Germany

Above: Sony Center, Berlin

2006 brought a pleasing economic impulse to Germany. At a rate of 2.7% Germany’s economic growth far exceeded most experts’ expectations. Furthermore, current numbers as well as predictions for 2007 indicate continuing positive developments for the entire German economy. Indeed the opinions of many top German company managers suggest that the conditions for investing in Germany are good and will continue to improve.

There are clear reasons for Germany’s economic success, such as the reforms that the federal government recently implemented. For example the government just agreed to a business tax reform proposal that brings this tax in line with the corporation tax at under 30%. Also with its comprehensive hightech strategy the Federal Government is channelling investment into Research and Development in Germany. These decisions both strengthen Germany as a high-tech business location and moreover set the course for Germany’s international competitiveness.

Germany is rightfully described as a “classic” investment opportunity for international companies. Almost 22,000 foreign companies already maintain a presence in Germany, including nearly all major “global players”. These companies employ three million people and contribute about r1,000 billion to the German GDP. US companies’ total investments alone amount to $100 billion. International companies active in Germany see the high quality and flexibility of the German labor force as another one of the principal reasons behind their decision to invest in Germany. Productivity rates are extremely high meaning that Germany has recorded the lowest increase in unit labor costs within the past 10 years in the entire EU. Germany’s competitiveness has improved considerably and is now one of the highest in the eurozone. Investors get more value for their euros in Germany than in most other eurozone countries.

Germany has decisive advantages over other European economies: it is the largest economy in Europe, with the largest number of consumers (82 million), and it is located at the geographical center of Europe. With a combined population of about 450 million, the countries unified under the EU banner represent the largest contiguous market in the world. In addition, Europe’s 10 largest economies belong to a monetary union, of which Germany is the undisputed center.

Above: Quadriga, Brandenburg Gate, Berlin

Surveys of international investors show that market size and market access continue to be the most important criteria in the selection of locations for investment. Recently, the consultancy Ernst & Young took note of Germany’s quiet changes and rated the country the most attractive in Europe for investors and one of the world’s top three investment locations. The American Heritage Foundation and the Wall Street Journal count the German economy among the 20 national economies which merit the title “free economy” .The reason: Germany’s markets are open, both de jure and de facto. This is particularly the case in areas that were once state monopolies, such as energy, postal services and telecommunications. On the subject of market access: Germany has nine European markets in its immediate vicinity, all of which can be reached very quickly. Companies will continue to invest in Germany in the future in order to benefit from this market proximity and potential. A feature of competition among European markets is that Germany’s market expertise and inter-cultural competence has traditionally made the German market a pivot point for Eastern European companies operating in Western Europe and vice versa. As a result, the German economy is at the center of the international flow of traffic, goods and services.

Above: Cologne Cathedral, Cologne

Furthermore, Germany has the densest and best developed transport and communications infrastructure of all European countries. With the major seaports of Hamburg and Bremen plus the biggest air freight terminal and turning platform in Frankfurt, and with its 17 international airports, Germany has a global network at its disposal. From Germany, companies can deliver their goods directly to the destination via one of the world’s densest motorway networks, on a railway system with international connections as well as via an extensive inland waterway system. The booming logistics market in itself is opening up outstanding business opportunities for investors. In the past three years the German logistics industry had a growth rate of 8.5 percent – a figure that is expected to increase even more. This makes logistics one of the most important industries in Germany.

The OECD ranked Germany fourth among the world’s countries that have reformed their labor market most successfully in the past decade. German labor is highly qualified and flexible. The German “Facharbeiter” (skilled worker) is well trained and highly motivated; the professional standards of administrative, technical and managerial staff are high, labor relations are stable, and sickness rates low. Now is an excellent time for investors to invest in Germany. The German economy is performing very well. Indeed data shows that exports are improving, investment is increasing, and domestic consumption is also growing. The consumer confidence index has reached its highest level for 15 years. Consumer spending is buoyant. Germany has all of the ingredients for a sustainable economic recovery. Therefore, the German economy is in an ideal position to welcome international investors.

Above: Transrapid

This is also an exciting year for new investments in Germany because as of January Germany now has one investment promotion agency (IPA). The former IPAs Invest in Germany and the Industrial Investment Council (that previously only promoted investment in eastern Germany) merged into one agency called Invest in Germany. Invest in Germany (IiG) is the federal investment promotion agency informing, assisting and consulting foreign investors about investment opportunities in Germany. We provide full service support from site analysis to the implementation of investment decisions. Our industry teams study markets, supply information on structures and costs, and ensure professional guidance for successful business launches in Germany.

Companies planning to establish or expand business operations in Germany can obtain detailed information on the legal and corporate investment framework, tax regulations, regional and federal financial support, and visa requirements. IiG handles all investment information discreetly and confidentially and all services are free of charge. Investors will now have a team of about 100 employees and nine international offices, including US offices in Boston, Chicago, Palo Alto/San Francisco and Washington D.C. as well as offices in Japan and China to help them find the best location and conditions for their investment in Germany.

 

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