualities they need are in Germany. As a result, more foreign companies are coming to Germany and the tide of offshoring by German companies has turned, leading many of them to bring their businesses back.
Photo: BSW-Solar/Langrock
Germany’s Unique Investment Landscape Many foreign companies – particularly those in knowledge-intensive and hightech industries – have based facilities in Germany in order to exploit advantages unique to the investment landscape: expertise in R&D; innovation clusters with concentrated expertise; and skilled specialists at numerous research centers and universities. They also know that German employees lead Europe in skill level, productivity, and company loyalty, and that “Made in Germany” commands respect worldwide. 21
Two Stars in the Constellation of Expertise Germany is especially attractive to the renewable energies and logistics sectors. With annual turnover of €22.9 billion, over €6 billion in exports, and nearly €9 billion in investment volume, Germany is the place to be for key players in the renewable energy sector. In July 2007, for example, the American photovoltaic module producer First Solar opened its first German factory in Brandenburg because, as the company’s president stressed, Germany is the world’s largest solarpower market and leader in related scientific expertise. Germany is Europe’s top destination for logistics companies too. DHL, for example, relocated its EU hub from Belgium to Halle-Leipzig. DHL’s decision means that the attractiveness of the Halle-Leipzig region has increased not only for logistics companies but also for companies that depend on logistics service providers. In today’s global economy, that means all businesses. Re-discovering Germany’s Benefits… Foreign companies aren’t the only ones discovering these advantages. Many German companies that had offshored production have been deciding to return to
Germany or, in a sense, reshore. While abroad, they had to deal not only with extra costs resulting from language and cultural differences but also with legal uncertainty, a lack of worker loyalty, unreliable supply chains, and limited logistical opportunities. …and a Big Boost from the Government Germany’s government is taking concrete steps to further these trends. Its “HighTech Strategy” will devote €15 billion to cutting-edge research by 2009. At the same time, it will boost R&D funding for small and medium-sized enterprises by 40 percent to over €850 million. And, by 2010, it will dedicate 3 percent of GDP to R&D. These measures reinforce other improvements, such as a progressive dismantling of bureaucracy and red tape and, as of January 2008, a corporate tax reform making Germany competitive with other major European economies. Taken together, these improvements will enhance Germany’s reputation as an excellent place to do business and an ideal setting for companies seeking to maximize their innovative and economic potential.
Marketing Germany
“Best of� Federal Creativity The Economic Development Agencies of the Federal States advertise the advantages of their own regions worldwide. We asked them to send us the ads that they think are especially witty or interesting. See this “best of� selection on the next four pages.
Invest in Bavaria
www.invest-in-bavaria.com
Max knows where he wants to go: to the top! For this, Bavaria is the right place to be. Bavaria offers the best opportunities for all, be they summiteers in the Alps or successful researchers. One of Europe’s best education and training systems might enable Max to co-shape the future of us all, for instance in one the high-tech sectors in which Bavaria enjoys global leadership. It is no accident that global players such as Siemens, BMW, Audi, MAN or Linde are headquartered in Bavaria. Or Max might some day work for major international high-tech companies of which 1,300 are operating in Bavaria. Perhaps your company as well, shortly?
Ă‚4HE AUTHORITIES IN 3AXONY !NHALT NOT ONLY DELIVERED WHAT THEY PROMISED BUT EVEN MORE Âą !NTON -ILNER 1 #ELLS !'
If you want Max to contribute to the success of your enterprise, you know where to find him. In Bavaria.
3OMETIMES EVEN THE HIGHEST EXPECTATIONS ARE EXCEEDED 4HIS IS WHAT HAPPENED TO !NTON -ILNER #%/ OF THE LARGEST INDEPEN DENT MANUFACTURER OF SOLAR CELLS IN THE WORLD TODAY 4HE COMPANY WHICH HAS THE HIGHEST GROWTH RATE IN THE &EDERAL 2E PUBLIC NEEDED ONE THING ABOVE ALL ELSE TO CONTINUE ITS RAPID DEVELOPMENT REALLY PROMPT AND UNBUREAUCRATIC SUPPORT FOR EXAMPLE IN PROVIDING FUNDS FROM THE %UROPEAN 3TRUCTURAL &UND )F YOU TOO EXPECT THAT LITTLE BIT EXTRA FROM YOUR PRODUCTION SITE ASK US 7E CAN MAKE YOU A SPECI½C OFFER WITHIN HOURS ON
Invest in Bavaria Prinzregentenstrasse 28 80538 Munich, Germany Phone (+49 89) 21 62-26 42 Fax (+49 89) 21 62-28 03 E-Mail info@invest-in-bavaria.com Internet www.invest-in-bavaria.com
WWW INVEST IN SAXONY ANHALT COM
4HE EXPANSION OF THE 1 #ELLS !' PRODUCTION FACILITIES IN 4HALHEIM 3AXONY !NHALT WAS SUPPORTED BY THE %5 2EGIONAL $EVELOPMENT &UND %2$& AND HAS HELPED THE COMPANY TO CREATE SECURE JOBS SINCE ITS FOUNDATION
Germany’s number one Biotech Region
130+&$5 1"35 '*/"/$&% #: 5)& &6301&"/ 6/*0/
Important chemistry sites
Cluster of aerospace
Large assortment of properties – just call
High quality of life
Germany’s Capital Region is waiting for you The perspectives: • • • • • • •
Proximity to the growth markets of Central and Eastern Europe Motivated and highly qualified specialists The most favorable labour cost + working time in Germany Optimal investment subsidies (EU target area 1 + 2) Enterprise networks and competence centres Low municipal taxes High quality of life
Contact your central partner for promoting business in Brandenburg:
Brandenburg Economic Development Board
Brandenburg Economic Development Board (ZukunftsAgentur Brandenburg GmbH) Steinstrasse 104-106, D-14480 Potsdam Phone: +49 (0)3 31/6 60-30 00, Fax: +49 (0)3 31/6 60-38 40, E-Mail: info@zab-brandenburg.de
www.invest-in-brandenburg.com
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Invest in Germany Magazine
Bavarian Ministry of Economic Affairs, Infrastructure, Transport and Technology
Marketing Germany
Big Ships Need Big Ports – Excellent Products Need Excellent Locations! Ride the Wave. Come to Bremen. Dock at Germany’s top logistic Hub The Federal State of Bremen is a place for world trade. Needless to say international trade always requires logistical know-how. Over 1,000 companies with more than 20,000 employees specialized in logistics, achieve top performance, and set new standards in Bremen’s logistic sector everyday.
Within a commodity flow area of 3,158 acres, contacts and relationships are established directly. Minolta, DaimlerChrysler, and Tchibo, one of Europe’s leading coffee distributor, are shining examples of successful companies “docked” at Bremen. They share Europe’s biggest high-rise warehouse, run by the BLG Logistics Group. The transportation turnover is breaking records in Bremerhaven, Bremen’s large port, where one can find specialists for every logistical assignment imaginable in Europe’s unique Cargo Distribution Center. Interested in the logistics location Bremen? We are knowledgeable representatives for efficient, individualized economic development initiatives.
Bremer InvestitionsGesellschaft mbH 75 Broad Street, 21st Fl New York, NY 10004
Phone 212.974.1883 rene.hoevel@big-bremen www.big-bremen.com
“Schleswig-Holstein is convincing not only with world-class music, but also with harmonies in industry.”
It’s a Saxon! Each generation continues to develop the heritage of its parents. For more than 175 years, Saxons have been identified with innovation, quality, and productivity in mechanical engineering throughout the world. Whether it be machine tools, printing and textile machines, or complete industrial plants: More than 35,000 employees in about 440 companies are already working on the next generation. If you also wish to "proliferate", you'll find the best partners right here in Saxony - guaranteed!
Saxony Economic Development Corp. Bertolt-Brecht-Allee 22 , D - 01309 Dresden Phone +49-351-2138 0 info@wfs.saxony.de www.invest-in-saxony.com/machine
Success with Hamburg Your Partner for Success The metropolitan region of Hamburg with its more than four million inhabitants is one of the European regions to have gained the most from the fall of the Iron Curtain and from globalisation. Today Hamburg is one of the most dynamic commercial centres in Northern Europe. Modern services in the logistics, aviation industry, technological and media sectors have taken their place alongside modern industrial production and traditional trade in shaping Hamburg´s economy. Let us talk about your success.
23 We will open markets for you.
Industry-specific HWF support is offered in cooperation with:
Marketing Germany
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In the heart of Europe, at the center of Germany, a strong federal state is growing. Not least due to the support from LEG â&#x20AC;&#x201C; the State Development Corporation of Thuringia: In the past years we have successfully based well over 400 companies there. Centrally located and with a first-rate connection to international markets, Thuringia offers excellent conditions for making very promising investments.
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gwSaar Saarland Economic Promotion Corporation
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Invest in Germany Magazine
ATRIUM Haus der Wirtschaftsfoerderung Franz-Josef-Roeder Strasse 17 D-66119 Saarbruecken, Germany Phone +49 / 681 / 9965-400 info@gwsaar.com
Marketing Germany
We have a tradition of building
skyscrapers.
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Join Caterpillar, NestlĂŠ, Unilever and enjoy the benefits of working in a region where global players spend their holidays.
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Invest in Mecklenburg-Vorpommern GmbH Schlossgartenallee 15 Â&#x2039; D - 19061 Schwerin T: +49/385/59225 - 0 Â&#x2039; F: +49/385/59225 - 22 Info@invest-in-mv.de Â&#x2039; www.invest-in-mv.de
â&#x20AC;&#x153;Lower Saxonyâ&#x20AC;&#x2122;s state costume? The lab coat.â&#x20AC;?
Innovative Germany
+++++ Innovation News +++++
Print your message on a T-shirt? No way! That’s so 20th century! Well, then, why not have a T-shirt broadcast your message using LEDs or electroluminescent foils integrated into the fabric, instead? You say that, even though your factory floor is cold, workers still have to lie on it sometimes while performing their tasks? Instead of halting production so you can rip the place up and install heaters, how about having the workers’ uniforms produce heat? It might sound a bit like it’s out of the space-age, but rest assured – it’s a reality. Textile Interfaces, a company based in Gotha (Thuringia), has been developing ways to integrate cloth and advanced technology in ways that use the best of both worlds. The business is also developing textile products for its customers that are exclusively made of recyclable or renewable materials and are therefore sustainable. Possible applications are all over the map, from glowing logos on shirts to be worn at trade fairs to rip-proof pockets and integrated heating on a prototype for the uniforms of people working in Opel factories. Philips required textile interfaces for the product development of the Lumalive jacket with integrated programmable monitors on an LED basis.
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Invest in Germany Magazine
These have been marketed for events and promotions throughout Europe over the last year. Textile Interfaces is only a couple years old, and clearly they’re just beginning to figure out innovative solutions to meet their clients’ demands. A company that shows up at fashion shows and computer conferences? That’s so 21st century!
Jatropha seeds
Nuts for Oil – a 21st Century African Tale Jatropha is a shrub with red flowers that can grow just about anywhere in tropical countries. It also produces nuts with an oil content of 40 percent. That fact – along with the fact that African farmers have been using the bushes to serve as borders between different fields – has brought a stable source of electricity to villages in Ghana, Mali, and the southern part of the Tanzanian territory of Tanganyika.
Using a hybrid photovoltaic-and-oil-burning system, the Cologne-based firm Energiebau Solarstromsysteme GmbH has partnered up with InWEnt, a development corporation based in Bonn, to enable villages to have reliable electricity day in and day out. During times of low usage, the photovoltaic solar collectors suffice to meet energy needs. But when usage increases, they can be supplemented by Jatropha-oil-burning generators. The whole package is so simple that it takes no specialized knowledge to run. As a result, the villagers – or, in the case of the Tanganyikan project, a convent of Vincentian Sisters of Charity in Mbika – can keep the thing going. Another advantage of systems using Jatropha oil is that, unlike biodiesel, which needs processing, Jatropha nuts only need to be crushed. Once their oil has drained out, it is ready for immediate use. As a result of using this system, not only has productivity and income increased in the villages in which the system has been installed, but some farmers, who’ve already had the Jatropha shrubs around their fields, are supplementing their incomes by gathering and selling the nuts.
Photos: (c) Bernd Weingart, Berlin for Philips, NL
T-Shirts That Glow and Warm
Innovative Germany
+++++ Innovation News +++++
Visual Impressions for Blind People A subretinal chip implant produced by Retina Implant AG in Reutlingen, BadenWürttemberg, gives new hope to blind people suffering from retinitis pigmentosa or macular degeneration. The company – a spin-off of the University of Tübingen – has just received the 2007 STEP Award for its fantastic development. The jury agreed that the development will soon find success on the market.
Photos: GFZ Potsdam (www.icdp-online.de)
Medical experts from the University Eye Hospital in Tübingen have succeeded in giving blind people simple visual impressions by implanting chips beneath their retinas. Seven patients have already received the subretinal chips, says Prof. Eberhart Zrenner, head of the Department for Pathophysiology of Vision and Neuro-Ophthalmology at the University Eye Hospital of Tübingen. The chip helps allow people to perceive sources of light such as lamps and windows. Some of the patients could even locate bright objects on a dark surface. The retina chip takes over the functionalities of the rods and cones of photoreceptors. The therapy is appropriate for people who were able to see at one time as well as for those whose visual nerves and related areas of the brain are still working. Approximately 130,000 blind individuals live in Germany and an additional 17,000 people go blind each year. One fourth of these new cases is caused by a degenerative retinal disease.
Among these diseases number retinitis pigmentosa (RP) and age-related macular degeneration (AMD), as a result of which the retina’s photoreceptors cease to function. Ophthalmologists are still unable to use therapeutic drugs or medical products to help patients who have gone blind as a result of degenerative retinal diseases. Retina Implant AG aims to change this situation. The company defines itself as an innovative “development and production company” offering medical products for visually handicapped and blind patients, and it aims to be the first company in the world to market functioning subretinal implants. The development is based on the results of a research project in which numerous university hospitals and research institutes have been participating since 1996, most of which are located in Baden-Württemberg. In close cooperation with their partners – the University Eye Hospital of Tübingen, the University Eye Hospital of Regensburg, the Natural and Medical Sciences Institute at the University of Tübingen, the Institute for Microelectronics Stuttgart, and the Institute for Physical Electronics at the University of Stuttgart – Retina Implant AG plans to bring to the market the first fully functional electronic retinal implant, so as to partially restore vision to those who have gone blind. This is a great example of the innovative and applicationoriented research activities in BadenWürttemberg. For more information, please contact Dr. Birgit Spaeth; birgit.spaeth@bw-wfk.de
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Injecting CO2 Into the Soil Greenhouse gases, global warming, automotive emissions, and the dangers they all pose to our planet: these are things very much in the news these days. What’s pretty much a consensus is that something has to be done about carbon dioxide (CO2) the most common gas contributing to the so-called “greenhouse effect.” One suggested solution has been to plant more trees, which transform carbon dioxide into oxygen, but there’s just so much a tree can do and so many places to plant them. What if you could just grab the CO2 and park it somewhere instead of releasing it into the atmosphere? What if, for instance, you could repurpose an old East German natural gas storage facility and fill it with the carbon dioxide collected from factory emissions? Would it work? And would the stored gas degrade the minerals in the surrounding site? The European Union has joined up with Germany’s federal government to investigate these questions. They’ve also dedicated a combined €38.7 million to a pilot project in Ketzin, a village northwest of Potsdam, which will be coordinated by the city’s GeoForschungsZentrum. The project will entail a detailed study of what happens when 60,000 metric tons of CO2 – the annual output of 40,000 cars – are injected into a saltwater aquifer some 800 to 850 meters beneath an old gas plant in Ketzin. CO2SINK, as the project has been dubbed, will be an important test. The EU has pledged to reduce carbon emissions by 30 percent by 2020, and if this project succeeds, a new and relatively inexpensive method of capturing and storing CO2 will have been found.
Innovative Germany
The Best of German Innovations Germany has had a world-class research and innovation landscape for decades. The economic weekly WirtschaftsWoche recently presented the best ideas to come out of Germany thus far. Read the most interesting examples below.
120 Years of Liquid Crystals Over the past few years, liquid crystal displays (LCDs) have become so ubiquitous that we’ve begun taking them for granted. Thin, energy-efficient (especially compared to the previous generation of television-set-like displays, which were also incredibly heavy), and capable of sharp resolution and amazingly accurate color, LCDs are taking over the computer-monitor and television industries more and more. In fact, it’s estimated that over $100 billion will be spent on them in 2008, up 12 percent from 2007. Germany has led the way in liquid crystal research since botanist Friedrich Reinitzer first detected them in 1888 at the German University of Prague while extracting cholesterol from carrots. Since then, much research has been done on how heat and electrical impulses cause crystal compounds to change colors as well as on the best chemicals to crystallize for these purposes. LCDs were originally only monochrome and used in products such as early digital watches, but they were soon refined enough for more complex applications. Today, Merck Chemicals in Darmstadt is the leading manufacturer of these crystal compounds, providing 70 percent of the world’s supply of liquid crystals and holding over 2,500 patents, with around 100 more being added each year.
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Invest in Germany Magazine
The lotus is a powerful metaphor in Buddhism. It’s a plant that sits atop swampy water and produces a beautiful flower. It’s also remarkable – scientists have discovered – in that its leaves are absolutely impervious to dirt. Any impurity that lands on the leaf will just roll off with the help of a little water. In 1971, Wilhelm Barthlott, a professor of botany in Bonn, became fascinated with this phenomenon. With the help of a microscope, Professor Barthlott discovered that the seemingly smooth upper surface of the lotus leaf was, in fact, quite rough and had incredibly tiny crystals of wax only nanometers (that’s billionths of a meter!) wide. By 1994, he’d learned enough about the lotus’s surface to be able to patent a method of manufacturing similar self-cleaning surfaces. Since then, dozens of applications of this technology have been brought to market; from a spray for automobile brakes, to tents, awnings, and shades made out of treated fabrics that repel dirt. Another innovative spray has been marketed that gives metal a “lotus effect,” too. The Buddhists probably knew it all along: There’s more than one jewel in the lotus. You just need the time, patience, and concentration to find it! “No Fatty” from Germany Germany, perhaps more than other countries, has to contend with all number of dated stereotypes. Many might still consider Germany to be the land of the high carbohydrate (potatoes, dumplings, beer and bread), salt and fat (pork, goose and, of course, sausages) diet, but this couldn't be further from the truth. Thanks to people like Mannheim butcher Josef Pointner, who has developed a special low-fat sausage, the German diet and German foods are enjoying a resurgence and are healthier than ever before.
Pointner was very proud of both the variety and quality of the wurst (or, sausages) he sold, but the fat content had to go. There was a big problem, though: fat is one of the primary ways to convey flavor. Collaborating with the Fraunhofer Institute for Process Engineering and Packaging, Pointner set about finding ways to make very low-fat sausages – without using chemical additives – that were still as tasty as the ones made in the traditional way. Calling the new line “No Fatty,” he trimmed the fat away from the ham or cutlet meat he began with, leaving between 2 and 3 percent fat, and then he chopped the remaining meat extremely fine. Preparing the sausages at very low temperatures, he came up with products that he tested on 2,600 volunteers including star chef Alfons Schuhbeck. Everyone raved, and now “No Fatty” is available at Edeka supermarkets in southern Bavaria. By the end of this year, it’ll also be available throughout Germany. Socks That Never Smell Unpleasant odors are a fact of life. Our bodies produce them, and they leach into our clothes. Cooking odors are nice while you’re cooking, but less so several days later. Cloth, in particular, seems to attract and hold them, and getting them out has spawned a billion-dollar detergent industry producing substances that don’t always get the job completely done. Socks, undergarments, curtains – all retain odors we’d rather not smell! The lotus effect
Photos: © Merck KGaAw
The Lotus Effect: Self-Cleaning Surfaces
Measuring the injection jet in diesel injection systems. Bosch researchers are working on improving diesel injection systems. The picture shows laser-based technology being used to measure an injection jet.
But thanks to research into a curious family of chemicals called cyclodextrins by the German Textile Research Institute in Krefeld, the Munich-based company Wacker Chemicals has been able to produce cloth that neutralizes unpleasant odors and to integrate their product into many fabrics with practical, everyday uses. Cyclodextrins have the unusual ability to form a “host-guest” relationship with hydrophobic (or water-resistant) molecules by encasing them and significantly speeding their rate of decomposition. This process can work with many substances, including toxic waste, sewage, and cholesterol. In the case of odors, many of them are caused by hydrophobic oils. The oils exuded along with sweat, for instance, quickly turn rancid, which causes an unpleasant odor. When the sweat goes into a fabric – a shirt for instance – which has been treated with cyclodextrins, the oil undergoes a chemical change that transforms it into a compound that can be easily washed out using detergent and water.
Photo: Bosch
Piezoelectric Fuel Injection for Non-Diesel Engines As any automobile enthusiast will tell you, German cars are famous around the world for their superb engineering – and, in particular, for their engines.
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With the rising cost of oil, though, these engines have to be designed not only for speed and endurance but also for the conservation of fuel, which can lower both of these factors. But, since the EU has issued strict rules about reducing emissions, it has to be done. As a result, German automakers have headed into the lab to see what they can do. One of the more revolutionary results of this research has been the development of Piezoelectric fuel injection systems by the companies Bosch and Siemens. The science behind this is fiendishly difficult to explain, but the results aren’t: With the extreme precision this technology affords, exact measurements of fuel can be injected into the engine through the rapid opening and closing of the injector, a process which results in the production of far less exhaust. The results: fuel is saved, pollution is minimized, and efficiency is maximized. Piezoelectric fuel injection has been a standard component of diesel engines for seven years. Daimler and BMW will soon make available cars with standard gasoline engines with the Piezoelectric system. Moreover, as the manufacturing technology is refined, other carmakers will offer similar vehicles as well.
The Ultrasound Scan Is it going to be a boy or a girl? The question that expectant parents have asked since the dawn of time is answered easily enough these days: just have an ultrasound scan and find out! But, of course, it wasn’t always this easy. The previous method of looking into the human body – x-rays – involved an amount of radiation that could imperil the developing fetus. And radiation made x-rays hazardous for a lot of other medical applications as well. But in 1961, Richard Soldner, an engineer at Siemens, discovered how to use ultrasound frequencies to deliver pictures in real time and, in doing so, revolutionized diagnostic medicine. Exposure to x-rays for long enough to see things happening would be too dangerous, but an ultrasound scan was perfectly safe. In 1967, a doctor in Erlangen named Gerhard Rettenmaier was the first to use ultrasound to look at developing fetuses. Another advantage that ultrasound has over x-rays is that it is able to retrieve better images of soft organs, such as the pancreas or thyroid glands. With improvements in miniaturization and computer analysis of data collected by ultrasound, the range of diagnoses made possible by this technique has only grown – and to the point that, today, there’s scarcely a place in the body that can’t be visited, observed, and analyzed.
Future Germany
Managing Ideas Employees who come up with clever ideas to improve products and processes can help their careers as well as earn extra money. Furthermore, integrating and making use of their ideas is of fundamental importance for the competitiveness of a business location. Everyone at Deutsche Post has heard of Michael Redsch and recognizes his photo on the company’s intranet. Redsch, who works in the letters department in Berlin Hennigsdorf, is a minor celebrity within the company. He has submitted more ideas than any other employee on how the company can save money. On average, he comes up with nearly 225 ideas per year, and he has done so for the last 10 years. “I enjoy it,” he says. One of Redsch’s best inventions involves using water in fire extinguishers instead of foam. The German postal company uses the equipment for fire prevention exercises and saves €50,000 per year by not having to refill them with expensive extinguishing chemicals. Redsch profits with an additional €5,000 in his bank account. According to a recent study of EuPD Research Bonn, most of the big German industrial companies have recognized the growing importance of idea management. Its predecessor had been on the agenda for decades, under the humble name “company improvement.” The new “idea management mix” though, is not only the administration of the ideas of employees but also the systematic fostering and active steering of their creativity. When it comes to new solutions, better products, and faster processes, employee knowledge is the key to success. Factory and office workers often know the weak spots in their equipment or working methods and how these can best be rectified. “Idea management has no catch,” says Christiane Kersting from the German Instiute for Business Studies, the umbrella organization for ideas management. “There is no argument against it, only for it.”
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ABB, Audi, Siemens and others have experienced that idea management is extremely profitable. The average return on investment is 1:9.6. This is why they try to shorten the implementation of a specific software for describing their ideas, entering in the mask the potential use for the company and the estimated investment cost too. Valuable ideas range from the simple to the technically demanding. An employee at RWE Systems, for example, suggested
installing flooring with velcro, as he saw in a hotel while on vacation, making dismantling floors at a later point much easier. An employee at the tourism industry giant TUI developed a portable travel kiosk, making it possible for people to book vacations in places like shopping centers. Industrial powerhouse ThyssenKrupp uses express wire transfers to save €40,000 in interest payments, and a new driving route for its trucks helped the smelting company Krupp Mannesmann save €200,000.
Foreigners Dream the “German Dream” Which positive, optimistic dreams do you have for Germany? That was the question posed to 30 prominent foreigners interviewed by journalists Wolfgang Blau and Alysa Selene in cooperation with the German television station ZDF. The journalists selected people who also dream big when it comes to their own lives – and who live their dreams. Here are a few interesting answers from the book “German Dream.” Simon Anholt, marketing expert, Great Britain “It is one of the characteristics the world loves of the Germans, namely the fact that their products are reliable, that their systems, structures, organizations, and administrators are reliable and well-organized. People like that, especially given the fact that this characteristic becomes more precious every year, as the world turns into an ever more chaotic, ever more unpredictable mess.” Anne Cameron, author, Canada
Photo: Inken Greisner
“It is a fact that you have a reputation all over the world for manufacturing the best equipment, the best machines, cars, and motor bikes. Even the best bicycles still come out of Germany! Therefore, it is my dream that Germany pushes forward as an example to others and develops the alternative technologies we all need now to make us independent from crude oil. Already today, Germany is the leading developer of wind energy and tidal power stations, and you have the population required for the task and the production capacities. I would, therefore, really welcome it if Germany’s industry could make a special effort to develop alternatives to the internal combustion engine. Of course, everyone is already playing around with these technologies, but no one is really serious about them, as can be seen from the amount of capital still clinging to the gas and crude oil industry.” Jean-Michel Cousteau, ocean conservationist, France “As far as environmental issues in Europe are concerned, I think Germany has shown the direction in which we should have already been heading a long time 31
ago. In this respect, Germany is far ahead of everyone else. As I see it, it is Germany’s destiny to take the lead in issues concerning the environment, to share its knowledge and power with others, and to show others what they can still do better, how they can better look after their bodies of water and their environment and build machines – whether automobiles or complete industrial facilities – that are more energy efficient.” Joi Ito, Internet entrepreneur, Japan “My impression is that Germany is the country best-equipped to organize Europe. Every country has a number of advantages and strengths and – as stereotypical and superficial as it may sound – the Germans have a proven success record when it comes to the construction and operation of big organizations and structures… In the 21st century, the Internet is the cornerstone of the open community and open democracy. Without open source there is no Internet. The Internet brings real freedoms – the freedom to participate, to innovate, to increase value, to make contact – and these are the values on which, in my view, Europe should focus its attention. In this respect, Germany is the country with the technical know-how, the necessary market size, and the influence to coordinate such an effort.” Hunter Lovins, corporate consultant, USA “The Germans, German companies, and the German government bring together the different currents and tackle environmental problems, such as global warming, in a way that enables individual citizens to find higher value in their lives. Use Germany’s huge technical capacities, use the sectors which already earn their
money with solar and wind energy, and use the German ability for intelligent policy-making to design an ecologically sustainable future for Germany, Europe, and the whole world… Germany’s auto-technical excellence and the creativity of the German people should be used to build beautiful, exciting cars of superior quality, which also save enormous amounts of energy. These cars should be driven on fuels produced by a regenerating agriculture sector, or they should have fuel-cell engines, or they should use technologies that we haven’t even thought about yet!” Wangari Maathai, scientist and environmental conservationist, Nobel Peace Prize winner, Kenya “I love the fact that Germany is a country that works very hard. The Germans are known all over the world for their work ethic. They are very committed to everything they do… I believe Germany has the chance to play a very important role in the G8 countries and the EU when it comes to the promotion of sustainable development in other countries. I would welcome it very much if Germany would invest more in the intelligent management of our environment.” Jeremy Rifkin, economist, USA “I think Germany is positioned very well to lead the third industrial revolution, thanks to Germany’s expertise in the chemical, engineering, and automotive engineering sectors. Germany also leads in the field of renewable energies required for hydrogen production. Germany is the leader in wind energy and is, in international comparison, very well positioned for the switch to renewable energies. Already today, Germany fulfills the general technological, scientific, and commercial conditions to actually become the leader of this third industrial revolution.”
Future Germany
Web 3.0: Germany’s Flagship Project More than a billion people log on to the Internet worldwide and that could double over the next decade. And we’re not just passively eyeballing websites. We all want our own part of it. Today’s Web 2.0 is all about user-generated content and social networking sites. The Internet has got personal, genuinely interactive, but also rather unwieldy. Navigating it can be like rummaging through the undergrowth. Now the world’s scientists are working on solutions for the next Internet generation, and Germany is competing to be at the forefront of the latest innovations. Here, scientists from over 30 institutions and companies, such as Siemens and SAP, have put their heads together under the poetic umbrella of “Theseus” to work on the new Internet technology. “Theseus is the beginning of the end of the conventional search in the web,” says Lutz Heuser, the chief development architect at SAP. The heart of the project is an intelligent set of search tools that will optimize our access to knowledge from the Internet and Intranet. They are working on converting this technology into commercially viable services and profitable business models. Current search engines see websites as meaningless groupings of letters. They match letters, throwing up random lists
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of sites, and then hand the baton to the user. Users can spend hours picking through the hotchpotch of relevant and irrelevant sites. A Search Tool that Classifies Content and Leads to New Application Opportunities The answer to that will be Web 3.0, a new semantic technology, or, in other words, a new infrastructure for information on the Internet. The key will be a sort of smart search tool that is able to recognize and classify content because – crucially – it will understand the meaning of the information. Ultimately, processing and retrieving knowledge will become faster, more efficient, and more cost effective. “Theseus” is testing this out in six specific project areas relating to specific working environments. “Medico,” for example, is looking at how to help doctors identify and diagnose medical conditions. It then suggests possible treatments. At a click, new technology will enable a doctor’s computer to analyze X-rays and scans, pick out abnormalities, catalogue data, and compare it to similar diagnoses taken from a global database. The “Processus” project will put invaluable information at the fingertips of companies by scouting out specialist information and advising on how to source manpower or materials. And “Alexandria” is looking at cataloguing or tagging the
Hyperlinks in the WorldWideWeb
mass of unstructured data lurking in our computers – from emails to training tutorials – in order to make it accessible and useful. (See also www.theseus-programm.de) Race Against Time Current web technology, Web 2.0, was largely inspired by small American startups and subsequently taken over by larger corporations. This time, Europe is vying with the US to set the standards for the new technology. And governments are getting involved. The German government has injected the bulk of the funding into “Theseus.” The Federal Ministry of Economics and Technology announced last year that it will invest €90 million over the next five years. This will be matched by another €90 million from industry and business. Germany doesn’t want to repeat previous mistakes. It was over 10 years ago that the Fraunhofer Research Institute in Bavaria invented the MP3, only to see it brought to the market by US companies. Dr. Andreas Goerdeler, from the Federal Ministry of Economics and Technology, says now is a crucial time for Germany. “This is a unique opportunity to take the lead in the global competition to create the future of Internet technology and to put our stamp on the market.” The next giant leap for the Internet could be just a few years away.
Future Germany
No Fear and a Fighting Spirit “Managing the Future” was the theme of an event that brought 42 of Germany’s top young managers to Frankfurt to reflect on the shape of the future. The German publication manager magazin invited the cream of the crop of Germany’s young business elite to a discussion about the future of globalization. The world economy is passing through a delicate and very restless phase marked by crises in the real estate, banking, credit, and oil industries, the renationalization of economic policy, and erosion of the WTO’s multilateral world trade system. The questions posed were: What is the future of globalization? Will the open world economy survive a resurgence of protectionism? What will the world look like in 2030? And how should companies, states, and communities position themselves in anticipation of this world? Participating in the discussion were men and women in their 30s and 40s who will play a significant role in shaping the German economy over the next three decades. Since they are the men and women who will help manage Germany’s future, their responses to these questions were of particular interest and importance. In the end, all participants agreed that the pace of global development will once again pick up and will, in turn, significantly increase risks. And they agreed, that they are ready to take the challenges and go on the offensive.
What are the challenges? They estimated that the number of people offering services has doubled since 1990 to more than 2 billion. Many of these people have only been competing for their slice of the international job pie for a short while. In the future, a growing number of them will have an opportunity to specialize, to study, to invest, and to become more productive. As globalization shifts into a higher gear, the competition will get even tougher. As the catchphrase goes: You ain’t seen nothing yet. The anticipated “turbo-globalization” will bring social dislocation. In fact, more than 20 percent of the event’s participants believed that social unrest poses the biggest danger to the open world economic order. Next to social unrest, the other risks are: protectionism, commodity shortages, financial crises, the consequences of climate change, imbalances on the foreign exchange markets, a worldwide recession, and rising energy and transportation costs.
that people would develop into world citizens as economic globalization ran its course. Contrary to this expectation, however, this has not been happening, and we are paradoxically experiencing growing levels of cultural and religious fragmentation. The vast majority of tomorrow’s managers held that German companies and the German state should attempt to be among the leading decision makers in developments and thereby further improve the country’s future prospects. The young and elite group doubt the effectiveness of protection from competition as a strategy for the future. Instead, they believed that companies should put even more emphasis on innovation, research and development, education, and employee motivation. The predominant view was that Germany is in an extremely good position to benefit from continued globalization, and the group seemed eager to engage in the battle of global competition.
In the course of the discussion, it became obvious that many citizens and experts entertained different visions of globalization. For one thing, many had expected
Photo: Bert Bostelmann
The event “Managing the Future” in Frankfurt
Financing
Financing Germany’s Industries of Tomorrow Due to the fast pace of development and the continuously expanding production capacities in the fields of photovoltaics and biofuels, more and more foreign firms are showing an interest in locating their companies in Germany. For the same reason, in these and other growth sectors, a rising number of large projects are being implemented in Germany.
Project Cycle
As a result of this increased interest, many investors are turning their attention to the European Investment Bank (EIB) and its financing programs. As part of the EU’s “Action Plan 2007– 2009” energy policy, it was decided that the EIB should step up its efforts aimed at reaching the defined goals under the themes of “renewable energy” and “energy efficiency.” The central element of the EIB’s financing program is the so-called “single loan,” which aims to tailor itself to the specific needs of investors. On the one hand, this loan is attractive due to the conditions of the interest rate, which is lower than the LIBOR (London Interbank Offered Rate) and fixed for the complete duration – up to 20 years – of the loan. On the other hand, the EIB is a public bank that does not charge any borrowing fees, as profit is not its goal.
"Solar tree" in Gleisdorf
The loan can amount to up to 50 percent of a project’s total costs. Furthermore, cooperating with private banks to finance projects is possible and even welcomed by the EIB. The EIB only uses this instrument to support investment projects valued at more than €25 million. The application procedure is simple and nonbureaucratic, and it only takes around six weeks. Many other industry sectors (e.g., the automobile, aviation, pharmaceutical, and chemical industries) also fall within the EIB’s target market and are therefore eligible for project financing.
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The European Investment Bank (EIB) was created in 1957 by the Treaty of Rome and launched the following year. With assets exceeding €164.8 billion, the EIB serves as the long-term financing bank for the European Union. The lender aligns its activities with the political goals of the EU and uses its financing operations to support the European government’s key goals as well as the integration and social cohesion of its 27 member states. The EIB is co-owned by all 27 member states of the European Union. The size of each country’s stake in the bank is determined by its economic strength – calculated using Gross Domestic Product – when the country first joined the Union. More information: www.eib.org
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AHK - Your Bridge to the German Market All Around the Globe: The German Chamber Network | AHK More and more foreign companies consider Germany to be a leading market and the best gateway to the European Union. To be successful, foreign companies need a strong partner.
First port of call: The German Chamber Network Spread over 80 countries in six continents. Support of thousands of German companies operating abroad. Fully integrated into the economy of the host countries. More than 40,000 member companies, of which two thirds originate in the local markets. Assisting foreign companies that want to enter the German market either by trade or through investment.
Providing contacts, information and advice, particularly in the fields of: market opportunities and marketing strategies investment conditions and support import and export regulations customs duties currency regulations Closely cooperating with Invest in Germany, the inward investment promotion agency of the Federal Republic of Germany.
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Deutsche Auslandshandelskammern
Contact: Association of German Chambers of Industry and Commerce D -11052 Berlin | Germany Tel. ++49-(0)30-20308-0 | Fax ++49-(0)30-20308 -1000 Internet: www.dihk.de, www.ahk.de
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