GERMANY 1 / 20

Sierra Nevada is reviving production of the short-haul passenger aircraft in . HEAVY IN ­LIGHTWEIGHT Germany is a world leader in Leichtbau, or lightweight construction. And that is generating opportunities and innovation in engineering, materials technology, design and services. page 4

Chemical Industry: Travel & : Music Tech: The German ­chemicals Germany’s travel sector Music technology is sector is putting is the biggest and most thriving in Germany and billions into­ R&D competitive in Europe looking for seed investors

page 14 page 16 page 20 Photo: Illing & Vossbeck Fotografie Illing & Vossbeck Photo:

FOCUS

Going Heavy in »The need to trans­ Lightweight port people and things How lightweight technologies are changing the fabric of engineering, ­sustainably is perhaps manufacturing and construction the most pressing issue page 4 of our times.«

TRANSPORT All Aboard Dear Reader, In Brief: Stem cell innovation and improving the Deutsche Bahn’s modernization drive is performance of e-cars and websites ...... page 12 opening up Germany’s railway industry. page 18 We live in fast-moving times, and this issue of Markets Germany is all about motion. The need to transport people and things sustainably is CHEMICALS MORE ARTICLES IN THIS ISSUE: perhaps the most pressing issue of the age. Here, German lightweight engineering will play a vi- A Certain Musical ­Genius: Is Germany’s music tal role. Making things lighter means we expend technology sector undervalued?...... page 20 fewer resources moving them, and German en- From Guangdong to Germany: A Chinese med­ gineers are working on everything from light- tech firm is opening a German plant...... page 22 weight carbon-fiber air taxis to cardboard auto- Your Nexxt Partner: A new platform introduc­ motive parts to this end. es investors to partners in Germany...... page 23 Travel and tourism represent another form Removing Barriers: Sweeping new legislation of mobility. After all, Germany is Europe’s largest aims to help investors...... page 24 market for travel at source – worth almost EUR Celebrating Entrepreneurial Spirit: 60 billion in 2017. But there’s still lots of room for Chemical Attraction The German Entrepreneur Award recognizes growth, as the online share of bookings increas- up-and-comers...... page 26 es and the demand for instant trip planning Germany excels at producing basic Vive la !: GTAI’s Paris office sees a new expands. One new company trying to meet this ­chemicals efficiently, which is why the demand is Omio, which was founded in 2013 in sector is so profitable. But it still has a dynamic in French–German cooperation. .. page 28 few new tricks up its sleeve. What’s ’Small Talk’ in German? A U.S. consul as GoEuro by Indian entrepreneur Naren page 14 general in Düsseldorf shares her experiences.. page 30 Shaam. It’s recently become one of Germany’s tech unicorns. ____ The Digital Magazine Finally, there are movements in the musical Travel Tech’s New Frontier: Germany is the Online at: sense. Germany is famous for its music technol- largest source market for travel in Europe. ... page 16 www.marketsgermany.com ogy – everything from traditional instruments to digital innovations, including the MP3. Ger- Publisher: Germany Trade & Invest Gesellschaft für Distribution: Markets Germany is distributed solely man audio software is used on nearly every Hol- Außenwirtschaft und Standortmarketing mbH, Fried- by the publisher all over the world. lywood soundtrack, while musicians the world richstraße 60, 10117 Berlin, T. +49 30 200 099-0, Notes: © Germany Trade & Invest, February 2020 over plug into state-of-the-art German amplifi- F. +49 30 200 099-111, [email protected], www.gtai.com All information provided by Germany Trade & Invest Excecutive Board: Dr. Jürgen Friedrich, Chairman/CEO; has been gathered with the utmost care. We assume ers. So put on your favorite CD, or stream, and Dr. Robert Hermann, CEO no liability, however, for the accuracy of the informa- sit back and enjoy this mobile issue of Markets Director Corporate Communications: tion provided. Articles published under specific names Germany. Andreas Bilfinger do not necessarily reflect the opinion of the publisher. Managing and Content Editor: Eva Forinyak No reprints may be made without the prior consent Consultant Editor: Jefferson Chase of the publisher. Unless specified otherwise, the copy- right for pictures is held by Germany Trade & Invest. Editorial Team Kammann Rossi/wortwert: Imogen Dr. Robert Hermann, CEO Order number: O’Rorke, David Batty, Christoph Hus, Jürgen Jehle 21170 Email: [email protected] Cover: Design and Layout: Arne Büdts, Verena Matl, ­­ © 328SSG Jens Tappe Print: Kern GmbH, 66450 Bexbach, www.kerndruck.de Circulation: 5,000 Photo: Freshworks/PR/Maisberger.com Photo:

Girish Mathrubootham, CEO of Freshworks

“I’m the kind of person who learns by do- many futile hours trying to claim insurance, Quick facts ing,” says Girish Mathrubootham, CEO of he started sharing his experience in a forum Freshworks, which provides a broad range (“I wanted justice or revenge!”). Within a day, Name Girish Mathrubootham of simple-to-use business software. When he he had an apology from the company’s presi- Age 44 first launched Freshdesk in Chennai, India in dent. Something clicked: “I saw that the pow- Nationality Indian 2011, he acquired six international customers er had shifted to the user. I decided to build Company name within a fortnight. “They found us! We were a fresh helpdesk product.” Unlike most U.S. Freshworks Founded tapping into existing demand,” he beams. companies, Freshworks is as big in Europe as 2010 Based in USA Eight years on, the tech unicorn he cofound- it is in the States. In 2016, it set up its Europe- Industry Software as a Service ed is worth USD 1.5 billion. an HQ in Berlin to go “deeper and wider” in Value EUR 1.35 billion Mathrubootham set up his first venture, a the region. He chose Berlin “because of the Java training company, in 1999, and went on talent pool” and the “relatively low costs.” to build helpdesk systems and work as VP of Mathrubootham is mainly based in the U.S., product development for Zoho. The idea for a but he is constantly traveling. “It’s fantastic new venture came when he was shipping his to see how the company changes every six belongings from Texas back to India, and his months – it’s like a baby growing up, or a www.freshworks.com expensive LCD TV got broken in transit. After beast that you can’t understand,” he says. 4 MARKETS GERMANY | Focus

Engineers work on the Lilium jet. The flying taxi’s lightweight carbon fiber hull is essential for achieving electric-powered vertical takeoffs and landings. Where there are moving parts or mass needs to be transport­ ed, the rule is: the lighter the better. Photo: Lilium Photo: MARKETS GERMANY | Focus 5

Going Heavy in Lightweight

Germany’s expertise in lightweight engineering, design and services is generating exciting new opportunities and inno- vations in manufacturing, construction and other industries.

he Lilium jet is ready and request- across a range of industries, from aerospace ing takeoff. A man standing in a field to construction to robotics. Anywhere effi- T in southern gets the “OK” ciency can be improved by reducing overall on his radio and fires up the electric engines. mass, you will find lightweight tech making The sleek aircraft’s wings are fitted out with an impact. 36 small ducted fans and 12 flaps that allow for vertical takeoff and landing – just like a helicopter but without the dangerous blades. The flying taxi achieves a velocity of 100kmh »I think we’re before landing safely. The successful test flight in October 2019 approaching­ a was a momentous achievement for Lilium. Founded in 2015 near , the start-up renaissance in aims to offer aeromobility for all by creat- the lightweight ing a network of air taxi hubs. Its five-seater air taxis, designed to fly autonomously, are industries.« made possible thanks to lightweight tech- nologies. Dr. Rainer Müller, senior manager of lightweight Germany has become a heavyweight technologies at GTAI when it comes to lightweight technologies. Leichtbau, as it’s known in German, is an innovative branch that includes engineer- Lightweighting can trigger a butterfly effect ing, materials technology, design and ser- through all levels of the supply chain. If you vices. The principles of lightweight tech- make the moving parts in a machine light- nologies can provide substantial benefits er, the engines and gears can also be made 6 MARKETS GERMANY | Focus

Werner Loscheider »The Light­ weighting Initiative serves as a central contact point.«

Werner Loscheider is the head of the di- vision that looks after construction, light- weight construction/new materials, and resource efficiency at the Federal Ministry for Economic Affairs and Energy (BMWi).

How did the Lightweighting Initiative come about? The Federal Ministry for Economic Affairs and Energy supports a cross-technology and efficient transfer of expertise between smaller, which saves energy during opera- the various lightweighting stakeholders swing. Lilium aims to have its flying taxi in Germany. The Lightweighting Initiative tion and money for the operator. Lilium’s hubs operational by 2025. serves as a central contact point for Ger- lightweight carbon fiber hull is essential for man businesses. As the head of the division The strong supply chain was also a reason achieving electric-powered vertical takeoffs “Construction Industry, Lightweight Con- for U.S. aerospace giant Sierra Nevada Corpo- and landings. But it also obeys the general struction/New Materials, Resource Efficien- ration to select Germany as the location for rule: the lighter the better. cy,” I’m responsible for the Lightweighting renewing production of the Dornier 328 pas- Initiative. With a view to bringing together senger plane. The EUR 400 million invest- all the activities relating to this field, the A culture of innovation ment will create the first new aerospace pro- Federal Ministry for Economic Affairs and Germany is a world leader in lightweight duction facility in the former Energy has set up the Lightweighting Ini- industries thanks to its great engineering tiative Coordination Office in Berlin. Part since the fall of the Berlin Wall. Taking Off tradition and because of the specialized com- of the Lightweighting Initiative, the Coordi- in Eastern Germany, page 8 panies and research institutes concentrated nation Office, financed by our Ministry, is a there. “Germany has the infrastructure and national and international networking hub Building new foundations the experts in material design and technolo- and assists German businesses, particularly “I think we’re approaching a renaissance in gy to drive the Fourth Industrial Revolution,” ­medium-sized companies, as they imple- the lightweight industries,” GTAI’s ­Rainer ment lightweighting in their operations. says Dr. Rainer Müller, senior manager of Müller says. “It’s not just about carbon com-

lightweight technologies at GTAI. “You can’t What does Germany need to do to posites. It’s also about high-performing create that from scratch – you’ve got to al- further develop its ecosystem of light- metals and computer-driven materials re- ready have a tradition of engineering to be weight products and services? search.” able to serve new industries.” In 2020, the Federal Ministry for Economic Architecture also benefits from light- Lilium is one of many companies around Affairs and Energy plans to launch a tech- weight engineering’s ability to lower mass the world that are rushing to create a flying nology transfer program for lightweight- while maintaining strength. Reducing the ing. This funding program promotes cross- taxi, but few have actually completed a suc- weight of a ceiling, for example, makes it pos- branch and cross-material knowledge and cessful test flight. The company’s location is technology transfer concerning broad life- sible to redesign columns and walls because strategic. Its founders met at the Technical cycle assessment. It is a logical continua- they need to support less weight. Considering University of Munich and decided to stay in tion of the already successfully established all the intricate interdependencies and pos- Bavaria: “It made sense to remain here as the Lightweighting Initiative of the Federal sibilities requires digital tools for planning aerospace supply chain is strong throughout Ministry of Economic Affairs and Energy and simulation. These types of calculations central Europe, and there’s a strong man- and aims to bring lightweighting into a are too complex to be done with paper and broad range of industrial applications, as ufacturing base,” says spokesman Oliver pencil. The Fourth Industrial Revolution, has been described above. Walker-Jones. The company is building the page 10 first of two factories that will employ hun- The full interview: Researchers at the University of Stutt-

dreds of people once production is in full www.marketsgermany.com gart’s Institute for Computational Design and Energy Affairs Economic for Ministry Federal Photo: MARKETS GERMANY | Focus 7

FACTS & FIGURES German aerospace renaissance

and Construction (ICD) create experimental €400m €28.2bn architecture projects, often inspired by na- The investment by the U.S. aerospace The total aviation turnover ture and using robotic construction methods. giant Sierra Nevada Corp. in ­Germany in Germany­ in 2018, not including The structures that the researchers are build- to produce the Dornier 328 1) spaceflight and defense 2) ing might seem fanciful today, but the tech- niques and materials could one day become commonplace. Exports flying high ICD researchers cooperated with local company FibR to create a pavilion for the Germany’s Aerospace Industry 3) 2019 Bundesgartenschau, a biennial Ger- man horticulture show. It was produced by Spaceflight Spaceflight €2.9bn 9,300 two robotic arms spinning 150,000m of glass and carbon fibers. The resulting lightweight but sturdy structure was then covered by an Defense Defense €7.7bn 23,700 ETFE (Ethylene Tetrafluoroethylene) mem- brane that’s both waterproof and recyclable. Turnover Employees The finished pavilion looked like a futuristic Aviation Aviation €28.2bn 78,500 circus tent, both alien and organic. “I think that the sector of architecture and lightweight construction will grow because we are faced with the challenge of creating more housing and living space in cities for The share of exports out of more and more people with fewer resources,” the total turnover of the says Dr. Wolfgang Seeliger, managing direc- aerospace industry in 2018 tor of Leichtbau BW GmbH, Baden-Württem- 76% berg’s development agency for lightweight innovation. “Lightweighting is the only way RESEARCH & DEVELOPMENT to cope with these challenges.”

Aviation R&D expenditure by federal state Regional strengths in 2017 (in EUR million) 4) It’s no fluke that so many Leichtbau spe- cialists can be found in southern Germany. 1 Baden-Württemberg 2 7,9 1 0 Baden-Württemberg and Bavaria are re- 2 Bavaria 18,704 nowned for their auto industries, which are 3 Berlin 4,758 currently facing the challenges of the shift 4 1,195 15 to electric mobility. “One will find all stag- 5 909 8 6 es of the value creation process here, from 6 2,500 5 4 product concepts and designing methods to 7 Hessen 8,182 9 3 simulation and manufacturing,” explains 8 785 -Vorpommern 14 Seeliger. “Customers from abroad often ask 9 Niedersachsen 8,928 10 13 for solutions to reduce the costs of light- 10 North Rhine-Westphalia 14,336 16 7 weighting, or they want to benefit from 11 Rheinland-Pfalz 3,498 11 German manufacturing excellence when it 12 619 12 comes to criteria like quality or process sta- 13 3,400 2 bility.” 14 Saxony-Anhalt 919 1 Keeping weight down is of the utmost im- 15 Schleswig- 1,448 portance for electric vehicles. A lower weight 16 1,362 will increase a car’s range without any in- creases in the size of its battery, which is not 1) Source: Sierra Nevada Corp.; 2) Source: BDLI (German Aerospace Industries Association); 3) Source: BDLI; 4) Source: only expensive but adds additional weight. Federal Statistical Office 8 MARKETS GERMANY | Focus

Using components made of hybrid plas- Optimizing manufacturing In the case of Bahmüller, a family-owned me- tic-metals or carbon composites can drasti- Although automobility and aerospace are chanical engineering firm, the company used cally reduce a vehicle’s overall mass. the industries that most obviously gain from lightweight engineering to reduce the mass of Auto companies are looking ahead to the new lightweighting technologies, traditional a corrugated cardboard processing machine. not-too-distant future when autonomous ve- manufacturing will also reap benefits. Digita- They found that the carriage that moved the hicles will be commonplace. “A car needs a lization is revolutionizing traditional produc- product batch through the machine during lot of sensors and systems to be able to drive tion methods in what’s been termed Indus- the operational cycle was the part with the alone,” says Seeliger. “And since, for safety trie 4.0 in Germany – the Fourth Industrial greatest potential to optimize the machine’s reasons, many systems must be available Revolution. The possibilities presented by a functionality. Reducing the carriage weight redundantly in the vehicle, we can expect fully-digitalized factory – one that takes full led to being able to reduce the weight of the that the weight of a car will rise. By using advantage of innovative materials, artificial mounting frame as well (the frame had to lightweighting, you can compensate for the intelligence and computer-aided design – are meet specific requirements of strength and weight gain.” yet to be realized. stiffness in order to absorb the machine’s vibrations). By reducing the moving mass in the machine, the amount of vibrations were reduced as well. Overall, Bahmüller was able to reduce the mass of the machine by 50 per- cent, while saving 25 percent on the cost of building it and 40 percent on energy use. In , the Fraunhofer Institute for MADE IN GERMANY Manufacturing Engineering and Automation (IPA) has developed a processing machine Taking Off in Eastern Germany that can not only mill carbon fiber-reinforced plastics (CFRP) but also perform the post-pro- The Sierra Nevada Corporation chose Saxony for a EUR 400 million ­investment cessing. Cutting back on manual labor allows to build short-haul passenger aircraft. for post-processing savings of up to 50 per- cent and protects workers from harmful dust. Classic revived mercial aircraft is long overdue, and the new Carbon fiber-reinforced plastics are as Nearly two decades after the celebrated Ger- operation intends to create an aviation leg- man aircraft maker Dornier closed its doors, acy founded on the heritage of aircraft pio- stable as steel but eight times lighter. How- U.S. aerospace company Sierra Nevada Corp. neers,” says Dave Jackson, managing director ever, the manufacturing and processing costs is reviving production of the Dornier 328 of 328 Support Services GmbH. More details of CFRP components have remained high be- short-haul passenger aircraft. And they’re on the project will be released in early 2020. cause of the manual work required. Operators doing it in Germany. The D328NEU will have new engines, a new have to take freshly milled components from cockpit and a slightly extended fuselage that the machine, remove protruding fibers, and After an intensive site selection process, 328 will be able to accommodate 39 passengers, clean the items before sealing the edges. Support Services GmbH, a wholly owned up from the current 32. New propellers will subsidiary of Sierra Nevada Corp., chose Ger- make the D328NEU more fuel-efficient and The new machine developed by Fraun- many as the location for its EUR 400 million quieter but preserve “the DNA and reliability hofer IPA and its industrial partners solves investment. The new original equipment of the Dornier 328,” according to DRA. this problem. When a near-net-shape CFRP manufacturer DRA GmbH will produce the component is fed into the machine, it is D328NEU passenger aircraft at /Halle Buying into history milled into the desired shape. A brush then Airport in Saxony, creating up to 250 jobs. Dornier Flugzeugwerke was a pioneer of Ger- removes all the protruding fibers, and noz- An additional 100 jobs will be added at 328 man aviation. Founded in 1914, it became part zles blow the fine dust into an exhaust sys- Support Services’ headquarters at the Ober- of Daimler-Benz in 1985 and was acquired by pfaffenhofen Airport near Munich. Fairchild Aviation in 1996 before the com- tem. A sensor uses strip light projection to pany’s insolvency in 2002. To continue sup- check the CFRP workpiece for defects. If Reenergizing aircraft construction porting the aircraft – 180 of which are still in all measurements are within the tolerance The DRA GmbH project represents the first service – 328 Support Services purchased the range, the processing machine seals the edg- new production facility in the east since the assets for the plane in 2005. Sierra Nevada es with a liquid lacquer cured with ultraviolet end of aircraft construction in the former Corp. acquired the company in 2015. light, and the component is ready. The sys- East Germany. “Germany’s return to the de- tem isn’t just limited to CFRP projects — it sign and building of a Part 25 category com- See also picture on the right can also mill, finish and paint wood, alumi- num or metal components. Schkeuditz, Saxony on August 21, 2019: MARKETS GERMANY | Focus 9 German Economy Minister Peter Altmaier, Transport Minister Andreas Scheuer, Chan- cellor Angela Merkel, Eren Ozmen, owner of Sierra Nevada Corp., and Michael Kret- schmer, state premier of Saxony, stand in front of a Dornier 328 aircraft at the start of the first national aviation conference at Leipzig/Halle Airport. The conference focused on how the German aviation industry could become more competitive while becoming more environmentally friendly. Photo: picture alliance/Jan Woitas/dpa-Zentralbild/dpa alliance/Jan picture Photo:

AUTOMOTIVE INDUSTRY

€422.8bn Looking to the future Tesla already had a German connection – Total turnover of the ­German Unsurprisingly perhaps, more and more in- it has sourced parts from ElringKlinger, auto industry in 2017 (up 4% on ternational companies are investing in Ger- the previous year) an automotive supplier specializing in man engineering. In November, Elon Musk lightweight components, for years. Now announced plans to locate Tesla’s fourth Giga- ElringKlinger will also supply the cockpit factory for producing its electric cars, batter- cross-car beams for Tesla’s new SUV Y se- ies and motors in Grünheide, Brandenburg, ries produced in California. The company an hour southeast of Berlin. The multi-bil- uses hydroforming and injection molding lion-euro Gigafactory should create 3,000 in a single step to produce lightweight, hy- new jobs when the facility opens in 2021, and brid, plastic-metal components with both up to 8,000 when it is fully operational. 820,200 high dimensional accuracy and structural Musk had been searching for a European Employees working within the strength. location for Tesla for years. Analysts suspect- German auto industry in 2017 Lightweight construction solutions ed that it might end up in Germany because (up 1% on the previous year) could also determine Germany’s future com- of its strong auto supply chain. “Germany petitiveness when it comes to wind power. builds great cars,” Tesla’s CEO Musk said at Most windmill rotor blades are currently an awards ceremony in Berlin shortly before made of fiberglass composites. The bigger Source: 2017, VDA (German Association the Gigafactory was announced. of the Automotive Industry) the blades, the greater the energy output. 10 MARKETS GERMANY | Focus

Plattform Industrie 4.0 The Fourth Industrial Revolution

Germany’s Plattform Industrie 4.0 is one of the largest associations in the world focusing on the changes that will arise from digitalization and automation.

The Fourth Industrial Revolution (Industrie 4.0) refers to the ad- Engineers and designers are able to make innovations more vances that are sweeping industry as automation is combined with quickly than ever before. “The complex simulations and feedback digitalization and big data. Germany’s Plattform Industrie 4.0 is loops that lightweight design requires depend on digitalization,” driving the digital transformation of industry. Members share best Seeliger says. “A fully digitalized process chain can leverage the practices, use cases and ideas for international standardization. entire optimization potential during the product development – especially if lightweight technology has been taken into account Supported by Germany’s Ministry for Economic Affairs and Ener- from the beginning of the process.” This makes it possible to gy and the Ministry of Education and Research, the association achieve, for example, 20 iteration loops in as little as two days, brings together companies, associations, trade unions, politics rather than just three iterations in six weeks. and science to work on concepts, recommendations for action, implementation projects and support for small and medium-sized Plattform Industrie 4.0’s mission statement for 2030 focuses on enterprises (SMEs). interoperability, sustainability and autonomy. It’s a common vi- sion of how businesses in Germany, Europe and the world can “Lightweighting is a game-changer technology. It is now possible­ help upgrade the social market economy for the digital age. And to reduce the time to market, optimize processes and design bet- it lays the groundwork for Germany’s all-important SMEs to digi- ter products to stay one step ahead of the competitors,” says tally network with each other to reinvent their businesses as B2B Dr. Wolfgang Seeliger, MD of Leichtbau BW GmbH, Baden-Württem- services. berg’s development agency for lightweight innovation.

A futuristic circus tent which feels simulta­ neously alien and organic. ICD researchers cooperated with local company FibR to create a pavilion for the 2019 Bundesgartenschau. Two robotic arms spun a structure made from 150,000m of glass and carbon fibers. Photo: © ICD/ITKE Universität Stuttgart Universität © ICD/ITKE Photo: MARKETS GERMANY | Focus 11

INDUSTRY GROWTH AREAS

Future-oriented Leichtbau applications

Aerospace Automotive Wind turbines have become a major product for carbon fiber-reinforced plastics manu- facturers, with rotor blades measuring up to 90m being made. They need to be light- weight – not only to achieve maximum per- formance and aerodynamic efficiency but to make transportation and installation easier Flying taxis Plastic components as well. The Lilium jet, powered by 36 Every kilogram counts when small electric engines encased in it comes to building a car – a lightweight, carbon fiber hull, ElringKlinger has developed has reduced noise and vibra­ cockpit cross-car beams made tions compared to a traditional of polymer-metal hybrids that »Light­ helicopter. are lightweight but strong. weighting

is a game- Construction Medical Technology changer technology.«­ Dr. Wolfgang Seeliger, managing director of Leichtbau BW GmbH

Aluminum scaffolding Carbon prosthetics

Tobler’s MATO aluminum Using carbon fiber construc­ Industry leaders are waiting with baited scaffolding systems, adaptable tion, Ottobock’s Terion K2 breath to see what can be achieved when ad- to any shape of construction prosthetic foot can support a project, can save up to 50% person weighing up to 175kg ditive manufacturing is combined with light- of the time of erecting normal while itself weighing just 325g. weight technologies. 3D-printing technolo- heavyweight scaffolding. gies already reduce waste, cost and energy use compared to traditional manufacturing. The potential for experimental structures and extreme lightweighting is still being­ explored. Because lightweight technologies are so diverse and affect so many industries, getting wood – will be represented, and the program international tours for German delegations. an overview of the entire ecosystem is a chal- includes product lifecycle and the possibili- “International cooperation is very import- lenge. But Germany’s Federal Ministry for ties for reducing environmental impact. ant in this innovative field,” Merz says. “It’s Economic Affairs and Energy hopes to make “Our network started looking into recy- hard to implement the newest developments those connections easier with its Initiative cling opportunities and applying methods when you do it alone.” Leichtbau, the Lightweighting Initiative. to reduce and reuse materials quite early See Q&A with Werner Loscheider, page 6 on,” Composites United CEO Gunnar Merz Contact: The first ever lightweight-focused trade says. “In the case of hybrid materials, you [email protected] show, LightCon, will take place in Hannover can only address recycling by getting all the GTAI expert for lightweight in June 2020. It’s organized by Deutsche partners together.” That kind of collabora- ­industries & aerospace Messe AG with Composites United as tech- tion will hopefully continue all year round. [email protected] nical partner. All materials – from carbon Composites United regularly arranges tours GTAI expert for transportation composites to high-performance metals to of German facilities for overseas visitors and technologies 12 MARKETS GERMANY | In Brief

Germany Trade & Invest news Happy Birthday,­ GTAI!

2019 marked the tenth anniversary of the founding of Germany Trade & Invest (GTAI). To commemorate the occasion, Germany’s agency for promoting business investment to and from the country threw a two-day party with friends, partners and stakehold- ers in Berlin, one of GTAI’s two locations in Germany. GTAI Chairman/CEO Dr. Jürgen Friedrich opened the event on October 14, before a keynote speech by the director of the German Economic Institute, Michael Hüther, on “Global Markets – Challeng- es and Chances.” Economy Ministry State Secretary Claudia Dörr-Voss held a second keynote address that evening. Other lec- tures and panel discussions tackled topics ranging from Africa and artificial intelli- gence to open markets, energy and digi- tal infrastructure, and marketing Britain in the age of Brexit. In conclusion, GTAI CEO Dr. Robert Hermann introduced their am- bitious promotional campaign “Germany Works.” to the attendees.

www.gtai.com

GTAI is Germany’s economic development agency. It was established for the purpose of facilitating foreign investment in Germany and promoting exports. Photo: GTAI Photo:

Biotechnology Soft Cell An ingenious solution for mass producing stem cells

Stem cells are a vital element in biotechnology research, but so far they MSC, a serum-free and chemically defined cell culture – to more than have been difficult to mass produce. start-up denovoMATRIX 10 research institutes and hopes that someday it will be standard for wants to change all that. Founded in 2018, the award-winning compa- use in equipment like petri dishes. The company’s aim is to make stem ny has come up with a chemical coating for laboratory containers that cell treatments accessible. Stem cell therapies are increasingly replac- mimics the environment in human bodies where stem cells grow. The ing conventional medications for the treatment of blood, skin and eye idea evolved from years of research carried out by cofounder ­Robert ailments and are also used to treat spinal cord injuries, stroke, heart Wieduwild at Leipzig University’s Institute for Biochemistry. Denovo­ disease and diabetes. The research team hopes that one day they will MATRIX already sells its technology – including screenMATRIX, a mod- be able to use the stem cells to grow replacement body organs. ular microenvironment using biomimetic coatings, and myMATRIX www.denovomatrix.com MARKETS GERMANY | In Brief 13

Product technology E-commerce Automobility Smart Thermostats Speedy Business Revving Up Saving up to 40% in energy costs Making e-tail run more smoothly Doubling e-car motor performance

2019 was a good year for Hamburg-based, Manuel Hartong and Michael Anton Nader- B2B start-up “vilisto.” In April, the young er came up with the idea for their start-up company, which produces intelligent radi- “dynamic E flow” while driving together in a ator thermostats, won a prestigious Per- rented electric vehicle. “We passed a num- petuum Award for innovation in energy ber of cars, then drove up a hill, and the mo- efficiency. Then, in summer, vilisto raised 1 sec tor shut down because it overheated,” the capital investment of seven figures to fund two entrepreneurs from the Bavarian town Even a one-second delay can reduce further growth. “We deliberately opted for of Kaufbeuren say. Dynamic E flow aims online retail turnover by as much as smart capital when selecting the investors,” 10 percent. to solve this problem. Hartong and Nader- said Christoph Berger, founder and CEO of er claim their innovative product can dou- vilisto. The smart capital trend emphasizes Online consumers are increasingly impa- ble motor performance without increasing long-term and strategic growth and relies tient: Studies suggest that delays of even motor size by using copper wire to disperse on investors’ experience and access to net- a single second can reduce e-tail turnover coolants to engine coils. They believe their works. Digital heating technology can save by 10 percent. New software from Ham- solution can be used in air taxis, industrial clients up to 40 percent in energy costs, burg start-up Baqend, which was founded machinery, and electric buses and trucks. At the company claims. Vilisto’s solutions are by Hannes Kuhlmann, Florian Bücklers and the moment, dynamic E flow sells individual based on artificial intelligence technology, Felix Gessert, allows commercial websites to electric motors to niche companies and has which can memorize users’ behavior and operate between twice and ten times faster. development agreements with larger car- regulate heating to meet various weather It uses cloud databases to compress words makers and aviation enterprises. But in the conditions. The technology also includes and images, shortening loading times. Ac- future, Hartong and Naderer hope they will sensors that only heat rooms when they’re cording to the founders, it is the “result of design new motors in collaboration with actually being used. three PhD dissertations.” these partners. www.vilisto.de www.baqend.com www.dynamiceflow.com

Relieving the pain of insect stings has never been easier than with Product innovation heat_it, an app which treats the bite area with heat. Scratching an Itch

Hot new app relieves insect bites

Three young entrepreneurs from southwestern Germany have come up with a device to relieve the discomfort of insect stings using the principle of hyperthermia. Users simply hook up the “heat_it” device to a smartphone and enter the type of insect concerned. They then apply the gadget to the sting, briefly heating the skin area to 50°C, which inhibits production of the histamines that cause swelling and discomfort. The heat_it application is set to go on the market in 2020 for around EUR 30.

www.heatit.de heat_it Photo: 14 MARKETS GERMANY | Chemical Industry Chemical Attraction

Germany’s chemicals sector is the largest in Europe and also one of the most inno- vative in the world. While its strength lies in producing basic chemicals efficiently, it also has a few lucrative secrets up its sleeve.

Martin Erharter »Know-how in basic chemicals is advanced.«

he global chemicals business faces Martin Erharter is a partner in the Chem- ment. That level of spending is equal to over challenges ranging from interna- icals & Pharma Competence Center at five percent of the sector’s total revenues of the Roland Berger consultancy. He be- tional trade tensions to slowdowns around EUR 203 billion, and 16 percent of all T gan his career at the Sandoz/Novartis in the automotive and construction sectors. Group and has worked as a manage- R&D spending in Germany. No surprise then But the German industry has a number of ment consultant (notably in the manu- that German companies file the second most advantages, including the efficiency of its facturing, engineering and auto sectors) chemical patents at the European Patent Of- since the mid-1990s. chemical parks, its skilled labor force, its cen- fice. Moreover, the VCI predicts that invest-

tral location in Europe with proximity to end Germany’s chemicals sector is predomi- ments will rise to EUR 16.5 billion by 2030. customers and, last but not least, the hearty nantly basic chemicals. Despite market German appetite for research and develop- challenges, it continues to do well. Why? Potential for chemicals start-ups ment (R&D). For a number of reasons. Firstly, the pro- Interestingly, most of the innovation takes “The German economy basically lives duction facilities this sector has. These are place within Germany’s – its of- extremely well maintained in state-of-the- from high-end engineering and intellectual ten family-owned small and medium-sized art environments. Investment in them is property in the automotive and chemicals enterprises, which account for 90 percent high. Know-how in basic chemicals is ad- sector,” notes Christoph Gehse, managing di- vanced, and companies are putting effort of Germany’s 2,200 chemicals companies. rector of Dymax Europe, a subsidiary of the into making what are essentially small There’s also a new emphasis on chemicals U.S. Dymax Corporation, a world leader in improvements, using digital technology or start-ups which offer less conventional prod- light-curable adhesives. “And although Ger- data analysis. If you can improve output by ucts and services. In Berlin, for instance, local many now produces fewer chemicals than a tenth of a percentage point, that has in- authorities and the city’s technical university credible monetary impact. And the supply some other countries [ and the U.S.], we are putting EUR 11 million into an incubator of raw materials in Germany is very eco- are still one of the most innovative.” for fledgling chemicals companies. nomical. Key production sites – the famous chemical parks – are all supplied by a pipe- The most promising areas for future in- High level of investment line network which is highly efficient and novation in this field are digital development Around 10 percent of the almost half a mil- very competitive. and sustainability. The German government lion people in the German chemicals work- is legislating emissions reductions, and the force are engaged in R&D. And the chemical That doesn’t sound very exciting. chemicals sector’s most important custom- It’s not something that is necessarily very and pharmaceutical industries have devot- ers, including the auto industry, are des- exciting, or even something that gets writ- ed more and more money to this area every perately seeking solutions to deal with the ten about a lot. It’s more of an ongoing year since 2005. In 2018, the German Chem- process. But it is a very solid business and new rules. This generates opportunities. For ical Industry Association (VCI) announced a it remains the cornerstone of the chemical example, in October 2019, Japanese-found-

record-breaking EUR 11.8 billion in invest- industry in Germany. ed company Sunstar opened a new 20-mil- Pingel Tom Photo: MARKETS GERMANY | Chemical Industry 15

Dymax light-curable adhesives are solvent-­free and form strong, highly sta- ble bonds to plastics, metals and glass. Dymax Europe in is a subsidi- ary of the U.S. company Dymax Corp. Photo: DYMAX Photo:

INDUSTRY OVERVIEW

Advantage Germany

While it’s not exactly fast-paced, the lion-euro headquarters in Bavaria for its en- German chemicals sector is a solid bet. tancy Roland Berger, but that’s not due to a gineering wing. The company, which already lack of innovation. Instead, some firms, par- supplies Nissan and Toyota in Asia, will work Chemical parks ticularly those in specialty chemicals, are not Germany has a network of industrial parks on exciting new projects such as novel struc- necessarily patenting the new processes they that are not only cost-efficient, adaptable tural adhesives that respond to the changing develop but rather keeping them in-house to and convenient but well serviced by trans- needs of European carmakers. As the com- port of all kinds and often near other chem- maintain a competitive edge. pany explains in a statement: “The Bavaria ical parks. Smaller companies are “more likely to region is particularly attractive due to the Proximity to client industries use their specialist know-how about certain strong presence of premium car manufactur- Chemicals companies are close to all-import- materials for very specific applications,” Er- ers such as BMW and Audi.” ant customers in the automotive and con- harter explains. “They’re shifting into more struction industries in Germany and beyond. differentiated products, and they make very Valuable industry secrets Good labor relations good money by adding value. It’s an extreme- One of the most intriguing aspects of Ger- The last strike in the German chemical in- ly risk-resilient area. It’s also relatively easy many’s chemical sector is that increasingly dustry was in 1971. to defend your niche.” He concludes: “What innovation is hidden. While the industry still Secure power supply is also really interesting is that a lot of these relies on know-how in basic chemicals, it also Many chemical parks use a redundant en- companies are privately held and therefore ergy supply (i.e. their business is emergen- harbors scores of potentially lucrative se- have high investment potential.” cy-proofed) with two or more suppliers, crets – exciting interest from investors. Glob- and Germany’s grid is stable. ally, the number of chemicals patents com- Innovation and academic networks ing out of industrialized nations has been One third of German chemicals companies Contact: falling since 2010, explains Martin Erharter, collaborate with academia, and over 60 [email protected] partner and chemicals specialist at consul- percent undertake R&D activities. GTAI expert for the chemical industry 16 MARKETS GERMANY | Technology Travel Tech’s New Frontier

Germany has Europe’s largest and most competitive travel sector with a high out- bound share. Travel technology start-ups are setting up camp around the country, while Berlin boasts its first travel tech unicorn.

2

1

1 Pictured: a colorful facade in Cape Town, South Africa, a popular destina- tion for who love to travel abroad. Travel tech is more than just bookings. It’s about personalization, online marketing and increasingly new forms of dialogue such as chat and voice control. 2 The Munich travel technology company Fineway offers instant trip planning. After answering 10 ques- tions, you receive your individual, di- rectly bookable travel offer. Photos: alexeys, Fineway alexeys, Photos: MARKETS GERMANY | Technology 17

FACTS & FIGURES

ermany ranked third in the 2019 alization, online marketing and, increasing- World Economic Forum’s Travel €299bn ly, about new forms of dialogue such as chat G & Tourism (T&T) Competitiveness and voice control,” he says. “Such technol- Index, which measures factors and policies Estimated value of the Europe- ogies are already in use in Germany and in that enable the sustainable development an travel market by 2020 as on- high demand.” of the sector in each country. Underscoring line bookings continue to grow The Indian entrepreneur Naren Shaam the findings were Germany’s large domestic Markets Germany 2/17, page 8 is helping T&T market, strong overall enabling environ- meet that demand. He founded Berlin-based ment, infrastructure and natural and ­cultural Germany’s travel habits GoEuro in 2013 to help tackle the problem of resources. The country’s robust economy Europe’s fragmented transport infrastruc- has created a major domestic market that in ture. The online platform allows users to find turn has resulted in the largest T&T GDP in the fastest and cheapest travel options by Europe. train, bus and plane to thousands of cities, With a booking volume of EUR 58.8 bil- towns and villages across Europe. In 2019, the lion in 2017, Germany is the largest source company changed its name to Omio to reflect market for travel in Europe, says Dirk Rogl, its global ambitions. deputy director of the German government’s €58.8bn €64bn Tourism Expertise Center. “It’s not only Germany’s travel Estimated gross Omio’s journey to success Germany’s size and central location within booking volume travel bookings in “The transport system across the continent Europe that argue for investment: Our sales in 2017 Germany by 2020 is impressive in many ways, but with thou- and booking technologies are unique in the sands of ticket prices and options, and multi- world,” Rogl adds. ple providers and languages, it can be incred- Germany plays a significant role in the ibly difficult to plan travel and book tickets,” European tourism market with a high out- says Shaam. “To develop a solution, I knew going share – Germans like to travel abroad. I would have to be based in Europe. Berlin, Nonetheless, the German online travel mar- with its burgeoning tech scene, was the right ket is below the European average, partly due place. It’s great for attracting talent, is a more to the traditional strength of tour operators affordable city than some other European 4.5m 122.6m and traditional offline travel agencies in the The record number Number of passengers tech hubs and is also well placed from a trav- country, according to travel research com- of overnight stays in who boarded flights el perspective.” pany Phocuswright. There are, however, nu- Germany in 2018 in Germany in 2018 Omio has become one of Europe’s largest merous opportunities for growth. travel booking platforms. What’s more, it’s a tech unicorn. Available in 21 languages, it has An emerging new market Europe’s booming sector more than 27 million monthly users and an At 42 percent, the share of online travel in extensive inventory of mobile ticketing. Germany in 2017 was still below the European Travel tech is attracting major funding 42% average, but roughly in line with the booming from international investors, Shaam notes. Indian and Chinese markets, Rogl notes. “It is “Our investment comes from the U.S. and foreseeable that the share of online bookings 27% Asia as well as Europe, reflecting the interest will continue to increase. In addition, travel and recognition German travel tech is get- agencies and call centers use modern book- ting outside of the continent.” Last year, the ing systems and by no means book offline in company raised EUR 136 million in one of the classic sense.” As Markus Feigelbinder, 5% Germany’s largest-ever investment rounds, cofounder and COO of Munich travel tech doubling its total capital raised. Swedish firm Fineway, put it to news portal Munich investment firm Kinnevik AB and Singa- Startup: “In five years, we will have reached pore-based Temasek led the round, with par- Share of online Europe’s global Germany’s global the point where the instant trip planning we travel within market share market share ticipation from China’s Hillhouse Capital. Germany’s travel of gross travel of gross travel offer will be the norm and a completely new market in 2017 bookings bookings market will have emerged.” Contact: Travel tech is not just about bookings, [email protected] Sources: Phocuswright study “Tourism in Germany 2030”; Rogl stresses. “It’s much more about person- Federal Statistical Office GTAI expert for the tourism industry 18 MARKETS GERMANY | Technology All Aboard

Germany’s national rail operator Deutsche Bahn is facing the biggest modernization in its history. This bold endeavor will create a range of opportunities for foreign railway equipment suppliers and construction companies.

GROWTH SECTOR

eutsche Bahn (DB), Germany’s be used to renew around 2000 ­kilometers of state-owned railway company, is tracks and 2000 switching points every year. D planning major renovation and “The record size of this investment – construction projects, purchasing new trains €86bn plus the scope of areas it involves – will offer and digitalizing the entire rail system as part a wealth of opportunities for foreign compa- Total investment in the sector by of a major effort to modernize and expand nies as well as German firms to get involved,” 2030 by the government and DB the country’s railway infrastructure. In 2019 says Germany Trade & Invest (GTAI) trans- alone, DB invested EUR 11 billion, and in portation expert Stefan Di Bitonto. January 2020, the company and the German government committed to spending an addi- Foreign investors get on board tional EUR 86 billion by 2030. The massive investment and expansion plans are creating exciting opportunities for foreign Growth in long-distance travel companies, explains Christian Böttger, pro- More long-distance passengers in Germany €10.7bn fessor at Berlin’s University of Applied Sci- chose to travel with DB last year than ever be- Total investment from DB in 2019 ences (HTW) and an expert on the rail sector. fore, and the company is keen to ensure that to improve capacity, network “Germany will invest more in public transport trend continues. The government is support- efficiency and infrastructure in the years to come, and Deutsche Bahn has ing the rail operator as a clean alternative to already been extending its supplier base inter- air travel and has approved EUR 62 billion in nationally over recent years, as other German funding over the next decade. “Taking the rail operators have,” says Böttger. train is a form of active climate protection Deutsche Bahn’s biggest expansion proj- – rail is the only truly green mode of trans- ect encompasses the federal states of Hessen, port,” DB’s CEO Richard Lutz says. “We are 260m Baden-Württemberg, Rheinland-Pfalz and well on our way towards the target of more North Rhine-Westphalia. The EUR 4 billion Annual number of long-distance than 200 million long-distance passengers endeavor, which includes tunnel extensions passengers DB anticipates it will by 2030.” be carrying beyond 2030 and major track expansions, will start con- The volume of investment represent- struction this year and be completed in the ed a 54 percent increase over the previous 2040s. Upgrades to and new construction

­administrative period. Part of the money will Sources: Deutsche Bahn; German Federal Government on the Hamburg/Bremen–Hannover line MARKETS GERMANY | Technology 19 Photo: Deutsche Bahn AG / Tricon AG / Tricon Bahn AG Deutsche Photo:

Deutsche Bahn is unveiling a long-distance, multisystem electric locomotive to pull passenger coaches within Germany and across borders. The ECx system will be built by the Spanish firm Talgo. The framework agreement is for 100 locomotives. Pictured: a digital simulation of the engine.

will also commence this year at an estimated María de Oriol Fabra. “We will be delivering The boom in Asian tourism to Germany is cost of EUR 3 billion. Another big construc- the best product to one of the most demand- also creating investment opportunities. Ctrip tion and upgrade project will be the Hanau– ing customers in the world: Deutsche Bahn.” Group, China’s largest travel service provid- Würzburg/Fulda– lines in the 2030s. The DB deal helped propel Talgo’s new or- er, signed an agreement with DB last year Participating suppliers include railway ders in the first half of 2019 to EUR 804 mil- to enable the sale of tickets on its multilan- vehicle manufacturers like Spanish firms lion – a level the Spanish company describes guage platforms. “Through our partnership, Talgo and CAF, Canada’s Bombardier, Pesa as “historic.” we are enabling our 300 million members to in Poland, ’s Stadler Rail, Czech conveniently purchase German rail tickets, group Škoda Transportation, Russia’s Unit- Opportunities for growth supporting travelers to discover all corners of ed Wagon Company and China’s CRRC. Foreign companies are likely to find open- Germany,” says Ctrip Group general manag- “Germany is more open to international ings in other areas, such as civil engineering, er Amy Wei. With new infrastructure, digital suppliers than many other countries are,” railway signaling and electrification. Germa- transformation and ambitious plans support- Böttger says. ny is aiming to equip its entire rail network ing millions more passengers over the next Spanish manufacturer Talgo signed a with the European Train Control System decade, Germany’s railways are charging major agreement with DB for up to 100 mul- (ETCS) and digital signaling technology. “full steam ahead” – only this time with clean tisystem locomotives and passenger wagons, While this area is largely dominated by Sie- ­energy. valued at EUR 2.3 billion. Talgo is to begin mens, the French group Thales is well posi- delivery of its first EUR 550 million order of tioned, and growing investment in the sector 23 new long-distance trains, known as the could lure other foreign players like France’s Contact: ECx, in 2023. “For Talgo, signing this con- Alstom, ’s Ansaldo and Canada’s Bom- [email protected] tract is not only a great honor, it also brings bardier. There’s also increasing competition GTAI expert for transportation great responsibility,” says Talgo CEO José from Chinese players, says Böttger. technologies 20 MARKETS GERMANY | Technology A Certain Musical ­Genius

German music technology is used by major international artists and respected around the world. Even so, many music tech start-ups with clever and cutting-edge products are suffering from a general lack of investment.

MUSIC MAESTRO

German Tech: ­Global Groove hen it comes to music technolo- a long-time user of Cubase, developed by the gy, Germany has centuries of ex- Hamburg-based Steinberg, while German Matthias Strobel, president of the in- W pertise to draw on – from instru- dustry association MusicTech Germany, digital guitar amps are being used on tours by ment craftsmanship to the invention of the provides some insights that should be major acts as disparate as German hard rock MP3. That tradition has carried on into the music to investors’ ears. band Rammstein and U.S. jazz musician Pat next generation of high-tech digital products. Metheny. Moreover, a Berlin company called What distinguishes the German music Yet many start-ups in the German music tech Native Instruments is a worldwide leader for tech industry? business are overlooked by investors. Historically, German inventors have been sample libraries that supply everything from “The German music industry is setting responsible for just about everything that obscure Asian instruments to a complete or- worldwide standards in digitalization,” says fundamentally changed the music industry: chestra. “It would be interesting if big inter- Thomas Wendt of Integrative Concepts, from the gramophone to the microphone national companies were to use the expertise which provides PR strategy for Celemony, to the MP3. But the market was more con- that exists here,” says Wendt. Kemper and several other German music densed in those days. Today, there’s a huge range of different tools. tech companies. The same holds true for Fine-tuned expertise

technology aimed at musicians, their manag- What technologies will shape the future Christoph Kemper is head of the Kemper ers and their audiences. New developments of the industry? company, which makes guitar amps with in- in this area are in step with market trends: We’re already at the point where virtually dividual digital profiling (a technology he has 2018 was the first year that digital music for- any kind of music is available anywhere. a worldwide patent on). His clients include mats made more money in Germany than The next step is personalized music expe- bands like Depeche Mode and Coldplay. physical ones. According to the German riences – for example, there are firms that “German companies have very high stan- are using algorithms to recreate frequencies Music Industry Association (BMVI), 56.7 per- dards – there is a real eye for detail, so I think that people lose as they age, and firms that cent of turnover came from audio and video are making apps that remove the technical customers feel like they’re being taken seri- streams, compared with 43.3 percent from and financial barriers to musical creativity. ously,” he says. “I think that’s what has made physical formats. a lot of providers into market leaders.” Kem- The ubiquity of German equipment and What are the most promising companies per points out that his industry often strug- technical expertise in the industry flies large- in your industry right now? gles to find investors because of the compar- ly below the radar in terms of investment, The ones who are working out how art- atively high level of knowledge required. But ists can get paid more fairly by setting up even though, according to Wendt, German that hasn’t stopped foreign companies from metadata banks or working with block- audio software is now used on “virtually every chain. They will play a big role because the investing in or entering the German market. Hollywood soundtrack.” The Oscar-winning market is getting so fragmented. Japanese firm Korg, manufacturer of elec- film composer Hans Zimmer, for instance, is tronic synthesizers and audio processors, has MARKETS GERMANY | Technology 21

INDUSTRY INSIGHTS

Music in Figures

Total revenue from musical instruments sector in Germany (2019) 1)

recently expanded operations in Germany, start-ups are based [in Germany], especial- Yamaha has acquired Steinberg, and U.S. mi- ly in Berlin and Munich. That is why we are crophone specialist Shure this year opened working closely with actors like the industry Turnover in Germany of musical its second German office in Berlin. instruments, music equipment, pro audio association MusicTech.” “The German tech market plays a key and sheet music in 2018: ca. €1bn So, what does the future hold? The per-

role in the industry,” says Abby Kaplan, Year-on-year change: +6% sonalization trend in the music tech indus- Shure’s vice president of global retail sales. try reaches beyond professionals and is now “It’s why we continue to build our presence focused on removing the barriers to creativ- Music streaming since 2013: Number of in this important market. Being a member of streamed pieces of music (in billions) 2) ity. There are a plethora of apps that allow the House of Music community in Berlin has people to make music without any classical 5.9 11.5 21.2 36.4 56.4 79.5 many benefits for us. It strategically expands training, or indeed instruments. Matthias Shure’s European business, allows for collec- Strobel, president of MusicTech Germany, tive inspiration, and places us directly in the points to a major development in software heart of Berlin’s vibrant creative scene.” that uses algorithms to recreate frequencies Gérôme Vanherf of the Belgian seed in- that people otherwise stop hearing as they vestment fund LeanSquare (which has invest- 2013 2014 2015 2016 2017 2018 age and creates a fully personalized and op- ed in Berlin start-up MOD Devices, amongst timized listening experience. It sounds like 1) Source: SOMM – Society of Music Merchants; 2) others), is also enthusiastic. “A lot of great Source: GfK Entertainment sci-fi, but it’s a reality in Germany.

Dalton Tennant, aka D10, is the musical director for the Canadian rapper Drake’s current touring outfit. He integrates Native Instruments’ hardware and software into a live setting. Native Instruments is a world- wide leader for sample libraries. Photo: Native Instruments Native Photo: 22 MARKETS GERMANY | Technology

Guangzhou, the capital of Guangdong Province, is an important industrial From Guangdong and commercial location in China. to Germany

A leading Chinese medical technology company is opening a dialysis equipment manufacturing plant in China’ quality is so-so, or even worse,” says Wei. “Everything ‘Made in Germany’ has a in Mecklenburg-Vorpommern. good reputation.” That’s what brought Bio­ light to Mecklenburg-Vorpommern. Accord- ing to Gabriel Flemming, senior manager for healthcare at GTAI, Biolight is part of a grow- ing trend. “More Chinese companies are investing here to satisfy a demand in China for prod- ucts ‘Made in Germany,’” Flemming says. Production facilities in Germany also give foreign firms a foothold in Europe’s largest medtech market.

A growing market for dialysis Although Biolight is best known for patient monitors, the company also makes dialysis machines and products and systems used to treat patients whose kidneys can no longer re- move toxins from their blood. Around 1.4 mil- lion patients worldwide require regular dialy- sis – a 67-billion-euro market that is expected to grow. At the heart of the process are dia- lyzers – tubes containing tens of thousands of hollow fibers lined with microscopic holes that filter blood. As Biolight already sources most of its dialyzer fiber from Med-Tec (one of the few companies in the world with the ex- pertise to make it), a joint venture seemed like

Photo: guifang jian guifang Photo: a good fit. Biolight would have manufacturing facilities near one of its main suppliers, and its dialyzers would be ‘Made in Germany.’ Med- uangdong Biolight Meditech more than USD 100 million in annual reve- Tec, meanwhile, would gain a direct partner hopes to capitalize on Germany’s nue. Not content to limit itself to the Chinese in China, one of the world’s fastest-growing G global reputation for high-quality market, Biolight has branched out and now markets for dialysis products. “It’s new for us products by opening its first European man- sells to 130 countries. But it’s still dwarfed by to work with a Chinese company in Germany,” ufacturing plant in the country. To do so, the medical equipment giants like Philips and GE says Med-Tec CEO Jens Sieder. Chinese medical equipment company has Healthcare, whose established reputations Biolight’s factory facilities are nearing partnered with Med-Tec, a German manufac- and billions in revenue give them a huge ad- completion, and the joint venture currently turer based in the northern German state of vantage in Western markets. To expand, Bio­ has nine German employees. Dialyzer pro- Mecklenburg-Vorpommern. Together, they’re light is focusing on less developed countries duction is scheduled to start in early 2020, opening a 10-million-euro factory in Laage, and smaller hospitals. “Above all, we want to beginning with prototypes for regulatory ap- producing a key component to treat patients be growing and international,” says Gary Wei, proval and sales demos. with kidney disease. head of Biolight’s joint venture in Germany.

Based in Guangdong, Biolight is one of “There’s still room for growth in niche mar- Contact: China’s top three medical equipment manu- kets.” But initially Biolight encountered a [email protected] facturers of its sort, with some 1,000 staff and roadblock: “Many customers believe ‘Made GTAI expert for medical technology MARKETS GERMANY | Investors 23 Your Nexxt Partner

The online platform nexxt-change makes it easy for investors to search for German companies up for sale. Foreign companies can also discover SMEs and family busi- nesses that are looking to partner up.

Angelika Sielmann (left) was looking for someone to take over her company. She was introduced to the nexxt-change platform by Petra Maskow (right), head of business development at the Rhein-Erft branch of the Chamber of Industry and Commerce.

hen looking for companies to acquire, would you consider W an online matching service? In Germany, so-called platform partnering is common. For example, Dennis Wronski used nexxt-change to look for a company to buy. He came across a traditional company called MABA Spezialmaschinen, with more than 30 employees. The former owner, Ingrid Wein- hold, was keen to sell her business and they quickly came to an agreement. Nexxt-change matches potential investors with German companies looking for a buyer. Run in part by Germany’s Ministry for Economic Affairs and Energy, nexxt-change thoroughly reviews every advertisement before publication and vets the companies placing them. For foreign investors, the platform offers up bona fide opportunities Ulrich Kaifer Photo: to take over German companies with estab- lished business models and a foot already in the market. A lack of skills is not a bar- are 8,700 entrepreneurs in Germany looking rier to doing business. If required, Germany to sell their business to a successor outside Finding a partner online Trade & Invest (GTAI) can help foreign inves- the family and the company. And this figure There are currently over 6,000 advertise- tors formulate a purchase request in German is predicted to increase, mainly because the ments from companies who are seeking part- and post it on the platform. German population is ageing. Thus, many ex- ners, and investors can message the owners Germany has a very broad and prosper- cellent companies are currently on the look- via the platform. If the company owner is in- ous Mittelstand (the small to medium-sized out for a buyer or successor. terested in further discussion, he or she con- business community or SMEs), and only tacts the investor, and the two of them can about half of these businesses are passed on start sales negotiations. If investors do not to family members, so there are numerous Further information: www.nexxt-change.org find a suitable company straight away, they opportunities for buyers. Only 29 percent of can also submit a request specifying what SME owners sell their companies when they Contact: kind of company they are looking for, what retire, while 10 percent hand them over to an [email protected] qualifications they have and how much they employee. According to the research insti- GTAI expert want to invest. tute for German SMEs, the IfM , there for financing & incentives 24 MARKETS GERMANY | Investors Removing Barriers

Investing in Germany’s future has rarely been easier. Lawmakers recently passed forward-thinking legislation that will usher in a wave of new opportunities for investors, both domestic and foreign.

The German government is investing heavily in electro­ mobility infrastructure, particularly charging stations. Pictured: An electric car charges up.

he new legislation is a big deal for all investors. The changes amount to T nothing less than an attempt to over- haul Europe’s biggest economy, preparing it for the challenges posed by climate change, energy transitions and demographic shifts. For anyone interested in investing in Germa- ny right now, an in-depth knowledge of these laws is a must. The new measures have been anticipated for a long time and are the fruit of lengthy and complex negotiations between Kirchgessner/laif Markus Photo: the two government parties and various min- istries. They focus primarily on three areas: climate protection, skilled labor immigration Climate Package Opportunities and restructuring the country’s coal regions. As Germany decarbonizes its economy, the The so-called climate package is The construction industry will receive support laws will help IT specialists and care workers designed to coax the economy to carry out energy-efficient renovations of toward ‘greener’ sectors while to move in and revitalize its coal-dependent apartment blocks. Tax deductions will offset protecting businesses during the regions. costs for insulation and replacing old heating transition. The law assigns flex- Significant public funds via tax breaks systems and windows by up to 20 percent. ible greenhouse gas budgets to The automotive industry will receive incentives and direct investment will be made available different industries over the next to transition to electric cars. For instance, to businesses to attract direct investment. decade. There will also be a carbon state allowances for company cars with bat­ As always, the devil is in the detail: Investors pricing scheme – an increasing- tery-driven or plug-in hybrid engines have been will need to familiarize themselves with the ly common phenomenon – which extended until 2030, and there will be a tax laws to know where to take advantage. will entail new opportunities in reduction for company e-cars. There will also be the energy, auto, agriculture and major state investment in electric mobility infra­ construction industries. These mea- structure, specifically in charging stations. sures will be complemented by Public transport will receive more money from Contact: increased state investment in car- the state: EUR 86 billion will be invested in rail [email protected] bon-storage technology. networks alone over the next decade. MARKETS GERMANY | Investors 25 A resident is attended by Yingwei Yang from China, one of five new geriatric nurses at Skilled Immigration Act the Curanum nursing home in Cologne. German business associations have been popping champagne over the introduction of this law on March 1, 2020. With unemployment reaching new lows, several sectors have struggled with a shortage of skilled personnel in recent years – care workers, IT specialists, nurses and craftsmen are in particular demand. The Skilled Immigration Act will reduce the bureaucracy that has made it difficult for companies to get their preferred recruits into Germany. One of the key changes will be the elimination of the dreaded Vorrangprüfung, which required German authorities to prove that no EU citizen was available for a given job.

Opportunities

IT specialists are much sought-after in Germany, which is why the new law contains special clauses to allow them to settle even without training as long as they have worked in the industry. This will ease the labor situa­ tion for German IT companies.

The research and development depart- ments of big industrial players in Germany are likely to expand, as scientists around the world take advantage of the easier bureau­ cratic rules.

Germany’s carer industry depends heavily on workers from Poland and other central European countries. The new law will make it easier for German care home managers to employ people from “third countries” outside the EU. Major recruitment drives are likely to

result, as Germany’s population ages. Tim Wegner/laif Photo:

Structural Change Zollverein is now a UNESCO World Heritage Site. Architect Rem Koolhaas developed the master plan in 2002 – all construction has been based on his for Coal principle of “preservation through conversion.” The purpose of the restructuring program hammered out by the so-called Coal Commission (officially, the Commission on Growth, Structural Change and Employment, or KWSB) is to support the regions of Germany tradition- ally dependent on the coal industries as the country implements its transi- tion to non-nuclear, renewable energy sources. From now until 2038, federal resources promoting innovation and growth will be pumped into the eastern areas around Leipzig, western areas near Cologne, and other regions to com- pensate for expected job losses.

Opportunities

The KWSB recommendations aim to expand Germany’s renew­ able energy capacity to 65 percent of the market by 2030 without incurring extra costs either for companies or consumers. That won’t be possible without major state investment in renewables.

A further measure will see government investment encouraging power stations to be more energy-efficient by switching their combined heat and power generation to gas rather than coal. Gas suppliers are likely to comprise a larger share of the market.

The wholesale restructuring of Germany’s energy supply is likely to

Photo: Oliver Tjaden/laif Oliver Photo: put more pressure on the safety of critical infrastructure. Cybersecurity firms protecting power stations from hackers will see a boost. 26 MARKETS GERMANY | Investors Celebrating ­Entre­preneurial Spirit

Who will be the chosen few of 2020? That’s the difficult question facing the jury of this year’s German Entrepreneur Award (GEA). Last year’s winners were characterized by a strong social purpose as well as the right formulas for success.

he award is Germany’s most presti- er at last year’s award ceremony in July. “We music for children. The runners-up in this gious prize for up-and-coming busi- also need to assist these people with coming category were collaboration Factory, which T nesses. Handed out every year since up with the right business models and plans, develops “breathing” software for managing 2002 by Stern magazine, German broadcaster dealing with bureaucracy and getting financ- highly complex projects, and cutting-edge ZDF, the carmaker Porsche and the Sparkasse ing. But the first thing is to recognize them – online marketer OMR. network of banks, with support from the Ger- that’s an important part of our entrepreneur- “The GEA network is the Who’s Who of man Ministry of Economic Affairs and En- ial culture.” German enterprise, and we look forward to ergy, it recognizes fledgling companies who The 2019 Start-Up award went to Augs- profiting from its expertise,” said Boxine co- show outstanding promise in the categories burg company German Bionic, which pro- founders Patric Faßbender and Marcus Stahl “Start-Up” and “Rising Star.” duces exoskeletons that help industrial at the ceremony. Meanwhile, a special Life- The three finalists for the company awards workers to do heavy lifting (more on this time Achievement award was given to Alfred will receive expert advice and support from topic in the next issue of Markets Germany). Theodor Ritter, who rescued the Ritter Sport the four heavyweight sponsors of the prize, “The German Enterprise Award is an insti- chocolate company from economic difficulty plus access to the prize’s alumni network and while making it ecologically and socially sus- a healthy dose of prestige, which will be sure tainable. to attract the attention of investors. And last but not least is the prize for “The German Entrepreneur Award is one German Entrepreneur school initiatives. Last year, it went to the of the most important forums in Germany for Award Winners 2019 ­LUVAQ team from the western German town shining a spotlight on business innovation of Geisenheim for their ingenious ideas on among fledgling companies,” says Germany see on the right how to provide clean drinking water for de- Trade & Invest’s managing director of inves- veloping countries. tor acquisition, Achim Hartig. “For winners, It’s not easy for companies to get nomi- it can also be a springboard to take a young tution,” said German Bionic cofounders Pe- nated for a GEA, let alone win one. Any com- company to the next level. The GEAs are a ter Heiligensetzer and Armin G. Schmidt on pany, including foreign-owned ones, located useful indicator to foreign investors about receiving the prize. “Just being nominated and creating jobs in Germany is potentially young companies in Germany worth keeping is like being given a knighthood.” The 2019 eligible. However, candidates need to be an eye on.” runners-up were innovative logistics com- nominated by a committee of 300 experts pany Cargonexx, which improves efficiency selected from companies, universities, gov- Major lift for a bionic fledgling through self-learning algorithms, and pre- ernment and venture-capital funds. Nomi- The shortlist represents a broad spectrum cision measurement specialists Swabian In- nees are currently being evaluated, and the of companies and individuals, but the win- struments for their ingenious invention, the jury will whittle the shortlist down to the top ners are often companies that have both the Time Tagger. three by April. The 2020 award ceremony will potential to help society and the prospect of take place on September 8 in Berlin. turning a profit. “The GEA is important be- Joy for a toymaker cause it shows millions of people that it’s ex- The Rising Star prize for more established

citing to be an entrepreneur and that you get young companies was presented to Düssel- Further information: recognized if you do something successful,” dorf-based Boxine, which makes cuddly toy www.deutscher- said German Economy Minister Peter Altmai- figures that play CDs of audio fairytales and gruenderpreis.de/en/ MARKETS GERMANY | Investors 27 Boxine Patric Faßbender, Marcus Stahl

Tonies is a new and child-friendly way of lis- tening to audiobooks and music. The player – a cuddly cube or toy that can be taken to bed – is proving a runaway success with parents. Founders Patric Faßbender and Marcus Stahl posted a staggering €60m in turnover in 2018 despite being in a highly competitive market. www.tonies.com Photo: Boxine GmbH Boxine Photo: Dirk Bruniecki Photo:

collaboration Cargonexx ­Factory Rolf-Dieter Lafrenz

Rupert Stuffer CEO Rolf-Dieter Lafrenz set out to solve the problem that cargo trucks drive around Collaboration Factory’s “breathing” software of- empty 40% of the time – he developed an fers an adaptable solution for project manage- award-winning logistics platform that uses ment for the today's digital era. Rupert Stuffer self-learning algorithms to optimize efficien- recognized that conventional methodologies cy in the shipping industry. Cargonexx works were not meeting the current increasingly com- with 8,000 hauliers and reported a threefold plex business processes and set up the company increase in volume in 2018. in 2014. By 2018 it had a turnover of €10m. www.cargonexx.com www.collaboration-factory.de Photo: Dirk Bruniecki Photo:

OMR/Ramp 106 Philipp Westermeyer

OMR is a new kind of digital media en- terprise that combines seminars, events, journalism and entertainment. Cofounder Philipp Westermeyer started giving semi- nars on digital marketing, which became so popular that they became the OMR Festival. Today, it attracts more than 50,000 visitors to Hamburg. Founded for just €25,000, OMR turns over double-digit millions. www.omr.com Photo: GBS German Bionic Systems GmbH German Bionic Systems GBS Photo: Julius Schrank OMR19 Photo:

German Bionic Swabian Instruments Peter Heiligensetzer, Helmut Fedder,

Armin G. Schmidt Dirk Bruniecki Photo: Michael­ Schlagmüller,

German Bionic’s exoskeleton Cray X supports Markus Wick the wearer’s lower back when lifting heavy loads – it can absorb up to 25kg of pressure – Swabian’s Time Tagger is a multichannel thereby reducing the risk of workplace inju- time-to-digital converter that monitors in- ries. Founders Heiligensetzer and Schmidt set put signals in real time based on quantum up shop in 2017 and brought Cray X to market research. The company turned over €1.2m in last year. 2018, two years after its founding. www.germanbionic.com www.swabianinstruments.com 28 MARKETS GERMANY | Investors

The view from Paris

The GTAI Paris office is located near the famous Eiffel Tower in the 15th arrondisse- ment near the Javel metro station. Every day the office receives enquiries from export-­ oriented French companies wanting to know how they can gain a foothold in the German market.

GTAI Paris, 18 rue Balard, 75015 Paris, France Photo: Orbon Alija Photo: MARKETS GERMANY | Investors 29 Vive la France!

Internationalization is on the cards for many French companies, observes Markus Hempel from the Paris office of Germany Trade & Invest (GTAI). As France’s closest neighbor, Germany is often the first port of call for overseas operations.

Mr. Hempel, last year you started work- Many French companies are operating ing at GTAI Paris as an investor recruiter. in Germany across a range of sectors. How has it been so far? Which sectors are attracting the most MARKUS HEMPEL: I was really surprised interest from investors at the moment? at how much France has changed in recent HEMPEL: The sectors where there are con- years. You can feel a completely new dynam- »You can feel gruencies between France and Germany and ic here. This is partly due to the government, the potential for reciprocity. Also the digital which is on a drive to reform. The economy a new dynamic.« and business services sectors, where there are has gained new confidence as a result, and many French players. At the moment, envi- business is now expanding beyond French Markus Hempel started working at the GTAI ronmental technology, medical technology, borders. There’s a great interest in Germany, office in Paris in the summer of 2019 and mechanical engineering and ICT are particu- has been facilitating French investment in for example. The first few months were also larly active. Germany since. He is well equipped for the very exciting personally: I have been seeing role, having studied in both Germany and Paris from a completely different vantage France and worked in France for several The IT sector in France is experiencing point with my four children. years. Additionally, his wife is French. robust growth. Can you tell us why? HEMPEL: There is a lively start-up culture here. France is Germany’s largest neighbor Being an entrepreneur in France is now consid- and the two countries enjoy a close There is also a high level of interest in how ered sexy. But many of these up-and-coming relationship. Do you still need to explain small and medium-sized enterprises work – entrepreneurs don’t want to restrict them- to your French clients why they should the owner-managed German companies. selves to the French market and are focused on consider investing in Germany? They are often very attractive business part- becoming active internationally as quickly as HEMPEL: It’s true that most French people ners for French companies. possible – first and foremost in Germany. know a lot about Germany and many French entrepreneurs and business managers are of Why are the French attracted to Germany course interested in the country. Germany is as a business location? Contact: [email protected] often the first choice when French business- HEMPEL: Export-oriented companies in par- Director of the GTAI office in Paris, es start going international. Nevertheless, or ticular want to invest in Germany. Not just France precisely because of that, there is a pressing because of its large sales market, but because Sophie Cabotte need for discussion. There are still huge cul- a German location makes expansion into [email protected] tural differences between the two countries, Eastern Europe much easier. Companies val- Head of Commercial Service Develop- and of course there is the language barrier. ue the fact that Germany offers a secure in- ment, German-French Chamber of vestment environment, and we are regarded Industry and Commerce What do your clients want to know about as punctual and reliable. Also, I keep hearing [email protected] Germany? that business partners in Germany are very Executive Unit Strategic Partner­ HEMPEL: They often specifically ask how open to cooperation. It is usually no problem ships (GTAI) and liaison to the they can gain a foothold in the German mar- for a French company to arrange a meeting ­German Chambers of Commerce

Photo: GTAI Anke Illing Anke GTAI Photo: ket through carefully placed investments. with a German company. Abroad 30 MARKETS GERMANY | Opinion What’s ‘Small Talk’ in German?

Germans have a reputation for being scientific but rather humorless. But is this ­cultural stereotype true? Fiona Evans, U.S. consul general in Düsseldorf, considers the relationship between her countrymen and their German business partners.

It’s often said that the Germans don’t really “do” small talk. But, as Fiona Evans found out, there are lots of opportunities you can use to break the ice in Germany.

he and Germany en- joy a strong trade and investment re- T lationship. There are lots of reasons why: the robust rule of law and protections of intellectual property in both our nations, for example, and the advanced technologies produced by both. But I truly believe it is per- sonal interactions that grease the wheels of commerce and that Germans have a singular advantage when developing relationships with American business partners. German reliability is probably paramount in the minds of most Americans. It is no se- cret that German products are honored for their precision and reliability, but a reliable

After a year in my position as U.S. consul gen- translation for “small talk.” Nonetheless, I’ve eral in the Rhineland, it is clear to me that the had plenty of opportunity while chatting Germans also know how to relax. Whether it with people at trade fairs, receptions or in my »Germans are in fact is or simply a national holiday, the personal time to engage in light conversation experts in small talk.« Rheinlanders make the most of their person- with Germans and to observe how they inter- al time. Americans are hard workers, taking act with their American contacts. In my view Fiona Evans, relatively little vacation, but it is during the Germans are in fact experts in small talk. U.S. consul general in Düsseldorf after-hours conversations on the golf course Last year, I co-led the German delegation or in a restaurant, where a lot of business gets to the U.S. government’s annual foreign di- done. The German attitude toward taking rect investment summit and saw first-hand business partner can open many additional pleasure in life is as welcome along the Mis- how German attitudes, style and know-how doors. It might sound simple, but adhering sissippi as it is along the . make business deals happen on both sides to timelines, respecting meeting times and The German people’s knowledge of the of the Atlantic. It is therefore no wonder to focusing on the business at hand allows for U.S. is a huge advantage. When I was in lan- me that the U.S. is the leading job creator in more productive discussions and shows your guage training, I found it funny when my in- North Rhine-Westphalia and that Germans

American partner that you mean business. structor told me that there is no real German are some of the largest investors in the U.S. Images/Geber86 Getty Düsseldorf; US - Generalko,nsulat Photos: At your service! SET UP BUSINESS IN GERMANY Want to be part of Europe’s largest market? We’re your first point of contact. Germany Trade & Invest (GTAI) provides potential investors with free, reliable information on the latest opportunities and risks in the German market.

GETTING STARTED­ IN GERMANY­ Our experts are there to help you in all phases of establishing a ­ Our extensive range of services for foreign investors, business in Germany. free of charge, include: www.gtai.de/ gtai-en/invest • Market and industry analyses • Market entry strategy support • Individually tailored tax and legal information, e.g. on company establishment, labor law and visa options Get in touch to find out what we can do for you. • Recommendations concerning financing & funding opportunities • Project partner identification and contact (location and financial) • Site identification, site visit support

Germany Trade & Invest Friedrichstraße 60, 10117 Berlin T. +49 30 200 099-0 Silvia Obajdin Alexander Walter [email protected] [email protected] [email protected] Investing in Germany Made Easy with Markets Germany

Insider investment Visit the Markets ­Germany news for Germany – Digital Magazine with improved three times a year search ­functions, exclusive background information and tips for related articles. www.marketsgermany.com

Also on the app and website: Get the Markets Germany newsletter six times a year.

How it works: For a free Markets subscription, visit www.gtai.com/markets-germany-abo or www.gtai.de/markets-international-abo, save your contact details in your personal “My GTAI” area – and you’re done! www.gtai.com/markets-germany

Your free Markets subscription, direct from the publisher

Markets Germany: Markets International: Invest in Germany using GTAI’s expertise Export and foreign trade with GTAI’s insider information with a free subscription at: with a free subscription at: www.gtai.com/markets-germany-abo www.gtai.de/markets-international-abo