Invest inGermany January 2005 Volume 2/1

magazine

Foreign Investments:
Top Priority
Chancellor Schrder with Foreign Investors

Major Investment Decision Success Story

Crafty Deal for Paper Maker Jamba! Rings the Right Number

Foreign Direct Investment Innovation Report

Private Equity Heads for Germany Tiny Giants Nanotech in Germany
CO N T E N T S

E D I TO R I A L B U S I N E S S A S S I STA N C E
Written by the two managing directors of Bundling High-Tech Competence
Invest in Germany . . . . . . . . . . . . . . . . . . . . . . . . .3 How to find your way to the high-tech
networks of Germany . . . . . . . . . . . . . . . . . . . . .14
W H AT G E R M A N P O L I T I C S D O E S
Supporting Mid-sized Companies The E-Trade Center
Mid-sized companies build the backbone First web-address for those seeking
of German economy . . . . . . . . . . . . . . . . . . . . . . .4 business partners . . . . . . . . . . . . . . . . . . . . . . . . .15

Starting Your Business with Subsidies I N N OVAT I O N R E P O RT

Information about incentives for business . .5 Tiny Giants Nanotech in Germany
6 IIC Successes At the forefront of nanotechnology . . . . . . .16
Eastern Germanys Dealmaker
Story about the Industrial Investment S E C TO R R E P O RT
Council (IIC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Medical Technology Reaches a Crossroads
About the largest and still expanding
F O R E I G N D I R E C T I N V E STM E N T medical technology market in Europe . . . . .18
Private Equity Heads for Germany
Major foreign private equity firms M A J O R FA I R S I N G E R M A N Y
get active . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 Focusing on Plastics and Rubber
Report about the K 2004, the biggest
The Effects of Foreign Acquisitions plastics fair worldwide . . . . . . . . . . . . . . . . . . . .21
What economic scientists found out
about the topic . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 AWAY F R O M H O M E
11 Smart Brothers Germans prize high-quality goods
S U CC E S S STO RY Visiting the Japanese entrepreneur
Motorola in Germany: Shaping the Future Kinya Terada in Frankfurt am Main . . . . . . . .22
The company is one of the biggest
foreign employers in the country . . . . . . . . . .10 MARKETING GERMANY
Germans Wonder: Whats in a Name?
Jamba! Rings the Right Number A campaign for strengthening the brand
From zero to $ 273 million the coup of Made in Germany . . . . . . . . . . . . . . . . . . . . . . .24
the Samwer brothers . . . . . . . . . . . . . . . . . . . . . .11
ABOUT US
M A J O R I N V E STM E N T D E C I S I O N Promoting the Soccer World Championship
Crafty Deal for Paper Maker 2006
Canadian-American Mercer International Our activities in the framework of the
18 Nanotechnology invests in the German pulp industry . . . . . . .12 promotion of the WM 2006 . . . . . . . . . . . . .25

On the cover: Chancellor Gerhard Schrder with foreign investors. Big picture: the Chancellor with Mr. Jeffrey M. Immelt, Chairman of the Board and CEO of General
Electric at a press conference in Berlin 23.10.2002; small pictures (from left to right): the Chancellor with Sir Christopher Gent, CEO of Vodafone in the Chancellors
Office 28.11.2002; the Chancellor at the laying of the foundation stone of the Zellstoff Stendal Pulp Factory, an investment of the Canadian-American Mercer Inter-
national 30.08.2002; the Chancellor visiting the Aker-Shipyard (a Norwegian investment) in Wismar 20.04.2004.

M A ST H E A D

Publisher: Writers: Christopher Cordy, Clive Freeman, Terry No reprints may be made without the prior consent of the
editors. They reserve the right to publish or shorten readers
Invest in Germany GmbH Martin, Ed Meza, Edith Oltay, Joellen Perry, Ed Ward
letters. The publication is based on information accessible to
Anna-Louisa-Karsch Str. 2, D-10178 Berlin, Germany the public which the editors consider to be reliable. However,
Phone: +49 30 206 570 Design and production: they assume no liability for the accuracy of such information.
The articles published under names do not necessarily reflect
Fax: +49 30 206 571 11 ergo Unternehmenskommunikation GmbH & Co. KG,
the opinion of the editors.
E-Mail: office@invest-in-germany.com Hansaring 55, D-50670 Kln
Internet: www.invest-in-germany.com Art director: Michael Kemmerling
Managing Directors: Dr. Urda Martens-Jeebe, Art design: Christian Bernauer
Gerhart Maier Cover photos: Bundespressearchiv
Editor: Eva Forinyak Litho: D.I.E. Grafikpartner, Cologne
Consultant Editor: Kevin Cote Print: PrintService von Wirth, Bergheim

2 Invest in Germany magazine January 2005


The current challenges will be reinforced in 2005
2004 has been a year of constant
and fundamental change
not only for the global economy and the deci-
sion makers in international politics but also
for investment promotion agencies. World-
wide economic growth has finally started to
take off and it is still gathering pace. On the
other hand the accelerating global division of
labour is a cause of controversy because of the
challenges it poses to the traditional western
economies in the USA and Western Europe.
Issues such as globalization, technology
and the shift towards a service based econo-
my have, not only in Germany, been very
high on the agenda in 2004. The challenges
of 2004 will only be reinforced in 2005.
In the light of these issues Invest in Ger-
many will expand its range and depth of ser-
vices. The Federal Government has allocated
additional funds to raising the profile of the
Business Location Germany which will give
us considerably more room to manoeuvre in
the future.
In this edition of the Invest in Germany
Magazine we will start off a series of editori-
als which will highlight the current hot topics
of interest and discussion in the German eco-
nomy. In our last edition you will have already
become familiar with the new commissio-
Photos: BASF, Jamba!, Jenoptik, Invest in Germany
ners for foreign investment. Now we as the
managing directors of Invest in Germany
would like to introduce ourselves to you.
In this context we will give you a brief
overview of what is on the agenda of Invest
in Germany in 2005.
Firstly, Invest in Germany will grow as a
company. Since mid 2004 two managing
directors have been sharing duties at the helm
Invest in Germany magazine January 2005
Dr. Urda Martens-Jeebe
Managing Director
to add flexibility and increase the internatio-
nal exposure of the company. Additionally
the workforce of IIG will be almost doubled
by the end of 2005. To cope with these
changes we will be moving to more spacious
offices with more suitable facilities for the
reception of clients and visitors.
Secondly, we will enhance our partner
network. In October 2004 we opened a third
U.S representative office in San Francisco.
Offices in Shanghai and Tokyo will follow
suit. Additionally an agreement of coopera-
tion between Invest in Germany and the Ger-
man Chamber of Trade and Industry will ena-
ble the bilateral German Chambers of Com-
merce abroad to act as representatives for
Invest in Germany in our efforts to offer our
international clients a face to face contact in
their home countries.
Thirdly, in order to deliver our message
more efficiently to our clients, we will launch
a comprehensive information campaign in
our most important target markets. Most nota-
ble in this aspect is that we will refrain from
the so called classical marketing tools like
ad campaigns or spots and focus on the deli-
very of direct, tailor-made information that
will serve to dispel stereotypes and thereby
help our clients to build up a precise and rea-
listic picture of what is really possible in
todays Germany. We will sharpen our pro-
file with regard to sector specific expertise.
IT and the branches that stand for mobility
will be moved into the foreground in much
the same way as the biotech and medical
technologies are currently the focus of much
of our efforts.
Finally, sophisticated strategies of invest-
ment promotion cannot afford to separate
E D I TO R I A L
Gerhart Maier
Managing Director
the way of doing business from the way of
life in the respective country. In order to pre-
sent Germany not only as a high tech loca-
tion with outstanding work ethics, we will in
the future direct the attention of international
businesses to our culture and putting it
plainly how to have fun and take full advan-
tage of the vibrant lifestyle to be had in Ger-
many. There is one particular event in the
future that serves this purpose better than
any conceivable marketing tool: the Football
World Championship in 2006 which will be
taking place in Germany. We will not miss this
unique opportunity to add clout to our inves-
tors approach by linking football and busi-
ness.
Another example in this respect is an all
encompassing initiative from all major players
in German politics and economy to modern-
ise and refresh the image of Germany in Japan.
Invest in Germany will play a decisive role in
this campaign, which is going under the ban-
ner Deutschland in Japan and which will run
from April 2005 to April 2006.
Summing it up, the message is that Ger-
many is in a better position than ever to attract
and provide for foreign investors. A recent
survey put Germany in third place of the most
popular location for foreign investors after the
U.S.A and China, something which is quite
remarkable when you consider the economic
problems faced by Europe in last few years.
To carry this message out into 2005 and
beyond, Invest in Germany, as the first stop
agency for international investors, will pre-
sent itself with new features and faces.
Do not hesitate in finding out exactly
how we can meet your needs.
3
W H AT P O L I T I C S D O E S

Supporting Mid-sized Companies

Most foreign investors associate Germany with large technology
companies that have strong brands DaimlerChrysler, BMW,
Siemens or SAP. However, its Germanys mid-sized companies that
keep the economy going.

T o better support these medium-sized

companies, the government has initiated
numerous programs as part of its Agenda
2010 reforms. Some key elements of the so-
called Pro-Mittelstand initiative include the
formation of a state bank to aid mid-sized
companies and entrepreneurs, programs for
loans and start-up funding, an easing of rules
for registering new businesses and accoun-
ting for small businesses, and a formal High-
Tech Masterplan that features E500 million
in capital for mid-sized entrepreneurial firms.
The Pro-Mittelstand initiative has been ongo-
ing since January 2003, and a group of
experts and scientists recently confirmed in
the MittelstandsMonitor 2004 that prospects
for small and mid-sized companies have
Wolfgang Clement, Federal Minister of Economics and Labour with the winners of the
improved.
StartUp German Founders Prize.
The High-Tech Master Plan has four goals.
To improve the basic conditions for establish-
ing new, technology-based companies in
Germany; to offer new incentives for research from private investors, up to E1.7 billion will The experience from the pilot project is now
and development, to create new models of be available for growth-oriented enterprises being used to support spin-offs on a larger
cooperation between public research insti- in Germany over a five-year period. The fund scale.
tutes and medium-sized companies, and, final- is run jointly by the European Recovery Pro- Fourth, Germany aims to ensure the
ly; to prevent a shortage of skilled workers in gram Special Fund and the European Invest- access of newly established tech companies
science and engineering through a dedicated ment Fund. to relevant promotion programs. For instan-
policy of qualification and education. Second, tax relief measures were adopt- ce, the BioChancePlus program was launch-
ed for 2004 and 2005 aimed at securing inter- ed to help connect young companies with
The High-Tech Master Plan nationally competitive tax conditions for ven- well-established biotechnology research net-
features H500 million in capital ture capital in Germany. For instance, the works.
corporate income tax rate was reduced to a Finally, the government has initiated edu-
As the worlds second-biggest technology standard 25 percent. In addition, efforts have cation programs at all levels from second-
exporter, Germany has lots to offer innova- been made to create legal certainty for ary schools to universities to motivate young
tive start-ups, including a strong research previously undefined tax scenarios. people to take initiatives and start their own
community that supports young companies. With the introduction of the law for the businesses. Start-up competitions are given
The recent worldwide decline in venture promotion of venture capital, the half-income nationwide media attention and a new pro-
Photo: StartUp-Deutscher Grnderpreis

capital funding has taken its toll on Germa-
ny, and the government is trying to turn the
situation around with six key initiatives.
First, the government is focusing efforts
on funding for the very early R&D phase of
start-ups, since this funding has nearly dried
up in Germany. One measure is a new joint
venture capital fund. Including contributions
taxation method for the so called carried
interest came into force. The result being an
internationally competitive tax system.
A third measure in the program is a pilot
project to facilitate new start-ups from uni-
versities or research institutions. From 2001
to 2003, the Federal Ministry of Education
and Research provided funds for 45 spin-offs.
gram supports women entrepreneurs. These
efforts are focused on ensuring a continuous
labor supply for tech companies and training
and motivating new entrepreneurs.
Seen as a whole, the Pro-Mittelstand
Initiative has placed renewed emphasis on
Germanys mid-sized companies, offering
them easier conditions for doing business.

4 Invest in Germany magazine January 2005

Starting Your Business
with Subsidies
Investors interested in Germany are offered numerous support
programs, including loans, subsidies, grants and business consulting.
T he German government is serious about
sharing the countrys reputation for high-
quality goods with all investors who are inter-
ested in being a part of it. In fact, more than
3,000 support programs are available to inves-
tors who want to contribute to and benefit
from Germanys high standards of produc-
tion. The support programs are available not
only in Germanys new eastern states, but in
western regions of the country as well.
Financed by the federal government, the
states and international organizations, inclu-
ding the European Union, the support pro-
grams offer funding and consulting for inves-
tors with entrepreneurial initiatives, particu-
larly medium-sized businesses. This
government aid is intended to support busi-
ness start-ups, investment, research and
development, and training, as well as im-
prove and protect the environment. The aid
comes in the form of investment premiums,
additional capital allowances, regional sup-
port and special credit programs.
Most programs are designed to help
small and medium-sized businesses, accord-
ing to the Federal Ministry of Economic
Affairs and Labor. However, large companies
may receive grants of up to 35 percent of
their investment costs in the new, eastern
German states and up to 18 percent in the
western German states. In some cases, grants
to mid-sized businesses may be as much as
50 percent of the initial investment.
Government Support for
Investing in Germany
Subsidies are a main form of support from the
German federal government and regional
governments. They are available under two
programs: The Improvement of Regional Eco-
nomic Structures program, and the Investment
Subsidy for eastern Germany. The former aims
to attract investors who will help create addi-
Invest in Germany magazine January 2005
tional income on a permanent and direct basis
in a particular region. From 1991 to 2002, some
E32.5 billion helped support industry and cre-
ate the basis for 880,000 new jobs.
Subsidies are granted on the condition
that the permanent jobs created have to be
maintained for at least five years after the
investment project ends. The latter is a sub-
sidy for the acquisition or manufacture of
new depreciable movable fixed assets or for
the purchase or construction of buildings.
A second type of aid is low-interest loans
or interest-subsidized loans for start-ups. The
Kreditanstalt fuer Wiederaufbau accepts
applications from private credit institutes for
loans of 500,000 to E5 million with maturi-
ties of 10 to 20 years, for example. Under a
similar form of aid, called Capital Resources
Aid, loans are made at maturities of up to ten
years for as much as E1 million.
Generous incentive packages reduce
investment costs in Germany
For small and medium-sized companies
these packages can total up to:
50 % 28 %
Grants
47 %
Gov. Loans,
25 % Guarantees and
Holdings
25 % 25 %
Down payment
of the investor
New German Old German
States States
Source: BMWA, Invest in Germany
Third, the state offers guarantees for some
investment projects if banks are unwilling to
secure a loan and the project would other-
wise not come to fruition. In some cases, up to
80 percent of the loan amount is guaranteed.
Finally, grants are made available for
research and development, human resource
development and environmental protection.
Research and development fields supported
include natural science, climate and envi-
ronmental research, energy, new technolo-
gies, information and communications tech-
nology, biotechnology, health research, job
organization and design, transport, space
travel and construction. Human resource
investment is supported with the help of the
European Social Fund, which focuses on job
training. Additional grants for environmental
protection projects focus on air pollution con-
trol, noise reduction, water pollution control,
waste disposal, energy conservation and
renewable energy sources.
International Support for
Investing in Germany
International investors interested in Europe-
an Union support for new business initiatives
usually obtain such support through German
government grants funded by EU capital.
From 2002 to 2006, for instance, Germany has
E29.7 billion available in EU funding to pro-
mote the economy.
In some cases, investors apply directly to
the EU for assistance. Invitations for applica-
tions can be found in the Official Journal of
the European Union. Support includes loans
at concessionary rates of interest, equity
investments or venture capital. Further aid
from the EUs Structural Fund is available to
small and medium-sized enterprises. In addi-
tion, such companies benefit from non-finan-
cial assistance such as business support ser-
vices and consulting.
5
 Jenoptiks world-class laser
technology plant in
Jena, in the southeastern
state of Thuringia.

Eastern Germanys Dealmaker

Eight years ago the German federal government and the six eastern 18,000 direct jobs. Among the world-class
German states founded the Industrial Investment Council (IIC) to companies to take advantage of the IICs free-
of-charge consulting work services like mar-
support the regions transition to market economy by luring inter- ket research, site selection consulting, and
national investments. The idea turned out to be a pretty good one. financial incentives advising are BMW, Ves-
tas, and Oracle.
Initially, assets from the former East Ger-

L eave it to a woman to bridge Italys warm

Mediterranean vibes and the cool Hanse-
atic climes of Germanys Baltic coast. The
woman in this case is Alice, the codename
for a high-speed DSL Internet service from
Telecom Italia, Italys leading telecommuni-
cations outfit. In October, the firm announced
its newest customer support contact center
would debut in Rostock, a harbor town in the
northeastern German state of Mecklenburg-
Western Pomerania. A well-qualified work-
force, competitive wages and incentives, and
the firms desire to increase its already-
successful German presence drew the Italians
to Rostock, where a service center will em-
sulting agency that promotes investment in
eastern Germany and worked on the deal.
Projects in which the interests of both parties
align so perfectly are especially gratifying.
Well-qualified workforce,
competitive wages, and incentives
This particular alignment of interests is just
the latest in a long line of IIC coups. Found-
ed in 1996 to support eastern Germanys
transition to a market-based economy by
luring international investment, the IIC has
been instrumental in the regions stunning
transformation since the Berlin Walls fall in
manys political party were to fund the IIC for
just four years. But the agencys quick suc-
cesses in its three main focus areas technol-
ogy and services, automotive, and life sciences
and chemicals spurred its shareholders, the
German federal government and each of the
six eastern German states, to renew its
budget twice. Now, with a charter extended
to the end of 2008, the IIC boasts both a well-
honed strategy for success and a truly global
reach, with offices in Paris, Washington D.C.,
San Francisco, Detroit, and Tokyo.
Central to the IICs strategy is the idea
that success builds on itself. We see the
establishment of new companies in eastern
Photos: BMW, Vestas

ploy 170 locals next year. 1989. In just eight years, the IIC has encour- Germany as having a lighthouse effect, says
Deals like these are the whole point of aged 98 multinational firms to invest in the IIC President Dr. Horst Dietz, a former ABB
our work here, says David Chasdi, a mana- former East Germany, drawing a total of E4.3 executive who notes that firms often follow
ger at the Industrial Investment Council, a con- billion to the region and creating about competitors into a region to take advantage

6 Invest in Germany magazine January 2005


The Danish company Vestas, the worlds largest manufacturer of wind turbines, began production in 2002
in Lauchhammer (Brandenburg) and has been producing 300 rotor sets annually.
of an already strong support system. Saxony-
Anhalt, for instance, drew world-class com-
panies like Dow Chemical by building on
a longstanding track record with chemical
industries, while investors like MTU Aero
Engines spur Berlin-Brandenburgs bur-
geoning reputation for excellence in aero-
space. We call this clustering, says Dietz.
Instead of trying to develop a new economic
base, we play to a regions strengths.
In just eight years, the IIC drew a
total of H 4.3bn to the region
In a newly expanded Europe, one of eastern
Germanys major strengths is offering the best
of both worlds; the political stability and high
quality standards of the West, coupled with
the labor market flexibility and new-market
access of the East. The six eastern German
states, for instance, boast some of the highest
investment incentives in the entire European
Union; grants, below market-rate loans, and
employment support programs cut firms
investment outlays up to 50 percent.
Massive infrastructure investments mean
the region boasts both a fully digital, fiber-
glass telecommunications network as well as
a plethora of air, rail, and road connections
to the major hubs of eastern and western
Europe. Add a motivated, well-educated
workforce eastern German workers log an
average of 100 hours more per year than their
western counterparts, and the region is thick
with world-class research institutes and it
becomes clear why 2,000 international firms
Invest in Germany magazine January 2005
have migrated to the region in the last decade.
Such factors certainly came into play when
BMW decided to build its new 3-Series limou-
sine plant in Leipzig, in the heart of eastern
Germanys auto belt. With the IICs project-
management assistance, the Munich-based
auto giant chose the Leipzig location which
will eventually employ 10,000 and produce
luxury vehicles for 15 percent less than other
BMW plants over strong competition from
the Czech Republic.
Leipzigs flexibility sealed the deal.
Obtaining construction permits took just
eight weeks. Unions and employees readily
agreed to a work schedule that picks up
when demand is high and recedes in slower
periods. And a dense network of over 700
regional auto suppliers, plus the presence of
other major firms like Volkswagen and Por-
sche, meant a ready supply of both parts and
people. Leipzig eventually came out on top
because of the availability of skilled labor,
says Helmut Panke, chairman of BMWs
board, as well as the excellent infrastructure
and transportation features.
A well-honed strategy for success
and a truly global reach
Other successes highlight eastern Germans
willingness to adapt long-held skills to
modern market demands. A traditional focus
on precision optics and electronics, for
instance, in the city of Jena in the southeas-
tern state of Thuringia, is a boon to laser
instrument maker Jenoptik, which expects
W H AT P O L I T I C S D O E S
sales of $2.2 billion this year. Saxonys Dres-
den, too, has capitalized on its history. One
of Germanys key industrial areas in the 19th
century, it was also the former Eastern Blocs
semiconductor center. Attracted by the regio-
ns stellar reputation, world-class chip makers
Infineon Technologies and Advanced Micro
Devices set up shop. Last year, AMD, which
currently employs 2,000 people in Dresden,
broke ground on a second, $2.4billion chip
factory. (See Invest in Germany Magazine,
September 2004) The people here are very
motivated, says Hans Doppe, general mana-
ger of AMDs Dresden operations, and many
have microelectronics experience from the
days of East Germany.
Adapting long-held skills to
modern market demands
To be sure, eastern Germany and the IIC face
challenges. The global economic slowdown,
a drop in foreign direct investment into Ger-
many as a whole, and the flood of labor head-
ing to low-cost nations like China all rendered
last year and this among the IICs slowest.
But the IICs Dietz projects that a global
upturn, coupled with the agencys steadfast
focus on knowledge-based projects that
exploit eastern Germanys highly skilled work-
force such as the Telecom Italia deal, which
has the potential to employ a total of 300 peo-
ple by 2007 will spur stronger job creation
in 2005. Among the IIC's accomplishments in
2004, in fact, are several other deals includ-
ing a recent announcement by Rolls Royce
and Lufthansa Technik to locate a $133 million
aero engine overhaul center near Erfurt, in
Thuringia that highlight the knowledge-
based workforce that is fast becoming eastern
Germany's calling card.
In the face of inevitable obstacles, one of
the strongest tools both the IIC and eastern
Germany wield is the certainty that the
regions success is crucial to the countrys
future. Theres an inherent sense of worth in
the work we do, says Dr. Markus Deibert, a
senior manager in the IICs Life Sciences and
Chemicals Division. I believe in the product
Im selling, because its worth it, for the Ger-
mans and for Germany. The legacy and the
ongoing challenge of the IIC is convincing
legions of multinational firms that their invest-
ments in eastern Germany are worth it, as well.
Joellen Perry
7
Private Equity Heads for Germany
Its consolidation time in Germany. Big conglomerates are
shedding ballast and public assets are being auctioned off.
With the IPO market dead for now, conditions couldnt be
better for private equity.
A s Europes largest economy, Germany
boasts a veritable cornucopia of busi-
ness assets that private equity (PE) firms
would love to get their hands on. For several
years, though, the countrys tightly knit cor-
porate culture and restrictive tax code have
put off all but the most intrepid PE profes-
sionals. Now, however, emboldened by a
range of legislative developments (including
new tax laws), the worlds biggest PE players
are on a feeding frenzy, gobbling up sizable
chunks of industries ranging from chemicals
and telecommunications to media and auto-
motive services.
In its latest report on German private
equity activity, the consultancy Ernst &
E16.9 billion represents a staggering in-
crease of 151 percent over the second half of
2003. In other words, the PE deals in Ger-
many are not only becoming more nume-
rous, theyre growing a lot bigger.
Concentrating on the opportuni-
ties in Germany
While the lions share of PE transactions are
still being carried out by German firms, domes-
tic influence is steadily waning. Home-broker-
ed deals accounted for just 39 percent of total
volume in the first half of 2004, compared with
44 percent in the previous six months and a
full 50 percent in the first half of 2003. Today
The three biggest PE transactions of the year
in Germany (through October 2004) were all
led by US-based firms: Fortress bought the
real estate holdings of Gagfah for E3.5 billion;
Texas Pacific Group and CSFB (Credit
Suisse First Boston) snapped up the plumbing
products giant Grohe for E2.25 billion;
and KKR (Kohlberg Kravis Roberts)
acquired the retail auto services chain ATU
for E1.45 billion.
Those may have been the weightiest
individual deals over the past year, but they
are not the only ones that have been grabbing
headlines. Two foreign PE firms in particular
Lone Star and Blackstone have made a
name for themselves with a string of high-
profile acquisitions.
Specialising in buying distressed debt
from banks, US-based Lone Star purchased
E1.2 billion worth of bad loans from
Dresdner Bank in October. Just weeks before,
Lone Star had picked up E3.6 billion worth
of property-related debt from Hypo Real
Photo: Celanese

Young says the number of buyout deals in the market is being driven increasingly by Estate. With the firm having pulled off eight
the country increased by 27 percent in the foreign companies, especially those from deals here within a year, PrivateEquityOn-
first half of 2004. The value of those deals Britain and the United States. line reported that Lone Star seems to be

8 Invest in Germany magazine January 2005


switching its focus away from China and con-
centrating particularly on the opportunities
presented by the German market.
Meanwhile, the firm that manages the
worlds biggest buyout fund, Blackstone, has
been on a spending spree of its own. Late last
year, after purchasing 51 European proper-
ties from Deutsche Bank for just over a bil-
lion euros, the New York-based PE firm paid
E1.6 billion for chemical maker Celanese. In
October Hanns Ostmeier, CEO of Blacksto-
nes German operation, told the newspaper
Die Welt that his company still had more
than $2 billion earmarked for further acqui-
sitions in Germany.
Biggest transactions led by
US-based firms
So whats driving this flurry of interest from
foreign private equity? Ernst & Young says
one important factor is Germanys proximity
to the growing economies of the EUs new-
Private-Equity-Investments in
Germany in Ebillion
17,2
12,6
7,2
7,1
6,1
3,6
2,0
1997 1998 1999 2000 2001 2002 2003
Source: Mergermarket, Factiva, The Boston Consulting Group
member states. German labor market
reforms are also mentioned in the Ernst &
Young report, along with the impact of the
new Basel II banking code, which is for-
cing German companies to turn to private
equity as an alternative source of capital.
Terry Martin
Invest in Germany magazine January 2005
The Effects of Foreign
Acquisitions
Every country aims to attract foreign investors, but little is known
about the effects it has, particularly on target companies and their
domestic competitors and on local economies. Chris Cordy takes a
look at a workshop in Hamburg which was devoted to just that.
T he sort of foreign direct investment (FDI)
normally seen in developing countries
where foreign companies move in and set up
from scratch is largely precluded in indus-
trialised countries by the conditions prevai-
ling in the well-established and often tightly
regulated markets there. FDI in that case in-
variably means either buying-up existing
companies or organisations (acquisitions), or
joining forces with them in pursuit of partic-
ular goals (mergers).
A workshop called Effects of Foreign
Acquisitions on Domestic Firms held at
Hamburgs Institute of International Econom-
ics in collaboration with Viennas University
of Economics and Business Administration,
noted that the effects depend on company
investment strategies and economic con-
ditions in the host countries. As a result, they
are correspondingly difficult to predict or
measure. However, a number of trends can
be clearly identified.
Either buying up existing
companies...
It is widely assumed that FDI improves pro-
duction efficiency and papers presented at
the workshop generally support this view. L.
Piscitello and L. Rabbiosi from Milan show
that foreign acquisitions generally increase a
target companys productivity in the medium
term. Although the Copenhagen Business
Schools C. Gioia and S. Thomsen note that
performance drops for a year or two after any
acquisition and that companies taken over by
foreign buyers tend to drop even more, they
also say that significant improvements come
within a couple of years, which suggests the
dip is caused by buyers trading off local per-
F O R E I G N D I R E C T I N V E STM E N T
formance for advantages such as market and
technology access.
The effects of mergers and acquisitions
on wages at target companies are relatively
unpredictable. S. Girma from the University
of Leicester and H. Grg of both the Univer-
sity of Nottingham and the German Institute
for Economic Research in Berlin looked at the
effects of foreign acquisition on a domestic
targets wages for both skilled and unskilled
workers. Their findings suggest a wide diver-
sity depending on the buyers nationality, the
industry involved and the workers skill
groups.
...or joining forces with them
for mutual goals
Innovation and technology transfer are also
important considerations for both foreign
buyers and domestic target companies. C.
van Beers of the Delft University of Techno-
logy and B.M. Sadowski from the University
of Technology in Eindhoven say the results
of a survey of over 10,000 Dutch companies
during the mid-1990s indicate that foreign
affiliates positively affect innovation activities
in host countries.
This is largely supported by the Fraun-
hofer Institutes K. Blind and A. Jungmittag
from the University of Wuppertal, who ana-
lyse the impact of foreign competition due to
inward foreign direct investment and imports
on the innovation activities of German service
firms. Finally, recent data on the UK manu-
facturing industry suggests that FDI is an
important channel for direct technology
transfers from foreign multinationals to
domestic exporters.
9
 S U CC E S S STO RY
Motorola in Germany:
Shaping the Future
They invented the mobile phone and produced the radio trans-
ponder used by Neil Armstrong to speak his famous first words
from the moon. Motorola, one of the worlds most innovative
companies, is shaping the future in Germany.
M otorola has significant operations in ev-
ery major market around the world. The
United States, where the company is based, is
obviously a key region. As is China, where
rapid economic growth is helping to drive the
companys expansion. But when it comes to
the largest market of all the 25-nation Euro-
pean Union Motorola has staked its success
on one country in particular: Germany.
The company that invented the mobile
phone has not one but five strategically vital
locations in Germany. Spread out around the
country, Motorolas German units (Berlin,
Flensburg, Taunusstein, Munich and Bad Salz-
detfurth) are highly specialized, each focusing
on different sets of technologies. Lean and
efficient, the units have all been exploiting
location-specific synergies, enabling them to
Sophisticated high-tech set made in Germany.
10
collectively leverage the advantage of doing
business in Europes largest eonomy.
Its easy to see why Motorola would
choose to concentrate its resources in Ger-
many. For this type of industry, no other Euro-
pean nation can match Germanys winning
characteristics. These include world-re-
nowned R&D capabilities, state-of-the-art
infrastructure and unparalleled market access.
All companies in Germany profit from these
conditions to some degree. But they lend
themselves particularly well to fast-cycle tech-
nology-driven enterprises requiring close
market proximity. And Motorola is exactly
that kind of enterprise. Put simply, Germany
gives Motorola what it needs to maintain its
technological lead and maximize the econom-
ic potential of European enlargement.
For a more concrete illustration of Germanys
importance to Motorola, a good place to start
is the companys state-of-the-art operation
in Berlin. Opened in October 2000, this
E35 million-euro facility focuses on radio and
mobile communications. The Berlin unit is
also responsible for the development of the
companys brand of digital radio technology
known as TETRA. One quickly sees that this
is where the future is unfolding. As Motorola
executive Aharon Mirsky once put it: Ger-
many is where its decided what kind of tech-
nology will shape the European market. And
in Motorolas business, technology is king.
Beyond Berlin, Motorolas German ope-
rations spread out to the North, West and
South. In Flensburg, located in the northern
state of Schleswig-Holstein, the company
runs one of the most sophisticated mobile
handset manufacturing facilities in the world.
The company has five strategically
vital locations in Germany
Moving south, one passes Bad Salzdetfurth
where Motorola has its broadband unit en
route to the companys German headquarters
in Taunusstein (near Wiesbaden). The com-
pany that furnished the transponder for Neil
Armstrongs call to earth in 1969 is developing
the next generation of radio equipment here.
Here too, youll find the companys huge
distribution center, responsible for logistics
and customer service in Europe, Africa and
the Middle East.
Finally, the Bavarian capital, Munich, is
home to one of Motorolas cutting-edge
design and technology centers. Opened in
the year 2000, the center concentrates on
bundling synergies from its integrated elec-
tronic systems and telematics sectors. Re-
searchers here specialize in developing embed-
ded solutions for the automobile industry.
Altogether Motorola employs nearly
3,000 people in Germany. Staff levels were
significantly higher at the end of the 1990s,
but restructuring has enabled the company to
achieve far greater efficiency. The American
Chamber of Commerce in Germany ranks
Motorola among the top 15 US companies in
Photos: Motorola, Jamba!
the country. Sales from the German units last
year totaled nearly E2.5 billion.
Terry Martin
Invest in Germany magazine January 2005
 Successful brothers: Marc,
Alexander and Oliver Samwer,
founders of Jamba!

E163 million worth of ringtones and E71 mil-

Jamba! Rings the lion of pictures many of them from Jamba!.

Another thing they had in their favor was that
Europe was ahead of America in the adop-

Right Number tion of cell phones, so that their business was

well-established by the end of 2003, when
Verisign came calling.
Verisign itself is one of the success sto-
In their mid-teens, the three Samwer brothers, growing up in ries of the dot-com boom, being a multifacet-
Cologne, decided theyd like to be rock stars. Being practical sorts, ed concern which provides encoding and
authentification solutions for Internet busi-
they decided to come up with a Plan B, and settled on becoming ness transactions, security for wireless com-
entrepreneurs as a second career goal. Theyre stars now. Although munications, and is also the company which
they never bothered to take to the stage, this May, they sold their administers the top-level country Internet
domains and assigns the .com, .org, and .net
company, Jamba!, to Verisign, an American firm, for $273 million. appelations. Its chairman, Stratton Sclavos,
had been buying up Internet and telecom-

I t wasnt the first successful company for

Marc, Alexander, and Oliver Samwer. In
1999, they had launched an online auction-
house, Alando. A hundred days after it debut-
ed, eBay bought it for $47 million, which the
brothers immediately put into founding Jam-
ba!, a clearing house for mobile-phone ring-
tones, pictures, and games. Working out of an
industrial space in Berlins Kreuzberg district,
they worked hard to make themselves the top
site for Germanys mobile phone users
mostly young to download accessories to
customize their handys, as theyre called in one-stop shopping for these things, suitable
Germany.
In retrospect, it looks fairly simple: the
boys first idea was to found a shipping firm,
but they realized theyd have years and years
of unprofitable learning ahead of them. Wor-
king at school with computers, they realized
that the Internet was going to take off in a big
way, and by the time they entered universi-
ty, they were comfortable with using it so
much so that Alando seemed like an excel-
lent idea. It must have been: the most recent
figures show that on a per-capita basis, Euro-
peans are using eBay more than Americans.
One thing the Samwers recognized
immediately, having watched the phenome-
non take off in Japan, is that for many young
people, mobile phones are about a lot more
than making telephone calls: theyre a multi-
media interactive experience involving
instant messaging (SMS), customized ring-
tones, customized pictures, and games. If an
Internet portal could be created that offered
stars? Not really: the workplace uses inex-
for all the manufacturers of mobile phones,
it might do very well.
The chairman saw Jamba! as a
perfect fit in the Verisign galaxy
It might, indeed: operating in nine European
countries since its start in 2000, Jamba! has
sold over ten million ringtones and 4.3 mil-
lion games. Last year Germany alone bought
munications companies since 2001, and saw
Jamba! as a perfect fit in the Verisign galaxy.
With help from Deutsche Banks New
York office and a Boston venture capital firm,
the deal was approved in the middle of 2004,
and Jamba! now has the resources to realize
its vision: it can buy world ringtone rights for
hit songs as soon as they appear, and it gives
work to over 300 people in job-starved Ber-
lin, a number which seems likely to double
over the next couple of years.
And are the Samwers living like rock-
pensive furniture from Ikea, and Oliver
admits to commuting from his modest apart-
ment on bicycle, same as ever. Alexander, the
younger brother, is taking some time off to
acquire an MBA from Harvard, but thats
about as elite as theyve gotten. And, having
found a foothold in America, the Samwers are
now eyeing an even larger market: Asia.
Ed Ward

Invest in Germany magazine January 2005 11

 Crafty Deal for Paper Maker
Barely two years after its corner stone was laid, the Zellstoff Stendal pulp
factory in Arneburg, Saxony Anhalt, began production of bleached long
fibre kraft pulp. Central Europes largest state-of-the-art pulp mill now has
a work force of 580, including 30 apprentices.

W hen full capacity is reached in 2006, it

will be turning out 550,00 tons of craft
pulp annually. During one period of its con-
struction phase, 2,500 workers were employ-
company which for years has invested in the
German pulp industry. In the 1990s it
acquired a factory in Rosenthal, Thuringia,
from the Treuhand organisation. That was
overnight and the timing couldnt have
been better. The world market for pulp
grows currently at a rate of four percent annu-
ally, says Wolfram Ridder, Zellstoff Stendals
Photo: Zellstoff Stehdal GmbH

ed on the project, which cost nearly E1 bil-
lion. The pulp mill investment is a major
boost for Saxony Anhalt, which currently has
around 20 percent unemployment.
The force behind Zellstoff Stendal is
Mercer International, a Canadian-American
converted within a few years into a 300,000-
tonne craft pulp facility, deploying innovati-
ve production procedures.
Now, with the much bigger Zellstoff
Stendal plant up and running, German pulp
production gets a 50 percent boost virtually
upbeat managing director, who is a vice-pres-
ident of Mercer International. Ridder speaks
of Germanys favorable geographical
location giving the company a unique com-
petitive edge, thanks to its proximity to Euro-
pes bustling central and northern markets

12 Invest in Germany magazine January 2005


and to bourgeoning markets southward.
The Canadian-American company praises the
quality and efficiency of the supply chain in
Germany, and says it also stands to benefit
from the countrys excellent infrastructure.
The Stendal and Rosenthal plants in Germa-
ny enjoy trade advantages over North Amer-
ican companies producing for the European
markets, according to the company. Why?
Because of lower fibre and freight costs, a
Located on an 85-acre site, it draws its energy from its own bio-mass station, which has 100 megawatt capacity the biggest of its kind in Germany.
common currency and the benefit of con-
ducting business in local language and time
zones.
Long fibre pulp is exclusively sold to the
market for use in various grades of paper
manufacturing. But when Germany failed to
build modern new mills, Scandinavia and
North and South America won an increasing
share of the world market. Now, thanks to
Mercer investment here, it has again become
an important factor in the market.
Pulp production gets a
50 percent boost overnight
Wolfram Ridder is 42 and graduated with a
masters degree in wood science and timber-
trade technology in 1988. He has been a key
person in the Stendal project. It won the
Invest in Germany magazine January 2005
backing of the European Commission, which
approved state aid of over E250 million to help
build the mill. Some 13,000 applications were
received when Zellstoff Stendal advertised its
600 upcoming jobs last year for the plant. Now
as it gears up to full capacity, as many as 1,000
additional jobs are likely to be created indi-
rectly in the states delivery and service sector
outlets. Horst Rehburger, the States Econom-
ics Minister, has called the pulp plant one of
its most significant industrial projects. Located
on an 85-acre site, it draws its energy from its
own bio-mass station, which has 100 megawatt
capacity the biggest of its kind in Germany.
Quality and efficiency of the
supply chain in Germany
Mercer International holds a 64 percent inter-
est in Zellstoff Stendal and 100 percent in the
Rosenthal pulp mill in Blankenstein. Here
some E360 million was invested to replace
an uncompetitive facility which produced
low-grade sulphite pulp with a modern pulp
mill of nearly double the capacity. It gave
Germany its first sulphate craft market pulp
mill of the post-war period.
Mercer also owns Dresden Papier in Hei-
denau, Saxony, comprising two paper mills,
M A J O R I N V E STM E N T D E C I S I O N S
with an annual production capacity of 85,000
tonnes in speciality grades. Says Ridder:
Without our experience in Rosenthal we
would never have been able to build our
Stendal plant.
Financing for the Stendal plant came
from numerous sources, public and private,
and amounted to over E1 billion. Some E819
million was arranged with Bayerische Hypo-
vereinbank, Munich, with Nord-LB, Hano-
ver, and the Halifax Bank of Scotland as sig-
nificant co-underwriters. A minority share-
holder of Zellstoff Stendal is RWE
Industrielsungen GmbH, with an interest of
29 percent; another is Fahr Beteiligungen AG
with seven percent.
Investors expect to fully recover their
capital within 15 years. Mercer says the Sten-
dal and Rosenthal plants will be responsible
for 850,000 tonnes of pulp production per
year about 65 per cent of overall German
pulp capacity. Besides customers in Germa-
ny, where demand is about five million
tonnes per year, Mercer also sells under the
Mercer Pulp brand to customers in Western
and Eastern Europe, the Middle East and also
to Asian growth markets.
Clive Freeman
13
 B U S I N E S S A S S I STA N C E

Bundling High-Tech Competence

Employing the Internet to harness the country's innovative power,
Germany has not only connected its leading scientific and engineering
personnel, research centers, universities and companies, it is also
showcasing them to the world.

S tarted in 1999 and launched at the Hano-

ver Fair in 2000 by the German Federal
Ministry of Education and Research, the kom-
petenznetze.de initiative clusters information
on networks of competence in high-tech cut-
ting-edge fields such as aerospace technolo-
gy, biomaterials, genomics, materials science,
mechatronics, medical engineering, nano-
technology and optical technologies. Trans-
lated, Kompetenznetze means competence
network.
More than a simple address site, kom-
petenznetze.de offers the best Germany has
to offer in these leading fields of science and
technology and in-depth information about
the latest breakthroughs and developments in
the various areas, including links to even
more detailed sites.

Translated, Kompetenznetze
means competence network

Over 100 competence networks are listed

under kompetenznetze.de, according to geo-
graphic location and specialization. The site
thus provides a consistently updated over-
view of scientific and technological innova-
tion, investment and education in Germany.
Competence networks improve com-
munication and create structures that facili-
tate cooperation, says Edelgard Bulmahn,
Germanys Federal Minister of Education and
Research. Small and medium-sized compa-
nies gain access to the most advanced re-
search. The international orientation of the
networks helps companies to form stronger
ties with partners outside Germany, and the
networks of competence provide these part-
ners with the opportunity to benefit from the
specialized potential found in small and
medium-sized companies in Germany, says
Bulmahn.
The international marketing of German
industries was a main factor behind the cre-
ation of kompetenznetze.de. Its a one-stop
Easy accessibility to the networks by potential investors is vital for German innovation in cutting-edge fields.
shop for foreign investors, associations, and
education and research organizations look-
ing for a holistic view of various markets or
industry and scientific sectors. The initiative
supports the networks it represents by pro-
viding an innovative communications and
information infrastructure.
Professor Dr. Jrg Sydow of the Institute
for Business Administration at Berlins Free
University and chairman of the kompetenz-
netze.de advisory council, notes that al-
though there is hardly a more systematic, sus-
tainable and comprehensive approach
towards cluster development than the one
pursued by the German Ministry of Education
and Research, what counts in the end are
economic results on the levels of both orga-
nizations and regions. Sydow stresses the
vital need for companies and research cen-
ters to work together. It is estimated that the
locus of more than three quarters of all inno-
vation is no longer a single firm, but inter-
organizational relationships and networks.
Germany is one of the world leaders in
biotechnology, medical engineering and
medical research. Under kompetenznetze.de,
there are 14 biotech clusters, 10 medical engi-
neering competence hubs and 18 medical
networks specializing in some of humanitys
most devastating diseases, including the
HIV/AIDS Competence Network in Bochum.
The network has brought together Germanys

14 Invest in Germany magazine January 2005

leading clinical and research science groups
working on HIV/AIDS. Through this national
research alliance, HIV patients have for the
first time been recruited to take part in
clinical studies nationwide. The HIV/AIDS
networks core project is the creation of a
central database drawing information from a
representative national group of patients.
The creation of competence hubs
around the country have also provided a
much needed boost to regions in the former
East Germany. The state of Saxony-Anhalt
has for more than a century been world
famous for its seed growing industry. Its now
benefiting from its own competence network
in the field of plant biotechnology. Inno-
Planta, the networks coordinating agency,
oversees 34 plant biotechnology projects
involving more than 60 partners in the re-
search, industrial and agricultural sectors. It
is expanding its activities, which stretch from
basic research to practical applications to the
entire value chain of agricultural production
with the aim of strengthening the regional
economy.
25 percent of R&D expenditure
is spent by foreign companies
In Dresden, Silicon Saxony is establishing
itself as the technology network in the heart
of Europe, bringing together, and coordinat-
ing cooperation among, the regions leading
semiconductor companies, small and
medium enterprises, research institutes and
universities.
The existence of the networks and easy
accessibility to them by potential investors is
vital for German innovation in cutting-edge
fields, and kompetenznetze.de has contribut-
ed significantly to this end. The active pur-
suit of innovation in Germany pays off, par-
ticularly for companies based elsewhere,
says Bulmahn. As the most recent report on
technological capabilities and performance
confirms, 25 percent of R&D expenditure in
Germany is spent by foreign companies.
Expanding its international reach, kom-
petenznetze.de recently entered into a new
partnership with its French counterpart
DATAR (delegation l'amnagement du ter-
ritoire et l'action rgionale). All the infor-
mation on kompetenznetze.de is now avai-
lable in French as well as English.
Ed Meza
Invest in Germany magazine January 2005
The E-Trade Center
Invest in Germany? Thats probably why you picked up this magazine:
youre just interested in investing, and although location isnt your
first criterion, youre looking for an investment that will bring you
what you want. Or have you got something that the German people
and their international partners might like to buy or invest in? Either
way, the German Federal Government is here to help you out.
N ot right here on this page, but, rather, at
www.e-trade-center.com. Its the new
e-Trade Center, a huge searchable database
of companies looking for partners, many
through organizations that already have exist-
ing relationships with Germany. Recently re-
designed to make your search even easier, its
incredibly simple to use although, as ever,
your own good sense should dictate how
you invest.
The front page should give you the idea:
there are numerous opportunities here. Look-
ing for something to invest in? Click the but-
ton and see what offers are current. Looking
for an investor? Register yourself and let peo-
ple see what you need. The step-by-step
setup makes it easy, and it only takes a short
time before youre in the database.
There are also some refinements to help
narrow searches down. Specific needs can be
promoted by organizations devoted to this
task, and the sites Global Business Platform Screenshot of the frontpage of the new e-Trade center.
combines the databases of eight different
organizations, from the Africa Association to
the International Chambers of Commerce, is specifically set up to help you negotiate the
into one easily-searchable pool. These so- regulations and laws, including customs and
called Premium Partners all have resources taxes, which are a part of getting going in the
beyond the databases which can help you Federal Republic.
come to an informed decision. China and A small problem some users might
Poland have individual spaces where com- encounter is that, although the E-Trade Cen-
panies in these booming economies can find ters pages are written in good English, a
partners. Then there are other partners who number of the investment offers are only in
provide somewhat more specific investment German. Of course, most people doing busi-
targets, such as German exports or renewable ness with Germany have a German-speaker
energy resources. The Expand Program or two on call, so this shouldnt be too much
targets the developing worlds exports, of a hurdle. Oh, and theres one other link on
through a program administered by private that front page thats quite important. It will
and government institutions in Germany. take you to the online version of a magazine
If youre doing business with Germany, called Invest in Germany. Its well worth
a link on the right side of the E-Trade Cen- checking out!
ters home page will connect you to the Ger-
man Chambers of Commerce Abroad, which Ed Ward
15
 I N N OVAT I O N R E P O RT
Tiny Giants Nanotech in Germany
Historically, Germany has always been on the cusp of scientific
and industrial innovation, and heading into the 21st century, it has
become a leading player in groundbreaking nanotechnology.
N anotechnology encompasses all techno-
logical developments at the scale of one
millionth of a millimeter, or a nanometer. The
aim of nanoscale science, engineering and
technology is to work at the molecular level,
atom by atom, to create large structures with
fundamentally new properties and functions
in vastly different application areas.
Cross-disciplinary in nature, nanotech-
nology draws and benefits a wide range of
areas like materials science, physics, chemis-
try, and biology. It is also becoming vital in
mid-level and low-tech areas, from vehicle
Nanostructure creates color without dye The natu-
ral phenomenon of color without dye has been taken
up by nano-researchers.
and plant engineering and construction to
the production of paints and cosmetics.
Nanotechnology has made possible a wide
range of discoveries in all major research
areas in physical, biological and engineering
sciences.
Germany is today the most active EU
country in the nanotechnology industry. In
1998, the German government announced
an increase in funding and the establishment
of six competence centers throughout the
country in cooperation with universities,
research centers, large companies and SMEs.
16
Through 2004, the number of government-
backed competence centers specializing in
fields such as nanomaterials, biotechnology
and electronics has grown to nine nation-
wide. The budget for these competence
centers has increased, from E27.6 million in
1998 to E112.1 million in 2003.
Currently generating some $180 billion
worldwide, nanoscience is expected to be-
come a $1 trillion-a-year industry within 10
to 15 years, employing some 2 million wor-
kers. In the next decade, nanotechnology in
manufacturing will likely account for $340
Wood surface repels water droplets The wood has
been treated with BASFs "Lotus Spray", produced with
nanotechnology.
billion of that industry; in electronics,
$300 billion; pharmaceuticals, $180 billion;
and chemical plants, $180 billion.
From 1997 to 2003, the worldwide nano-
technology research and development
investment reported by government organi-
zations increased seven-fold, from $432 mil-
lion to about $3 billion. Some 30 countries
have initiated national activities in this field,
with Japan and the U.S. currently leading the
way. In 2003, Japan invested $800 million in
R&D; the U.S. $774 million and Europe $650
million.
In view of strong competition from the U.S.
and Asia, Germany and Europe are stepping
up their efforts. In 2004, Germanys compe-
tence centers increased to nine major facili-
ties around the country, including Nanomat
in Karlsruhe; the Competence Center Ultra-
precision Surface Figuring in Braunschweig;
ENNaB in Munich; CeNTech in Mnster;
HanseNanoTec in Hamburg; CC-NanoChem
in Saarbrcken; CC-Nanobiotech in Kaisers-
lautern; CC Ultrathin Functional Films in
Dresden and NanOp in Berlin. Germany is
now at the forefront in Nanonet competence
Nanocubes are an ideal storage medium for hydro-
gen thanks to a special surface which has numerous
pores and channels.
networks, in which public research insti-
tutes, industries and small to medium enter-
prises collaborate on application oriented
research topics. Due to the nature of nano-
technologies, outside investment has not
been directed specifically at nanotechnol-
ogy, but rather in industries that apply it.
Uffe Bundgaard of Gate2Growth, an
initiative to help European companies secure
financing from venture capitalists, explains
Photos: BASF
that venture capital is not allocated specifi-
cally to nanotechnology, as the applications
of nanotechnology cross all traditional
Invest in Germany magazine January 2005
industry sectors normally identified by the
VC industry. Entrepreneurs looking for fund-
ing should therefore put greater emphasis on
the application than on the technology,
Bundgaard adds.
Similarly, Ian Newington of Kodak R&D
division notes, As with any other investment
decisions Kodak makes, decisions on invest-
ing in nanotechnology small and medium
enterprises are based on the perceived value
to the corporation. Decisions to fund are like-
ly to be pragmatic, based on specific needs.
Yet Germany's commitment to the bur-
geoning industry has helped to bring com-
panies and potential financiers together. Last
Invest in Germany magazine January 2005
year the U.K.-based Institute of Nanotechnol-
ogy helped organize the Nanotechnology
Meets Business conference in Frankfurt; and
in Munich, the World Nano-Economic Con-
gress launched the now annual Nano Trends
Congress, which has quickly become the pre-
mier nano-technology business confab on
the market today. In addition to showcasing
the latest developments in the field, it too
plays a vital role in bringing together leaders
in nanotechnology and business.
With its focus on practical commercial
applications and with over 40 speakers repre-
senting leading corporations, successful start-
ups and cutting-edge research institutes,
Nano Trends provides a unique opportunity
to network with the European nano commu-
nity.
In May 2004 some 160 delegates from
around the world gathered for the second
Nano Trends conference, in which major
industry players such as Bayer A.G., Degus-
sa, IBM and DaimlerChrysler presented case
studies on practical applications of nano-
technology and discussed impact and result-
ing market potentials.
company search: www.nanoingermany.com;
www.nanonet.de
Ed Meza
17
 S E C TO R R E P O RT
Ceramic ball & socket joint for an artificial hip joint being used in surgery. Hydrophilic catheters.
Medical Technology
Reaches a Crossroads
Germany has the largest medical technology market in Europe
and exports high-quality products around the world. Global
population growth, longer life expectancy in developed countries,
and the increasing willingness of rapidly aging populations to
invest in health will keep the market expanding.
M edical progress brought tremendous
improvements in the quality of health
care due to the introduction of new medical
technologies and therapies. In 2003, the
world market for medical devices amounted
to E184 billion making it an important eco-
nomic factor worldwide. With E55 billion, the
European market comes second after the
United States, whose medical devices market
is worth E79 billion.
The German market for medical tech-
nology is by far the largest market in Europe.
It is twice as big as the market in France,
three times the size of the Italian and UK mar-
kets. Germany has over 10 percent of the
global market sales and is the third largest sin-
gle market after the US and Japan. In 2003,
18
med-tech had a turnover of E19 billion and
made up 8.6 percent of total health expendi-
tures. In 2002, E24 billion were spent on
medical devices.
Germanys nearly 2,000 medical technol-
ogy enterprises employ more than 100,000
people and invested in 2003 some 7 percent
of their turnover in research and develop-
ment Small-to-medium sized enterprises play
an important role in the sector. They special-
ize in niche markets and serve as deliverers
of products to larger enterprises. The medi-
cal technology market covers some 8,000 dif-
ferent types of products, ranging from simple
bandages and spectacles, life maintaining
implants, equipment to screen and diagnose
disease and health conditions, to the most
sophisticated diagnostic imaging and mini-
mally invasive surgery equipment.
Exports and Growth
Photos: Bundesverband Medizintechnologie e.V.
Germany exports over 400,000 different types
of medical devices. The German market for
medical technology grew by an average of 5.8
percent between 1995 and 2001. Exports
were the driving force behind the growth
comprising 53 percent of the total turnover in
2001. The share of commissions from abroad
doubled in 2001 compared to 1995. Most
exports, 38 percent, went to EU states, follo-
Invest in Germany magazine January 2005
Thermo-moulding knee orthosis. Fluid management system in the intensive care station.
wed by the US at 20 percent. The growth and
turnover of the German med-tech market
declined somewhat in 2003.
The increase in life expectancy in the
developed world has brought with it a great-
er demand for med-tech devices. The growth
in the proportion of those over 60 will contin-
ue for decades to come. In Germany, the
share of the population over 60 is above the
EU average. The number of elderly is expect-
ed to grow from 22 percent in 2000 to 35 per-
cent in 2040. Moreover, a growing number of
people care about their health and seek to
live long healthy lives.
The willingness to invest in health has
increased with the improvement of the stand-
ing of health in the eyes of the population.
Health now ranks first in surveys measuring
the value of major areas of life, 80 percent of
Germans find health very important, the
family comes second with 75 percent.
Reforming health care
The tremendous progress in medical science
introduced new devices and therapies that
enable more people to receive treatment than
ever before. The increased expenses that this
involved have sent the costs of health care
skyrocketing in many countries. In Germany,
overall health expenditures increased from
Invest in Germany magazine January 2005
1995 to 2001 by an annual average of 2.5 per-
cent of the gross domestic product, reaching
nearly E226 billion in 2001. In 2002, total
health expenditures made up 11.1 percent of
the GDP. German Statutory Health Insurance
(SHI), which provides for the health care of
over 90 percent of the population, has for
years been chronically short of funds. The
SHI is based on the principle of solidarity and
MEDICA
The worlds largest medical fair Medica
takes place every year in Dsseldorf,
Germany. For the last event in Novem-
ber 2004 came 136.000 trade visitors
not only to learn about the exiciting
news in every segment of the market
but also to take part in the Medica
Congress and German Hospital Con-
gress. More than 4.000 exhibitors
presented product highlights like the
first UMTS-based communication unit
for consistent and swift transmission
of medical data (e.g. from ambulances)
and new-style bio-chips that classify
cancerous tumours or determine the
right dose of medicine. The next
MEDICA will take place in November
2005. For further information please
contact www.medica.de
seeks to provide the same health services for
all. The search for new ways of financing
health care began years ago. A major reform
of the health care system is currently under
way which seeks to stabilize contribution
rates, increase co-payments by patients, and
introduce more competition among insur-
ance companies.
Representatives of the med-tech sector
expect the ongoing reform of the health care
system toward more competitiveness to sig-
nificantly further investments and innova-
tions in the sector. The chairman of the board
of directors of BVMed, Anton J. Schmidt, has
called for an end to the coupling of contri-
butions and wages and for opening the sec-
tor to the dynamic opportunities offered by
the health economy.
Schmidt also urged reforms to shorten
the length of time it takes to approve new
medical devices and therapies so that patients
can benefit from them sooner. The hope is
that eventually a health policy will be imple-
mented that induces med-tech entrepreneurs
to compete to reduce medical costs. The
lower costs could then make room for wave
after wave of still newer medical technologies.
Edith Oltay
19
 Association of the German Trade Fair Industry
Littenstr. 9 Germany 10179 Berlin
Phone: +49 (0) 30 24 000 - 0
2005 Messen made in Germany Fax: +49 (0) 30 24 000 - 330

January April September

05.01.-07.01. PSI, Dsseldorf 02.04.-10.04. Saarmesse, Saarbrcken September I.L.M. Summer Styles, Offenbach
12.01.-15.01. Heimtextil, Frankfurt/Main 02.04.-04.04. I.L.M. Winter Styles, Offenbach September IFLO, Essen
15.01.-18.01. DOMOTEX, Hannover 02.04.-10.04. AMI AUTO MOBIL INTERNATIONAL, Leipzig 01.09.-04.09. EUROBIKE, Friedrichshafen
15.01.-23.01. boot, Dsseldorf 06.04.-09.04. Musikmesse, Frankfurt/Main 02.09.-07.09. IFA - Int. Funkausstellung, Berlin
17.01.-23.01. imm, Kln 06.04.-09.04. Prolight+Sound, Frankfurt/Main 04.09.-06.09. spoga - gafa, Kln
17.01.-22.01. BAU, Mnchen 06.04.-09.04. FARBE, Kln 10.09.-12.09. MIDORA, Leipzig
19.01.-22.01. IMA - Int. Fachm. Unterhaltungs- 07.04.-10.04. CAR + SOUND, Sinsheim 12.09.-17.09. drinktec, Mnchen
u. Warenautomaten, Nrnberg 11.04.-15.04. HANNOVER MESSE, Hannover 12.09.-17.09. SCHWEISSEN & SCHNEIDEN, Essen
21.01.-30.01. Grne Woche Berlin, Berlin 11.04.-15.04. Motion, Drive & Automation, Hannover 12.09.-15.09. CAT.PRO, Stuttgart
23.01.-26.01. HOGA Nrnberg, Nrnberg 11.04.-15.04. Factory Automation, Hannover 14.09.-21.09. EMO, Hannover
26.01.-30.01. Paperworld, Frankfurt/Main 11.04.-15.04. Compressed Air & Vacuum Technology, 15.09.-18.09. IFMA Cologne, Kln
26.01.-30.01. Christmasworld, Frankfurt/Main Hannover 15.09.-25.09. IAA - Personenkraftwagen, Frankfurt/Main
26.01.-30.01. Beautyworld, Frankfurt/Main 11.04.-15.04. Research & Technology, Hannover 16.09.-18.09. Inter-tabac, Dortmund
27.01.-30.01. IPM - Int. Fachmesse Pflanzen, Technik, 11.04.-15.04. Surface Technology, Hannover 16.09.-18.09. Kind + Jugend, Kln
Floristik, Essen 11.04.-15.04. Subcontracting, Hannover 20.09.-23.09. CMS - Cleaning, Berlin
29.01.-31.01. I.L.M. Essentials, Offenbach 11.04.-15.04. Energy, Hannover 20.09.-24.09. HusumWind, Husum
30.01.-01.02. cpd woman_man, Dsseldorf 11.04.-15.04. MicroTechnology, Hannover 20.09.-22.09. MATERIALICA, Mnchen
30.01.-02.02. ISM - Int. Swaren-Messe, Kln 11.04.-15.04. INTERKAMA, Hannover 22.09.-25.09. EXPOPHARM, Kln
12.04.-13.04. plw (Frhjahr), Pirmasens 22.09.-25.09. GDS - Int. Shoe Fair (Herbst), Dsseldorf
February 12.04.-16.04. IDS, Kln 24.09.-02.10. INTERBOOT, Friedrichshafen
01.02.-03.02. LogiMAT, Stuttgart 12.04.-14.04. Altenpflege+ProPflege, Nrnberg 26.09.-28.09. DIMA, Dsseldorf
06.02.-09.02. ispo winter, Mnchen 12.04.-14.04. IN-COSMETICS, Berlin 27.09.-29.09. DMS EXPO EUROPE, Essen
10.02.-15.02. Spielwarenmesse, Nrnberg 18.04.-20.04. RESALE, Karlsruhe 27.09.-30.09. MOTEK, Sinsheim
10.02.-12.02. FRUIT LOGISTICA, Berlin 19.04.-23.04. METPACK, Essen 29.09.-01.10. VisCom, Dsseldorf
11.02.-15.02. Ambiente, Frankfurt/Main 19.04.-21.04. SMT/HYBRID/PACKAGING, Nrnberg 29.09.-03.10. ART FORUM BERLIN, Berlin
12.02.-14.02. Body Look Frhjahr, Leipzig 21.04.-27.04. interpack, Dsseldorf
15.02.-18.02. LEARNTEC, Karlsruhe 21.04.-24.04. AERO, Friedrichshafen Oktober
19.02.-23.02. EuroShop, Dsseldorf 25.04.-29.04. IFAT - Int. Fachmesse Umwelt und 02.10.-04.10. GOLF EUROPE - Mnchen, Mnchen
22.02.-24.02. embedded world, Nrnberg Entsorgung, Mnchen 04.10.-06.10. EXPO REAL, Mnchen
24.02.-27.02. BioFach, Nrnberg 26.04.-29.04. Control, Sinsheim 04.10.-06.10. Vision, Stuttgart
25.02.-28.02. inhorgenta, Mnchen 26.04.-28.04. EUROPEAN COATINGS SHOW, Nrnberg 04.10.-06.10. INTERGEO, Dsseldorf
26.02.-06.03. EQUITANA, Essen 29.04.-02.05. Art Frankfurt, Frankfurt/Main 08.10.-12.10. Anuga, Kln
28.02.-04.03. didacta, Stuttgart 29.04.-03.05. interzum, Kln 11.10.-12.10. plw (Herbst), Pirmasens
11.10.-14.10. INTER AIRPORT, Mnchen
March May 11.10.-13.10. POWTECH / TechnoPharm / Explorisk, Nrnberg
02.03.-04.03. FAIRWAY, Mnchen 02.05.-06.05. LIGNA+ HANNOVER, Hannover 11.10.-15.10. CeMAT, Hannover
04.03.-06.03. BEAUTY INTERNATIONAL, Dsseldorf 04.05.-07.05. DACH+WAND, Leipzig 12.10.-15.10. REHACare International, Dsseldorf
04.03.-09.03. INTERNORGA, Hamburg 05.05.-08.05. FIBO, Essen 14.10.-16.10. hortec Karlsruhe, Karlsruhe
06.03.-08.03. ProWein, Dsseldorf 10.05.-12.05. SENSOR, Nrnberg 18.10.-20.10. BIOTECHNICA, Hannover
08.03.-11.03. enertec, Leipzig 10.05.-12.05. Marketing Services, Frankfurt/Main 18.10.-22.10. Fakuma, Friedrichshafen
08.03.-11.03. TerraTec, Leipzig 25.05.-28.05. Stone+tec, Nrnberg 18.10.-21.10. interlift, Augsburg
09.03.-12.03. FUR & FASHION, Frankfurt/Main 31.05.-03.06. transport logistic, Mnchen 19.10.-24.10. Frankfurter Buchmesse, Frankfurt/Main
10.03.-16.03. I.H.M. - Int. Handwerksmesse, 24.10.-27.10. A + A, Dsseldorf
Mnchen June 24.10.-28.10. SYSTEMS, Mnchen
10.03.-16.03. CeBIT, Hannover 01.06.-03.06. SHOWTECH, Berlin 25.10.-27.10. DKM, Dortmund
11.03.-15.03. ITB Berlin, Berlin 06.06.-11.06. INTERSCHUTZ, Hannover 26.10.-28.10. fsb, Kln
15.03.-19.03. ISH, Frankfurt/Main 07.06.-09.06. Techtextil, Frankfurt/Main 26.10.-29.10. aquanale, Kln
15.03.-17.03. E-WORLD energy & water, Essen 13.06.-16.06. LASER, Mnchen 27.10.-29.10. SOLARIA, Kln
17.03.-20.03. Leipziger Buchmesse, Leipzig 21.06.-23.06. Z - Die Zuliefermesse, Leipzig 28.10.-01.11. ART COLOGNE, Kln
17.03.-20.03. GDS - Int. Shoe Fair (Frhjahr), 23.06.-25.06. InterSolar, Freiburg 29.10.-06.11. hanseboot, Hamburg
Dsseldorf 30.10.-02.11. GSTE, Leipzig
18.03.-21.03. IWA - Int. Fachmesse Jagd- July
und Sportwaffen, Nrnberg 03.07.-05.07. ispo summer, Mnchen November
21.07.-24.07. OutDoor, Friedrichshafen 02.11.-04.11. IKK - Int. Fachmesse Klte, Klima, Lftung, Hannover
23.07.-25.07. Body Look Sommer, Leipzig 08.11.-12.11. AGRITECHNICA, Hannover
24.07.-26.07. cpd woman_man, Dsseldorf 08.11.-10.11. EBIF European Banking, Frankfurt/Main
15.11.-18.11. Productronica, Mnchen
August 16.11.-19.11. MEDICA, Dsseldorf
26.08.-30.08. Tendence, Frankfurt/Main 22.11.-24.11. SPS/IPC/DRIVES, Nrnberg
Stand: 20.10.2004, nderungen vorbehalten

www.auma-fairs.com 26.08.-04.09. CARAVAN SALON Dsseldorf, Dsseldorf 25.11.-04.12. ESSEN MOTOR SHOW, Essen
 T R A D E FA I R S I N G E R M A N Y

Focusing on Plastics and Rubber

The K 2004 exhibition in Dsseldorf is a major venue for presenting in the price of raw materials and competition
the latest innovations of the plastic and rubber industry. The market from the East European and Asian markets
also put pressure on the German plastics
for plastics is booming because the consumption of plastics increases industry. At the same time, these markets
with the rise in living standards in many parts of the world. offer new opportunities for the expansion of
the industry. The number of employees in
the Germany plastics industry grew by
Growing interest from exhibitors and itors (49 more than in 2001) from over 55 1.5 percent in 2003. A shortage of 15,000
visitors. The 16th International Trade Fair (53 in 2001) countries presented the newest engineers and 2,500 trainees in the plastics
for Plastics and Rubber, known as K 2004 products and technologies in the 17 exhibition processing industry puts an even stronger
was held in Dsseldorf at the end of October halls. limit to expansion.
and served as a major platform for informa- The German manufacturers of plastics
tion on the world of plastic and rubber for A Fast Growing Industry Ulrich Reifen- and rubber machines expect in 2004 an 8 to
developers, designers as well as production huser, the chairman of the Exhibition Com- 10 percent increase in commissions as well
experts from the automotive, consumer mittee of K 2004, forecasts that the use of plas- as a 6 percent growth in turnover. In the first
goods, electronics, aerospace and construc- tics will continue to grow worldwide at an eight months of 2004. Revenues of the
tion sectors. annual rate of some 5 percent. The plastics German plastics processing industry grew by
Theme this year was Vision Innova- industry, including producers, converters and 4.6 percent compared with the same period
tion Business, and K 2004 included a spec- machinery manufacturers, represents an last year. The revenues at home increased by
trum of suppliers extending from global play- annual turnover in Europe of E135 billion 2.4 percent, while sales abroad climbed by
ers to small-scale specialists and from cost- and employs more than 1.5 million people. 8.9 percent.
effective standard solutions to customized In the European plastics industry the demand Reifenhuser from K 2004 spoke in the
tools, raw materials and processes. With over for plastic products grew at 5.6 percent name of the exhibitors when he declared the
230 000 visitors the organizers surpassed their between 2001 and 2003. exhibition a great success which gave new
target of at least 200,000 visitors (228,000 The German plastics industry employs impetus to the industry and generated new
Photo: Messe Duessseldorf

came in 2001). More than half of the visitors
came from abroad from some 100 countries.
The majority of the exhibitors, 63 per-
cent, also came from abroad. In 2001 their
share was 51 percent. More than 2,921 exhib-
280,000 people who provide around 6.5 per- business for all of our sectors.
cent of the total industrial production. Ger-
many produced 16.8 million tons of plastic in
2003. The turnover, E18.1 billion, was, how-
ever, 2.4 percent less than in 2002. Increases Edith Oltay

Invest in Germany magazine January 2005 21

 AWAY F R O M H O M E
Germans prize high-quality goods
Kinya Terada owns and operates a small store in Frankfurts central shopping district. He and his wife
are the exclusive distributors for Aritsugu, one of Japans most famous knife companies. Kinyas
business concept combines Japanese culture with high-quality food products and kitchen utensils.
Shoppers browse through the knives and tea utensils, pick up a tray of sushi or sign on for an evening
cooking course. We interviewed the Japanese entrepreneur about doing business in Germany.
How did you get started here?
I opened the shop in 2001. Before that I
worked for a German company in the finan-
cial area. In 1995 I left the German company
and went back to a Japanese company. I was
the marketing director for Yakult, a Japanese
drinks company. It was not so easy to go
back to a Japanese company. Everything was
different.
What was so different?
In a German company, if I want to speak to
the boss of the Amsterdam division, for exam-
ple, I ask the secretary to connect me and the
secretary does it. In a Japanese company, the
secretary would suggest to me that I call
myself. This attitude is totally different. The
German secretaries are more helpful. Without
secretaries, doing business is very difficult.
This is a difference between Japanese com-
panies and European companies.
How did you decide to open your shop?
A German marketing specialist once told me
that Germans know and appreciate Japans
reputation for high-quality knives. He also
said that Germans were beginning to eat
more fish and vegetables. Some friends put
me in touch with handmade knife producer
Aritsugu in Japan. After a few meetings, the
company suggested I come up with a concept
that combines knives with the food culture of
Kyoto. So, I spent one year doing market
research, and I decided to offer a concept that
highlights each step in a Japanese meal the
cutting of the fish, the eating of the fish with
chopsticks and the drinking of tea. We de-
cided to offer sushi for lunch and various
cooking courses in the evenings.
After market research, how long did it take
for you to start up your business?
About one year.
22
Cooking/sushi demonstration by Mr. Kinya Terada at
Kulinart, a Frankfurt lifestyle-fair
Did you need any special permits as a
foreigner in Germany?
No. This country is very easy.
What did you have to do to start your busi-
ness?
I had to set up a German corporation with
limited liability, a GmbH. But, it wasnt actu-
ally necessary since Im independent. I de-
cided to start a GmbH anyway, and I used a
lawyer to help me. At the beginning, I had
two part-time employees in addition to me
and my wife.
Who are your main customers?
My customers are German bankers and
lawyers, French people and Americans. We
have offered a cooking class for the Ameri-
can Womens Club three times already. My
target market is the people who attend the
opera, since we are selling a high-quality,
high-cost product.
Do you plan to expand your shop?
Yes, I plan to open stores in Milan, London,
Paris and New York. Milan will be the first,
and I hope to open it in two to three years. I
want to form a brand-based business.
What do you enjoy about doing business in
Germany?
The German people prize high-quality, well-
made goods. German people are very inter-
ested in such products, particularly hand-
made products. Germans have a sense for
industrial products. They understand the
value of the knives we sell. This is one rea-
son I am successful here. Also, Germans are
becoming more health conscious and they
appreciate our sushi and cooking courses.
Japanese knives are just right for this as well.
Almost all our courses are fully booked.
Do you think this concept would have wor-
ked in Germany 10 years ago?
Ten years ago, German people didnt eat a lot
of vegetables and fish. The trend caught on
five years ago when Germans became more
interested in health.
Photo: Rosemarie E. Overstreet
What advice would you give to someone inter-
ested in opening a business in Germany?
I would say he or she should consider the
timing of their market entrance and their con-
cept.
Invest in Germany magazine January 2005
 When an American
Dad Stays at Home
Julie and David Simonson lived in Wisconsin, USA, before moving to a small village outside Munich in
July 2003. Julie, 39, was moved to the area by foods company Kraft Europe to take a job as a depart-
ment manager for new product development. The couple has two girls, 7 and 9. David, 46, looks after
the kids at home. Invest in Germany Magazine talked to the parents about life in their new home.
David, how do Germans react when you tell
them that youre a stay-at-home dad?
I get a subtle reaction that usually involves the
squinting of the eyes. Stay-at-home dads are
very rare in Germany. The house husbands
who I have met here are all expatriates of
other countries.
How long do you plan to stay in Germany?
Julie: We will stay two to three years. It depends
on how my company wants to work it.
David: I really like it here. Id like to stay. Its
very similar to the United States that I remem-
ber as a child. The people mind their own
business but look out for their neighbors.
People take more responsibility here.
The town we live in is small and quiet. It con-
sists of a baker, a butcher, a bank, a Porsche
dealership and a lot of houses. We hear chick-
ens and cows in the morning. Its a very
pleasant environment.
Did you have any problems adjusting here?
Julie: I would say the first couple of months
were really difficult. We had been warned
about this. During the first months, we didnt
have any of our things. We lived with rental
furniture for five weeks before our things
arrived. It was very frustrating to have to find
out where to go to buy everything, such as
all the lights for the house. That was the
Photo: Erol Gurian
hardest part buying all the light fixtures and
trying to hang them up.
David: Thats very different for Americans
to rent a house and walk in and see no lights,
Invest in Germany magazine January 2005
bare walls and no kitchen. But, we knew to
expect this because we had been warned by
the relocation company that was helping us
out.
Julie: Another adjustment was the shopping
hours, not being able to go to big shopping
malls and not being able to shop on Sundays.
That was very hard at first. Now, I really
appreciate having Sundays seem like a fami-
ly day rather than a day to accomplish tasks.
The other thing I had to get used to was what
I call the world of small. For example, the strong in their opinions, and you have to re-
streets are small, the cars are small, and the
products come in small quantities because
the refrigerators are small. If we were both
working, I think it would be very difficult to
keep the refrigerator stocked.
Have you had clashes with the locals?
David: Most of the Germans I have met have
been very warm and friendly. Some of them
have been a little bit reserved, but not like
I was expecting. One of the stereotypes that
I had been fed was correct. Regarding wait-
ers and waitresses. Some of the waiters here
are slow and dont pay attention to the guests.
Do you feel a sense of community in Ger-
many?
David: Were very involved in our English-
speaking church, and that helps us a lot. We
have a network of people who love us and
help us. If you do have a problem, chances
are there is someone at the church who has
gone through it and can help you.
Is it easy to communicate with your German
colleagues at work?
Julie: I often have to re-explain what Im say-
ing. In America, we use a lot of sports analo-
gies such as getting to first base or to make
a home run. If I say this phrase, I sometimes
get a blank expression.
How would you characterize Germans on
the job?
Julie: Germans are straight to the point and
spect that. Im the foreigner here, and they
know the people and the culture. Im trying
to learn how the typical German mom cooks
and eats. Im trying to understand this culture
for developing food products. Still, the
Germans are very friendly and they know
what they want to accomplish.
What is the main difference between work-
ing in Germany and working in the United
States?
Julie: When I came here as a manager, I real-
ly noticed that people have a good respect for
the balance between life and work. People
have a lot of vacation, and they take it. I think
thats great. Germans work hard on the job
and when theyre not at work, its strictly per-
sonal time. In the United States, Im always
calling in to the office when Im on vacation.
Here, I try to do it the German way. I just
check out.
23
 MARKETING GERMANY
Germans Wonder:
Whats in a Name?
The Made in Germany sticker on many products is more than a label
or brand name. For years it has been standing for the worlds best
autos, beer and a strong economy.
H ow significant is a Made in Germany
label in todays rapidly changing, glob-
alized world? For many years, certainly from
the 1950s onwards, it was somehow regarded
as symbolising Germanys post-war recov-
ery, which Chancellor Adenauers Economics
Minister Ludwig Erhard termed the Wirt-
schaftswunder the economic miracle.
But what about in todays more stressful,
turbulent age? Where rapid business com-
munication results in labels, brands and
trade names changing identity on an almost
daily basis, clouding our perception of coun-
tries and their products. Just what does a
Made in Germany label stand for abroad?
Certainly, famous German products are still
24
great sellers around the world. The nations
key motor vehicle manufacturing and mecha-
nical engineering branches are still booming,
even in times of global recession managing
a 70 per cent share of exports.
Famous German products are still
great sellers around the world
Siemens electrical engineering products have
an excellent reputation around the world. The
nations car-makers BMW, Mercedes, Volks-
wagen and Porsche consistently win high
export quality ratings. Nivea, now a brand
thats 100 years-old, remains Europes most
popular skin cream. One could quote many
other examples where German products excel
in world markets. Marketing analysts claim that
every time you purchase something, youre
buying a little piece of the country that pro-
duced it even if the product or service in
question doesnt actually originate in the
country with which we associate it. In brand
psychology, perception is everything. How-
ever, some German business people are con-
cerned. Recently they launched a nation-
wide initiative titled Marke D, aimed at
offering ways how the phrase Made in Ger-
many could preserve its standing.
In brand psychology,
perception is everything
The organisers noted that people abroad
were still impressed by many things in Ger-
many. They extolled its friendly relations
with neighboring countries, and respected
the international peace initiatives it makes
around the world. More than 400 people
showed up at a conference in Berlin recent-
ly to argue the merits Germanys brand value.
One of its themes was Image Building and
Strengthening Germany as an Investment
Location.
Proposals were made as to how Germa-
ny might improve its brand value abroad. Ste-
phan Scholtissek, director of the Brand Name
Germany campaign has suggested that fac-
tors such as German reliability and punc-
tuality remain important today, but he argues
that humor and self-confidence could be
added to quality characteristics connected to
Photos: Adidas, Bayer HealthCare AG, Beiersdorf AG, Henkel AG, DaimlerChrysler, SAP, Siemens AG
the famous German label. In a booklet called
The Country Needs a Strong Brand the cam-
paign organisers listed points gleaned from
workshops and discussion groups, noting
that while quality, perfection and reliability
were still considered German hallmarks, its
people were often seen as being a trifle short
on charm and lightness.
Germany was seen as a country famous
for its writers, poets and thinkers, and for
magnificent cars and beer. It has interesting
tourist destinations, and an attractive coun-
tryside. As for its products, they were deemed
solid. The organisers think that Germany
possesses wonderful talents and should make
more use of its abilities in a competitive, ever-
changing world.
Clive Freeman
Invest in Germany magazine January 2005

Promoting the Soccer
World Cup 2006 in Germany
A Time to Make Friends is the German governments slogan for
the Soccer World Cup in 2006. Invest in Germany is taking that
sentiment quite literally.
A s less and less distinguishes the econo-
mies of western European countries
from each other, and competition from the
low-wage countries of eastern Europe grows,
traditional ways of attracting foreign invest-
ments are no longer enough. Other, less
quantifiable values such as openness, ener-
gy, tolerance even fun are now also
important considerations for investors seek-
ing overseas opportunities.
So, where do you find all those qualities
and more and with a huge world-wide fol-
lowing in the bargain? The 2006 World Cup
in Germany is the perfect solution: German
soccers great reputation around the globe
makes it an ideal vehicle for attracting poten-
tial investment partners. Invest in Germany
has seized the opportunity presented by one
of the worlds greatest sporting spectacles to
show the country in a different light.
An ideal vehicle for attracting
potential investment partners
Instead of only focussing on Germanys
unparalleled technology and cutting-edge
design, we want to address decision-makers
on an emotional level too. Soccer is an ideal
vehicle to get across our message: Germany
is a great place to live and work. But the
chance the 2006 World Cup offers isnt just
limited to the duration of the tournament
itself. The run-up also offers marvelous pros-
pects for promoting Germany as an industri-
al location. The two-year lead up allows
ample scope to make the most of potential
synergies with cultural events and projects,
Photos: Invest in Germany
tourism, education and science and research.
Invest in Germanys first move in this
direction was a great success and pointed the
way ahead. The international match between
Germany and Brazil in Berlin on 8 Septem-
Invest in Germany magazine January 2005
group also included German and foreign
Members of the delegation in Berlins Olympic
Stadium and visiting the construction site of the
future Berlin Main Railway Station.
ber 2004 gave us a chance to invite top busi-
ness executives from Brazil and Japan and
board members from the German subsidiar-
ies of foreign companies to spend three days
visiting locations in Berlin and the surround-
ing state of Brandenburg. Particular empha-
sis was put on the logistics, pharmaceuticals,
and aeronautics sectors. The 32-member
ABOUT US
journalists. It was hosted by a number of
prominent politicians, including Interior
Minister Otto Schily, President of the German
Bundestag (Parliament) Wolfgang Thierse, as
well as Germanys national soccer team
manager, Oliver Bierhoff.
The success of this pilot project effec-
tively demonstrated Invest in Germanys
ability to organize and implement complex
events and confirmed its focus-group strategy
of addressing senior and middle-man-
agement executives separately (although the
senior figures werent drawn exclusively from
managing boards). It also established work-
ing relationships with German government
and trade organizations both at home and
abroad. These included the German Cham-
ber of Trade and Industry in Sao Paolo,
Brazil and eastern Germanys IIC consultancy
in Tokyo, which were responsible for
selecting guests and liaison.
We want to address decision-
makers on an emotional level
Invest in Germany gained important expe-
rience in dealing with the media during this
project, and this will certainly be intensified in
the future, with proportionately more journa-
lists from both Germany and the target areas
involved. The aim is to benefit from the media
contacts made in this context, independently
of soccer. Future events will also have a
heavier online presence Invest in Germany
has set up a special World Cup 2006 section
on its website, www.invest-in-germany.com.
Between now and 2006, Invest in
Germany is planning a number of events,
either inviting foreign business leaders to
Germany for international matches here, or
promoting investment in Germany during
away trips by the national team. In the next
few months, these will include Japan and
South Korea, the German Football Associa-
tion cup final in Berlin in May 2005, and the
Confederation Cup in June.
25
 ABOUT US

A selection of our planned events in 2005

22-27 January
EVENT AT THE PHOTONICSWEST
(German Photonics Industry)
San Jose; USA

23-25 February
EVENT AT THENANO FAIR &
CONFERENCE Tokyo, Japan

(from left to right): Manfred Dransfeld,President, German American Chamber of Commerce; Mark Chandler, 11-15 April
San Francisco Mayor's Office, Director of International Trade; Dr. Martin Wansleben,Chief Executive Officer,Asso- EVENT AT THE HANOVER FAIR
ciation of German Chambers of Industry and Commerce DIHK; Rene Gurka,Director, German American Cham- Hanover, Germany
ber of Commerce, SF Office; Reinhard Krause, German Federal Ministry of Economics and Labour, Berlin.

18-20 May
EVENT AT THE INTERNATIONAL BIO

Our New Office EXPO JAPAN Tokyo, Japan

31 May-06 June
EVENT AT THE TRANSPORT LOGISTIC

in San Francisco FAIR Munich, Germany

13-16 June
EVENT AT THE LASER WORLD OF
In August of 2004, Invest in Germany opened its third office in the PHOTONICS Munich, Germany
United States, the first on the West Coast.
19-22 June
EVENT AT THE BIO PHILADELPHIA

T he new office is headquartered in San

Francisco, California, and will represent
Germany in the states of Washington, Ore-
The West Coast office will focus on impor-
tant high-growth industries in the western
states, especially those most likely to be inter-
Philadelphia, USA

gon, California and Arizona. These states
had a combined GDP of $1,863 billion in
2001. It is headed up by new IIG team mem-
ber, Angelika Geiger, a German-American
who is a long-time California resident. Ange-
lika has served in executive-level positions in
various industries, including market research,
software and internet technologies. Her
experience and business contacts give Invest
in Germany a head start in establishing itself
on the West Coast. Angelika works closely
with her colleagues, Michael Rassmann in
New York and Kenneth Bremer in Chicago.
July
ested in business opportunities in Germany ROADSHOW LOGISTICS USA
and the EU. These include life sciences, IT,
September
aerospace, photonics, nanotechnology, envi-
ROADSHOW R&D France
ronmental & energy technologies and others.
In San Francisco, Invest in Germany occu- 18-20 October
pies a joint office with two other agencies EVENT AT THE BIOTECHNICA
sponsored by the German government, the Hanover, Germany
German American Chamber of Commerce and
BfAI (German Office for Foreign Trade). The 16-19 November
combined office will allow these three agen- EVENT AT THE MEDICA
cies to leverage their contacts, raise the pro- Dsseldorf, Germany
file of Germany on the West Coast and empha-
November
size the economic importance of this region.
EVENT AT THE BIO EUROPE
Dresden, Germany

Within the framework of 2005

German Year in Japan several events
in Tokyo, Osaka, etc.

Within the framework of the prepara-

tion for the FIFA World Cup 2006
Germany several events in Germany
Photos: Invest in Germany

and abroad

For details please contact our website

www.invest-in-germany.com and our
Dr. Urda Martens-Jeebe, Managing Director, Invest in Germany GmbH; Angelika Geiger, our new U.S. Representative West Coast offices
with Martin Gutzat, Correspondent BfAI (left) and Rene Gurka, Director, German-American Chamber of Commerce, SF Office.

26 Invest in Germany magazine January 2005

 Invest in
Europes Leading Economy

Invest in Germany
Invest in Germany guides the inves- As the primary contact for companies
tor to success in Germanys business considering expansion into Germany,
environment. Invest in Germany provides informa-
tion about the German business envi-
ronment and assistance in establish-
ing connections with an extensive
network of contacts in both the public
and private sectors.

www.invest-in-germany.com
Invest in Germany GmbH, Anna-Louisa-Karsch-Strae 2, D-10178 Berlin, Tel.: +49 30 206 57-0, office@invest-in-germany.com
Invest in Germany, LLC, 345 Park Avenue - 15th floor, New York, NY 10154, USA, Tel.: +1 212-454-1905, rassmann@invest-in-germany.com
Invest in Germany, LLC, 200 South Wacker Drive, Chicago, IL 60606, USA, Tel.: +1 312 596-8503, bremer@invest-in-germany.com
Invest in Germany, LLC, 201 California Street, San Francisco, CA 94111, USA, Tel.: +1 415 248-1246, geiger@invest-in-germany.com