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The Electronics and Microtechnology Industry in Germany

The Electronics and Microtechnology Industry in Germany

INDUSTRY OVERVIEW The and in Germany

ISSUE 2019/2020 THE ELECTRONICS AND MICROTECHNOLOGY INDUSTRY IN GERMANY Industry for the Digital Economy

“The vision and investment in Industrie 4.0 has started bringing together some very interesting vendors and concepts that we are convinced will play a big part of the future of the plant floor. Being an engaged part of this eco- system was a major factor in founding our new German subsidiary.”

Ed Nabrotzky CSO, Omni-ID

1/6 1/3 of all German "hidden champion" companies of all from new products - proof of high that are world leaders in niche markets innovation level in the microtechnology sector

26% 29% of all patent applications in Germany made by of all R&D employees in German industry active companies from the electronics & micro- in the electronics & microtechnology sector sector 24% of total German industry R&D expenditure 44% found in the electronics & microtechnology added value over production – highest rate industry among all big industry branches in Germany

Germany is recognized the world over as an innovative and . It enables companies to develop production and research location. The coun- cutting-edge that perfectly address tomorrow’s try is by some distance Europe’s leading production and sales digitalization needs. market. One in three chips produced in Europe today is made in Germany. Germany will continue to strive to provide top-class techno- logical performance through its outstanding infrastructure, The country boasts an unparalleled density of renowned prestigious international research facilities and dynamic R&D institutes and world-leading manufacturers and sup- investment climate. Investment opportunities are many pliers for electrical and electronic materials, components, and varied. Plug in and find out why Germany satisfies the and equipment across the value chain. These range from essential conditions for market success in one of the world’s microelectronic components to electrical household appli- most dynamic industry sectors. ances, automation systems, electronic medical equipment,

The German in Numbers

Germany’s industry numbers speak for them­ selves and for a secure and successful invest­ ment in the country.

Europe’s Biggest Electronics Market Germany is Europe’s number one electronics EUR 191.5 bn 858,000 market in production and sales terms. Germany’s Industry Turnover Workforce electronics & microtechnology (E&M) industry generated turnover of EUR 191.5 billion in 2017, with an export share of around 52 percent. Total industry turnover is forecast to grow to EUR 197 billion in 2018. Employing a workforce of more than 1.5 million at home and abroad, the E&M sector represents the second-largest industry seg- EUR 26.5 bn 52% ment in Germany in manpower terms. Innovation Expenditures Export Share

Research and Development Leadership Source: ZVEI 2018 Electronics and microtechnology in Germany is exemplified by its innovativeness: EUR 17.2 billion is invested in (R&D) annu- Technological Trends ally. As a result, companies generated almost one The German electronics industry is increasingly third of 2018 turnover from products less than three focusing its activities in automotive and industrial years old. As well as making provision for significant electronics. This is being driven by megatrends internal R&D expenditure, the German E&M sector including smart (Industrie 4.0), spends about EUR 10 billion on external R&D – this e-mobility, and the German energy transition is equivalent to almost half of the country’s exter- towards renewable energy. nal R&D investments. Research personnel within the German E&M industry is equivalent to around 29 percent of all R&D employees in German industry.

Industry Sector Turnover in Germany Industry Sector Employees in Germany in EUR billion yearly average in thousand

Total Turnover Manufacturing: Total Employees Manufacturing: 308 1,019 EUR 1.4 bn 298 5.3 m 1,005

854 858 226 773 786 215 46 46 191 179 49 49 144 7 7 136 452 467 53 53 106 114 292 294 58 58

Chemicals Foods Electronics* Machinery Automotive Chemicals Foods Automotive Electronics* Machinery

2016 2017 2016 2017

*excluding Sources: Federal Statistical , VDMA 2018

3 MARKET OPPORTUNITIES Photonics and Optical Technologies

Germany boasts one of the world's most thriv­ Technology for the Digital Transformation ing and innovative photonics sectors. German Photonics have a pivotal role to play in the global companies are world leaders in a num­ber digital transformation as key enabling tech- of photonics areas including laser technol­ nologies thanks to their tool, and visual ogy, lighting, microscopy, and imaging. properties. Optical sensing and imaging, vision and optical communica- Europe’s Photonics Leader tion, materials processing, and 3D are Germany is Europe’s leading photonics nation, central drivers of digitalization. The digitalization with more than 41 percent of continental produc- of technologies, production environments and the tion. Since 2005, the photonics industry has grown world of creates new and disruptive busi- at a rate double that of domestic and global ness models and networks. The image processing GDP (between six and seven percent annually). & measurement technology (22 percent share), Germany enjoys around six percent share of the medical technology & life sciences (19 percent), global photonics market. An export quota rate of optical components & systems (18 percent), and around 70 percent testifies to the international production technology (15 percent) represent the competitiveness of innovative photonics solutions major photonics subsector markets within the made in Germany. Since 2011, domestic production country. According to the VDMA, photonics is one volume has grown at an annual average growth of Germany’s most research-intensive sectors, rate of three per­cent – from EUR 27 billion to its with high R&D spending levels maintained since current level of EUR 31 billion. This is forecast to 2011. Average company R&D spending of nine rise to around EUR 39 billion in 2020 according percent of revenue underpins the importance to the VDMA (Mechanical Industry of photonics to domestic economic growth and Association). innovation.

German Photonics Production 2016 and Forecast 2020 in EUR billion

Image Processing & 8.2 Measurement Tech. 6.4

Medical Technology & 7.8 Life Science 6.0

Optical Components 7.0 & Systems 5.8

6.2 Production Technology 4.4

4.9 ICT, Displays 3.9 2020 2016 3.8 Light Sources 3.7

1.9 Photovoltaics 1.8

Source: Optech Consulting 2017

4 Industry Overview 2019/20 | gtai.com National Excellence Network LOCATION AVANTAGES Schleswig- for Photonic Research and Holstein Mecklenburg OptecNet Network Hamburg Western-Pomerania HansePhotonik

Bremen

Niedersachsen PhotonicNet Berlin OptecBB Hannover

Saxony- Brandenburg Max Planck School of Photonics Anhalt North Rhine- Göttingen Westphalia / Saxony Optonet University of Applied Science Jena Aachen Max Planck Institute Hessen Thuringia Fraunhofer Institute Rhineland- Palatinate Optence Leibniz Institute Darmstadt Erlangen Helmholtz Centre Saarland

OptecNet Deutschland Karlsruhe Bavaria Photonics BW Aalen

Baden- bayern photonics Württemberg Munich

Sources: Fraunhofer Institute for Laser Technology ILT, Optecnet 2017

Networks and Clusters German Regional Competence Networks for Opti- Germany is home to an impressive number of cal Technologies. Founded in 2000 as an initia- regional and national networks and clusters. The tive of the BMBF, OptecNet Deutschland is the rapid proliferation of science and industry clusters supraregional association of the seven regional can be attributed to the country’s advanced level competence networks. OptecNet’s mission is to of industrial diversity, aligned to a sustained and support the optical technologies as key technolo- forward-looking innovation policy. Generous R&D gies for Germany. funding promotes innovation as part of a long- term roadmap for the photonics future.

Max Planck School of Photonics The Federal Ministry of and Research go-cluster Initiative (BMBF) has announced support for a new network The Federal Ministry for Economic Affairs and of excellence under the lead of the Fraunhofer Energy (BMWi) “go-cluster” excellence program Institute of Applied Optics and Precision Engineer- brings together around 100 innovation clusters ing (IOF). The new Max Planck School of Photonics from across Germany. Cluster members are at (MPSP) focuses the key strengths of the German the cutting-edge of innovation and represent photonics community and aims to provide world- the technological diversity with the country’s class research support. The consortium aims to industry and technology sectors. The initiative connect all major and innovative photonics com- provides financial stimulus – in the form of munities to an interdisciplinary cluster. The MPSP support for innovative services and fund- will share in annual funding of EUR 9 million for ing for novel solutions – to optimize cluster an initial period of five years. . Membership provides numerous advantages to innovation clusters, actors and OptecNet Deutschland partners. Of the 17 photonics clusters and The German optics and photonics industry is networks recognized by the Clusterplattform concentrated within several clusters and industry Deutschland, 15 enjoy go-cluster status. associations. Regional clusters are organized in www.clusterplattform.de OptecNet Deutschland – the association of the

5 MARKET OPPORTUNITIES Industry Spotlight: Additive Manufacturing

Germany is one of the world’s leading additive Wohlers Report 2017. The aerospace and automo- manufacturing nations. The country’s “Made in tive industries are the most promising additive Germany” manufacturing renown is set to help manufacturing application industries according to it lead the way into the future along the value a recent Ernst & Young study. Germany is a leader chain in materials, devices and applications. in both of these major industry sectors.

Europe’s Additive Manufacturing Leader Aerospace Additive manufacturing, also commonly known The aerospace industry requires lightweight as , developed out of rapid prototyp- parts that are strong, geometrically complex and ing and exceeded USD 6 billion according to the manufactured in small lot sizes. This has led to the sector becoming an early adopter of additive manufacturing. Germany is a main Airbus site, Current and Intended Company 3D Printing Adoption Rates * with 3D printing application largely driven out of Hamburg. Parts are already in the air in certain aircraft, achieving weight decreases of between 37% Germany 30 percent and 55 percent, and up to 90 percent 12% energy efficiency increases across the entire pro- 16% duction process. USA 16% Automotive UK 17% The is already a major 11% user of rapid prototyping equipment: additive China manufacturing technologies are being applied 24% for the manufacture of functional prototypes 14% Rest of Western and for small and complex parts for luxury and Europe 22% antique cars. The automotive industry’s adoption 8% of additive manufacturing is projected to increase from USD 365.4 million in 2015 to USD 1.8 billion in 2023 – equivalent to a 19.5 percent compound experienced considering annual growth rate.

Machinery & Equipment 3D Printing for Tools and Machine Parts The machinery & equipment (M&E) industry is a /Production in 5 Years * traditional German stronghold. The M&E sector is the major application industry for additive manu- facturing. Toolless manufacturing, increased effi- Plastics 22% 12% ciency for materials and freedom of will all become reality thanks to additive manufacturing. Automotive/ Siemens in Berlin made a breakthrough in 2017 by 20% 11% Aerospace successfully testing gas turbine blades that were 100 percent produced by additive manufacturing. 40% Electronics 22% The company also claims that it can build proto- types up to 90 percent faster than normal with Machinery & 23% 70% Equipment this technology.

Pharma/Medical 16% 70%

likely very likely

* survey of 900 global companies Source: EY Global 3D Printing Report 2016

6 Industry Overview 2019/20 | gtai.com

Supporting Innovation form the entire additive manufacturing process chain; comprising the development, application A number of national alliances, initiatives and and implementation of additive manufacturing working groups have been established to support methods and processes. Extensive experience in cross-industry additive manufacturing research meeting industrial contract and research project and development activities. These allow potential requirements ­ both nationally and internationally ­ users and development partners from industry to form the basis from which the alliance develops work together to develop additive manufacturing customized for clients and manages com- applications for a number of industry sectors. plex assignments.

VDMA AG Additive Manufacturing Germany’s Mechanical Engineering Industry Fraunhofer Society Association (VDMA) hosts more than 120 members The Fraunhofer Society ("Fraunhofer Society in its Additive Manufacturing working group, pro- for the Advancement of Applied Research") viding an array of industrial 3D printing-related is a German research with 72 services to its members. institutes spread throughout Germany, each focusing on different fields of applied science. Fraunhofer Additive Manufacturing Alliance With over 25,000 employees (mainly scientists The internationally renowned Fraunhofer Society and engineers) and an annual research budget Institutes are at the frontier of research activities of around EUR 2.3 billion, it is the biggest in Germany and closely cooperate with industry organization for applied research and devel- players along the value chain. The Fraunhofer opment services in Europe. Additive Manufacturing Alliance encompasses 18 institutes that are located across Germany to

Selected Additive Manufacturing Players in Germany Showcase Fraunhofer Additive Category: Research & Development Manufacturing Alliances 1 Direct Manufacturing Research Center (DMRC) 2 Laser Zentrum Nord Schleswig- 3 Fraunhofer Institute for Manufacturing Technology and Advanced Holstein Mecklenburg Materials IFAM Hamburg Western-Pomerania 2 4 Fraunhofer Institute for Factory Operation and Automation IFF Bremen 3 Brandenburg 5 Fraunhofer Institute for Technologies and Systems IKTS Nieder- 8 6 Fraunhofer Institute for Laser Technology ILT sachsen 4 Berlin Magdeburg 7 Fraunhofer Institute for Manufacturing Engineering and North Rhine- Westphalia 1 Saxony- Automation IPA Anhalt 15 Paderborn 8 Fraunhofer Institute for Production Systems and Design Oberhausen 5 11 13 Technology IPK 6 9 Dresden Hessen Thuringia 9 Fraunhofer Institute for Production Technology IPT Aachen Saxony 10 Fraunhofer Institute for Mechanics of Materials IWM Rhineland- Darmstadt Palatinate 11 Fraunhofer Institute for Machine Tools and 14 Technology IWU

Saarland 12 Fraunhofer Institute for Industrial Engineering IAO Baden- Württemberg 13 Fraunhofer Institute for Material and Beam Technology IWS 7 12 Bavaria Fraunhofer Institute for Computer Graphics Research IGD Stuttgart2 14 10 15 Fraunhofer Institute for Environmental, Safety and Freiburg Energy Technology UMSICHT

Source: Germany Trade & Invest, 2017

7 MARKET OPPORTUNITIES Microelectronics and

Germany is a major microelectronics and electrification fueling growth force, secur­ing its place at the top of the of 103 percent for the period 2000 to 2016. It is international table as Europe’s lead­ also the semiconductor sector’s main industry ing semiconductor production location. sector client, accounting for around 44 percent of domestic industry demand. Germany expects to Europe’s Semiconductor Leader dominate the European market and occupy the With one in three chips produced in Europe being second place internationally, in terms of per capita German-made and accounting for more than microelectronics consumption for ; with a half of European microelectronics production, forecast of USD 9.6 billion in 2021 putting it only Germany has established itself as an international behind China (USD 11.4 billion). leader in sensors systems, energy-efficient elec- tronics and chip-based . Increased levels of Industrial Electronics automation in passen­ger vehicles and the ongoing Microelectronics has a decisive role to play in the digitalization of industry are creating increased ongoing digitalization of industrial production. demand for ad­vanced electronics and sensor Microelectronics and microsystems are central to technologies. Germany’s Industrie 4.0 project to establish the country as an integrated industry lead market Automotive Electronics and provider. Industry also recorded growth in account for around 80 percent of semiconductor demand, recording an increase of in modern vehicles. Mobile 49 percent during the period 2000 to 2016. The access, digital operating controls and electronic industry sector is the second largest semiconduc- assistance systems – once the sole preserve of tor segment, with a 24 percent semiconductor the premium segment – are slowly finding share. their way into all vehicle segments. The sector is driving increased chip demand, with digitalization

Worldwide Usage of Microelectronics for Vehicles in USD billion

9.0%

5.6% 11.4 5.5%

9.6 5.1% 9.3 1.9%

8.0 7.3 7.4 7.1 5.2% 7.0 6.5 6.3

5.2

4.2

USA Germany Rest of Europe Japan China Rest of Asia

2016 2021

Source: ZVEI 2017

8 Industry Overview 2019/20 | gtai.com Schleswig- Holstein ISIT Itzehoe Showcase Microelectronics Mecklenburg Western-Pomerania Clusters in Germany Hamburg

Bremen

FBH Berlin Niedersachsen IZM Berlin HHI Berlin Berlin IHP Frankfurt Brandenburg (Oder) Saxony- Anhalt North Rhine- IZM Moritzburg Westphalia IPMS Dresden Saxony IIS Dresden FHR Wachtberg Thuringia Hessen IIS Ilmenau ENAS Rhineland- Chemnitz Palatinate IMS Duisburg IISB Erlangen IIS Erlangen Saarland

Research Fab Microelectronics Bavaria Baden- Germany Institute Locations Württemberg Fraunhofer Institutes IAF Freiburg EMTF München Leibniz Institutes

Source: Fraunhofer-Verbund Mikroelektronik 2017

Leading Clusters global position in semiconductors and electronics in four future-relevant technology areas (“- Germany’s microelectronics sector is organized based technologies,” “compound semiconductors into strong regional clusters that form a complete and special substrates”, “heterointegration,” and industry value chain network responsible for “design, testing and reliability”). Industry clients, developing the smart, integrated systems required SMEs and research institutes alike will enjoy access to meet industry’s changing needs. In the east, to the complete micro- and value the Free State of Saxony – home to the Silicon chain from a single source. As the world’s largest Saxony cluster – enjoys a reputation as Europe’s pool for smart system technologies and intellec- biggest micro- and nanoelectronics location. The tual property rights, the initiative will strengthen microTEC Südwest cluster in Baden-Württemberg German and European competitiveness in the field. counts as a major European competence and The BMBF has made total funding of EUR 350 mil- cooperation network for intelligent microsystem lion through to 2020 available for the project. technology solutions in the fields of production, mobility, health, and energy. The it’s OWL cluster Semiconductor Investment in OstWestfalen-Lippe is playing a leading role in The BMBF “Microelectronics from Germany – Driver developing automation and mechatronics tech- of innovation for the digital economy” initiative nologies to make Industrie 4.0 a reality. will see public funding in the region of EUR 1 billion invested in the country’s chip industry through to Research Fab Microelectronics Germany 2020. Additional industry investment of around Eleven institutes within the Fraunhofer Group for EUR 2.3 billion should also be generated over the Microelectronics and two institutes from the Leib- same period as part of efforts to strengthen Ger- niz Association have developed a concept for a many’s already thriving semiconductor sector. cross-location micro- and nanoelectronics research factory. The “Research Fab Microelectronics Germany” initiative will consolidate the country’s

9 INVESTMENT CLIMATE Dynamic Labor Market

A Tradition of Quality Engineering Excellence Germany enjoys a long and successful tradition According to the German Federal Statistical in mechanical engineering and manufacturing. Office, Germany has a particularly high academic Researchers, companies and employees alike uptake rate. In the academic year 2018/2019, some continue to profit from the country’s global know- 508,800 students – at 429 institutions of higher how. The “Made in Germany” quality seal has long education – embarked on a course of academic been recognized as a sign of engineering excel- study. Germany’s share of university students in lence and precision across the globe. the sciences, mathematics, computer sciences, and engineering is the highest in the EU, with more than 21 percent of all students. Workforce in Germany by Level of Professional Education 2015 percent of total workforce Dual Education System In order to secure the economy’s demand for highly qualified personnel, Germany developed a dual system in vocational training – combining

Unskilled 17% the benefits of classroom-based and on-the-job training over a period of two to three years. In Skilled craftsmen close cooperation with the German government, University (dual education the German Chambers of Industry and Commerce graduates 21% apprentices) 52% (IHKs) and the German Confederation of Skilled Crafts (ZDH) ensure that exacting standards are Vocational college rigidly adhered to, guaranteeing the quality of graduates and training provided across Germany. One in five Ger- technicians 10% man companies take part in the dual vocational training system, thereby turning apprentices into Source: Federal Statistical Office 2017 specialists who fit each company’s needs. Most apprentices receive an employment contract after training. Companies participating in vocational Growth of Labor Costs in Manufacturing 2007-2017 training usually take more than 70 percent on as annual average growth in percent employees, underlining the importance of the training system. More than 1.3 million young peo- ple are currently in vocational training in Germany.

Greece -06% Competitive Labor Costs Spn 20% High productivity rates and steady wage levels make Germany an extremely attractive invest- Frnce 21% ment location. Since 2007, wages in the manu- facturing sector have risen in most European Germn 22% countries (EU-28), with the growth rate averaging Netherlnds 23% 2.5 percent. While some countries – particularly in Eastern Europe – experienced a rise of more U 24% than five percent, Germany recorded one of the

Europen Unon 25% lowest labor cost growth rates (2.2 percent) in the manufacturing sector within the EU. Highly Czech 43% flexible working practices such as fixed-term con- tracts, shift systems, and 24/7 operating permits Slov 48% contribute to enhance Germany’s international Hunr 53% competitiveness as a suitable investment location for internationally active businesses. Polnd 54%

Source: Eurostat 2018

10 Industry Overview 2019/20 | gtai.com

Creating Investment Stability

Open and Transparent Markets TOP 10 Electronics FDI Destination Countries in Europe The German market is open for investment in practically all industry sectors, and business Destination Country 2014 2015 2016 2017 2018 Total activities are free from regulations restricting day- to-day business. German law makes no distinction Germany 53 72 49 56 31* 230 between Germans and foreign nationals regarding United Kingdom 33 30 30 31 41 165 investments, available incentives or the establish- France 21 23 21 26 24 115 ment of companies. The FDI legal framework Poland 13 12 24 24 18 91 in Germany favors the principle of freedom of Spain 12 11 7 14 15 59 foreign trade and payment. Generally, there are no Netherlands 9 11 13 5 13 51 restrictions or barriers to capital transactions or Russia 8 8 11 9 13 49 currency transfers, real estate purchases, repatria- Hungary 4 9 12 11 10 46 tion of profits, or access to foreign exchanges. 6 13 8 3 11 41 Sound and Secure Legal Framework Turkey 9 4 7 17 8 45 According to the World Economic Forum (WEF), * preliminary data Germany is one of the world’s best locations in Source: fDi Markets 2019 terms of planning and operating security. Ger- many is also one of the world’s leading nations in terms of intellectual property protection and pro- tection from organized crime. German regulatory including the WEF and Ernst & Young. The 2018 authorities are highly professional in their opera- Logistics Performance Index of the World tions. The German legal system also counts as one ranked Germany first worldwide for its logistic of the world’s most efficient and independent. proficiency; singling out Germany’s quality of Social, economic, and political stability provides a trade and infrastructure. Accumulated solid base for corporate investment projects. Con- in this score for Germany are high marks for tractual agreements are secure and intellectual the quality of and air transport, excellent property is strictly protected in Germany. railroads and port infrastructure, as well as its information infrastructure. First Choice Business Location Ernst & Young’s European Attractiveness Survey 2018 confirms Germany’s reputation as one of the most attractive business locations in the world. FDI in the German Electronics Industry International decision makers ranked Germany • No. 1 destination for investments in the elec- first within the EU in the “most attractive busi- tronics industry within the European Union, ness location” category. A substantial 66 percent with 56 new projects in 2017 alone. of the 502 plus international managers surveyed • 3rd most attractive electronics FDI destina- consider Germany to be western Europe’s foreign tion worldwide after the USA and China (277 direct investment (FDI) magnet. The AmCham new investment projects in the electronic Business Barometer 2018 highlights the positive industry between 2013 and 2017) regard in which US companies active in Germany • Most projects from China (58 projects), USA hold the country. Asked about their opinion on (41 projects) Switzerland (22 projects), Japan the German business environment, 91 percent of (19 projects), and the UK (14 projects) US company respondents expressed satisfaction. • 17 percent of all FDI projects within the last Eighty-three percent are convinced that Germany five years established a manufacturing site will either improve or maintain its competitive in Germany. edge in the future.

Reliable Logistics Infrastructure Germany’s infrastructure excellence is confirmed by a number of recent studies including the Swiss IMD’s World Competitiveness Yearbook and vari­ ous investor surveys conducted by institutions

11 INVESTMENT CLIMATE Financing & Incentives in Germany

Incentives programs in Germany are available Investment Project Financing by Bank Loans through different public funding instruments and Debt financing is a central financing resource for different funding purposes. The individual and the classic supplement to equity financing funding requirements may, for example, result from in Germany. It is available to companies with a investment projects, research and development continuous cash flow. Loans can be provided to activities, personnel recruitment, working capital finance long-term investments, working capital needs or other specific purposes. The different and operational costs (R&D, personnel) and for incentives instruments including grants, loans and bridging temporary financial gaps. Besides offers guarantees are generally available for all funding from commercial , investors can access pub- purposes and can ordinarily be combined; thus licly subsidized loan programs in Germany. These matching the different business activity needs at programs usually offer loans at attractive interest different development stages of the company. rates in combination with repayment-free start- up years, particularly for small and medium-sized Please visit Investment Project Financing by Private Equity companies. These loans are provided by the KfW our for Technologically innovative start-ups in particular federal development bank and also by regional more incentives have to rely solely on financing through equity development banks. information: such as venture capital (VC). In Germany, appro- www.gtai.com/ priate VC partners can be found through the Investment and R&D Incentives incentives Bundesverband Deutscher Kapitalbeteiligungs- When it comes to setting up production and ser- gesellschaften e.V. (BVK – German Private Equity vice facilities, investors can count on a number of and Venture Capital Association). Special confer- different public funding programs. These programs ences and events like the Deutsches Eigenkapital- complement investment project financing. Most forum (German Equity Forum) provide another important are cash incentives provided in the form opportunity for young enterprises to come into of non-repayable grants applicable to co-finance direct contact with potential VC partners. Public investment-related expenditures such as new institutions such as development banks (publicly , equipment and machinery. R&D project owned and organized banks which exist at the funding is made available through a number of national and state level) and public VC companies different incentives programs targeted at reducing may also offer programs at this de- the operating costs of R&D projects. Programs velopment stage. operate at the regional, national, and European level and are wholly independent from investment Incentives in Germany incentives. At the national level, all R&D project funding has been concentrated in the High-Tech Strategy to push the development of cutting-edge Funding purposes technologies. Substantial annual funding budgets are available for diverse R&D projects.

Working Research & Specific Investments Personnel Labor-related Incentives Capital Development Purposes After the location-based investment has been initiated or realized, companies can receive fur- ther subsidies for up a workforce or the Financing supported by any of the following public funding instruments implementation of R&D projects. Labor-related (combinations of instruments usually possible) incentives play a significant role in reducing the operational costs incurred by new businesses. Public funding instruments The range of programs offered can be classified into three main groups: programs focusing on recruitment support, training support, and wage Equity Mezzanine Grants Loans Guarantees Capital Capital subsidies respectively. Labor-related incentives play a significant role in reducing the operational costs incurred by new businesses.

12 Industry Overview 2019/20 | gtai.com SUCCESS STORY Liaoning Julong Financial Equipment Corp.

Germany Trade & Invest (GTAI) provides a range Creating New Business in Record Time of inward investment-related services to interna- Liaoning Julong‘s decision to establish activities in tional investors. After careful consultation with Germany immediately paid off dividends, with the the individual investor, a support program of con- company being awarded a major contract from sultancy and information services is provided to the largest French bank after the new company help set the stage for investment success. Here we was founded. provide a typical example of the types of services we provided to a recent investment project. “The services offered by the experts at Germany Trade & Invest were Company Information extremely valuable to us during the • Liaoning Julong Financial Equipment Corp., established in 1998 in Anshan, Julong, China investment process. That’s why the

• The company is specialized in banknote han- process took only six months – from dling and processing. Liaoning Julong Financial the planning phase to completion.” Equipment Corp. also manufactures parts on an Bai Li, Managing Director, Julong Europe GmbH OEM basis for major international companies.

Product Information Julong Europe places great value on the profes- • Banknote handling and processing machines sionalism, diligence, and high level of education of (such as currency counters, sorters, and ATMs) its German employees. The availability of highly trained professionals was one of the company‘s Location Requirements most important selection criteria. The strategic focus on R&D and product quality improvement • The company wanted to set up a base means that the German subsidiary performs more in Germany to investigate interna- than a sales market role; being responsible for tional markets, support distributors, R&D repair team creation, the setting up of a pro- and manufacture/ products. prietary assembly plant, and the implementation • Proximity to European financial sector and Euro- of Julong‘s international strategy. pean Central Bank key to site selection decision The Julong Group contacted the official invest- • Central European headquarters with ment promotion agencies of several different ready access to European markets countries with its European investment project and conducted a number of site visits prior to Project Information selecting Germany as its ultimate investment • Investment volume: EUR 1 million location. • Jobs to be created: 40–70 within the first three years

• Location: Headquarters in Frankfurt (Main) with satellite in major German cities

Germany Trade & Invest Support

• Site selection

• Market and business development services

• Staff recruitment services

• Tax & legal information

13 OUR SERVICES Germany Trade & Invest Helps You

Germany Trade & Invest’s (GTAI) teams of industry ties, and other institutes active in the industry. experts will assist you in setting up your opera- Our team of consultants is at hand to provide you tions in Germany. We support your project man- with the relevant background information on Ger- agement activities from the earliest stages of your many’s tax and legal system, industry regulations, expansion strategy. and the domestic labor market. Germany Trade & Invest’s experts help you create the appropriate We provide you with all of the industry informa- financial package for your investment and put you tion you need – covering everything from key in contact with suitable financial partners. Our markets and related supply and application sec- incentives specialists provide you with detailed tors to the R&D landscape. Foreign companies information about available incentives, support profit from our rich experience in identifying the you with the application process, and arrange business locations which best meet their specific contacts with local economic development corpo- investment criteria. We help turn your require- rations. ments into concrete investment site proposals; providing consulting services to ensure you make All of our investor-related services are treated the right location decision. We coordinate site with the utmost confidentiality and provided visits, meetings with potential partners, universi- free of charge.

Our support services for your investment project

Strategy Evaluation Decision & Investment

Project management assistance

Business opportunity Project partner Joint project manage- Coordination and sup- Market entry analysis and market identification and ment with regional port of negotiations strategy support research contact development agency with local authorities

Location consulting/Site evaluation

Identification of Cost factor Site Site visit Final site project-specific analysis preselection organization decision support location factors

Support services

Organization of Accompanying Identification of Project-related meetings with Administrative incentives application relevant tax and financing and legal advisors and affairs support and establishment legal issues incentives­ consultancy financial partners formalities

14 Industry Overview 2019/20 | gtai.com CONTACT Investor Consulting

Jerome Hull is the senior Max Milbredt is respon- manager for electronics & sible for electronics and microtechnology technologies photonics at Germany in Germany Trade & Invest’s Trade & Invest. He consults Mechanical & Electron- international companies ics Technologies team. An on establishing a business acknowledged industry in Germany and actively expert, Jerome has success- promotes Germany as a fully accompanied numerous investment projects business location. Max has been involved in over from North America, Asia and Europe. thirty projects, ranging from large multinationals to start-ups, that have helped create more than 650 new jobs in Germany.

For questions on how to establish your business in Contact us at our headquarters in Berlin: Germany please contact Jerome Hull Germany Trade & Invest at [email protected] or Max Milbredt Friedrichstraße 60 at [email protected]. 10117 Berlin Germany For more information about the automotive T +49 30 200 099-555 industry in Germany, please visit our website: F +49 30 200 099-999 www.gtai.com/electronics

Imprint Picture Cover: iStockphoto/kynny Page 15: Jerome Hull/Illing & Vossbeck Fotografie Publisher Max Milbredt/Germany Trade & Invest Germany Trade and Invest Gesellschaft für Außenwirtschaft Notes und Standortmarketing mbH All rights reserved ©Germany Trade & Invest, Friedrichstraße 60 March 2019 10117 Berlin Germany Reproduction, in whole or in part, only permissible with express prior authorization. All market data Executive Board provided is based on the most current market Dr. Jürgen Friedrich, Chairman/CEO information available at the time of publication. Dr. Robert Hermann, CEO Germany Trade & Invest accepts no liability for the actuality, accuracy, or completeness of the Editor information provided. William MacDougall, GTAI Order Number Layout 20850 Monika Eschweiler, GTAI

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15 About Us Germany Trade & Invest (GTAI) is the economic development agency of the Federal Republic of Germany. The company helps create and secure extra employment opportunities, strengthening Germany as a business location. With more than 50 offices in Germany and abroad and its network of partners throughout the world, GTAI supports ­ German companies setting up in foreign markets, promotes Germany as a ­business location and assists foreign companies setting up in ­Germany. All investment services and related publications are free of charge.

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