Germany as a Business Location for Innovation
Germany Trade and Invest is the economic development agency of the Federal Republic of Germany for foreign trade and location marketing. GTAI supports both German and foreign companies with comprehensive and industry-specific information - daily trade news are provided for export-oriented German companies free of charge - which is based on the expertise and profound knowledge of the respective countries of 60 experts working abroad. Additionally, GTAI offers an extensive range of consulting services for foreign investors. CEO Dr. Benno Bunse answers our questions about Germany as an investment location for the Global Success Club News.
GSC: In 2012, Germany recorded a stock of foreign direct investment that amounted to 558 billion Euros. Germany Trade and Invest informs investors about framework conditions, funding programs, and investment opportunities in Germany, assists foreign companies during the establishment process, and knows the reasons for investments. Why is it profitable to invest in Germany?
Dr. Benno Bunse: Germany is the largest and strongest economy in Europe which makes it a preferred destination for foreign investment. But it is not the economy's size alone that is decisive; it is rather the diverse business landscape characterized by medium-sized enterprises that is internationally successful in many industries. The manufacturing sector in particular plays a major role in Germany: It makes up almost one fifth of the total gross value added. Therefore, more and more foreign companies choose Germany as a central location for their production. The extensive innovative strength of German companies is reflected in the number of patents. More than 13 400 of them were approved last year, which is almost twice as much as patents from France and the UK together.
Due to its central location and its modern infrastructure, Germany is suitable not only as a sales market but also as an ideal basis to enter further European markets. In addition, foreign investors benefit from the excellent education and research landscape, well-trained professionals, and a high degree of legal certainty. And last but not least, foreign investors appreciate the variety of government subsidies on which they can rely during the establishment process.
GSC: On your website you show a well-structured chart about your free, comprehensive counseling services – from strategy development through to evaluation for decision making. Due to its extensive range of services, GTAI appears to be very similar to a consulting agency. How can this assistance be imagined?
Dr. Benno Bunse: In addition to the assistance in obtaining a business visa, our consulting portfolio ranges from strategy development through to assistance during the final establishment process. Especially in early stages it is important to analyze market and business potentials in order to then develop a strategy for market entry. Once it is developed, we start to contact relevant project partners and search for a suitable location. Our employees are involved in the organization and the support during site visits. At the same time we start resolving project-relevant legal and tax issues and initiate a project-related financing and funding consultation. After the completion of this process, contacts to respective legal and financial partners are established. Furthermore, our employees assist investors with public application processes and the coordination of negotiations with local authorities. Our goal is to provide assistance that makes investors feel well advised and not left alone at any stage of the establishment process.
GSC: What other incentives for foreign direct investment are offered by the federal government?
Dr. Benno Bunse: When it comes to funding investment projects, Germany focuses on the provision of direct grants. Thereby, companies are supported when capital is needed the most: in the initial phase when the cost for the construction of production sites, for instance, can be very high. Loans and guarantees by public banks can be considered as an alternative or additional option.
GSC: East Germany is increasingly positioning itself as a location for innovation and is a major global cleantech player, especially in the field of solar and wind energy. 40 per cent of wind power plants installed in Germany, for instance, can be found in East Germany. The Berlin-Brandenburg capital region and the "Silicon Saxony" high-tech region are two locations where the ICT sector is booming. Which other future-oriented industries in East Germany show a lot of potential and – due to government investments – are particularly attractive for FDI?
Dr. Benno Bunse: The former East German States have already created several high-tech centers with great future potential in the past. In addition to the cleantech industry and the ICT sector, nanotechnology and biotechnology can certainly be named as attractive future fields. One quarter of all German biotechnology companies, for example, are located in Eastern Germany. Optical technologies are also a promising area that has a strong presence in East Germany, especially in the regions of Thuringia and Berlin-Brandenburg.
GSC: Last but not least, we would like to give further advice to our readers based on your experience with investors. What are common mistakes that investors should avoid in order to enter the market successfully?
Dr. Benno Bunse: Of course, there is no general advice that is applicable in all situations. Generally, however, it can be said that those who collect detailed information in time should not encounter any unexpected problems. In particular with regard to information and advice considering a business location in Germany, our free investment guides provides a good foundation. Our team Investors Services can also assist entrepreneurs with detailed information, counseling services, or assistance in project management during the establishment phase.
GSC: Thank you very much for this interview, Dr. Bunse.
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