GERMANY

Insights into Europe’s Biggest Economy 2 / 23

MAKINGCONNECTIONSD

ayPage 24

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Page 20

Electromobility is creatinga new market for plastics.

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It’s full steam ahead formaritime logistics.

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GERMANY’S
SMART PORTS

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Necessity is sparking new demand for energy efficiency
in Germany.

Photo: Illing & Vossbeck Fotografie

FOCUS“LESS IS MORE”
IS A MUST
Individuals, companies and municipalities across Germany are seeking
solutions to cut energy costs byincreasing efficiency.
Pages 4–11

“It stands to reason that
Europe’s largest economy must also be a leader
in energy efficiency.”
FITNESSHEALTH

Dear reader,

Protein degraders

Back in shape

German biotech company Evotec is pioneering a
new form of cancer research.

Whether indoors or outdoors, Germans are spending more time — and money — staying in shape.

Page 28

Page 26

AGRICULTURE

MORE ARTICLES IN THIS ISSUE:

Mechanical­farmhands

In brief: Synthetic photosynthesis, hologram ­video
calls and clever refrigeration magnets......... Page 12

Technology is the focus as German agriculture
grows more and more organic.
Page 18

Solar resurgence: The director of Fraunhofer
ISE on why German solar is hot again....... Page 14
Plastics in EV batteries: Electromobility iscreating a new market niche................... Page 24
Digital wanderlust: Germans are looking for
new travel experiences online................. Page 30

The Digital Magazine
Online at:

Welcome to Germany! Why the state is­streamlining migration laws.................... Page 32

www.marketsgermany.com

Green deal: The MD of the Canadian German
Commerce Chamber talks H2 ................. Page 34

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Notes: © Germany Trade & Invest, June 2023

F. +49 30 200 099-111, office@gtai.com, www.gtai.com
Excecutive Board: Julia Braune, Chairwoman/CEO,
Dr. Robert Hermann, CEO

All information provided by Germany Trade & Invest
has been gathered with the utmost care. We assume
no liability, however, for the accuracy of the informa-

Director Corporate Communications:tion provided. Articles published under specific names

Andreas Bilfinger

do not necessarily reflect the opinion of the publisher.

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Editor: Jefferson Chase
Editorial Team Kammann Rossi/wortwert:
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Circulation: 5,000of the publisher. Unless specified otherwise, the copy-

Energy efficiency is an often underappreciatedbut absolutely vital aspect of Germany’s energy
transition. So we’ve decided to make that our top
story this time around.
Efficiency can take many forms. It can be about
technology: the classic “get more out than what
you put in” model of the heat pump. It can be
about maximizing the performance of solar power cells to better capture the sun’s energy. It canbe about using surplus industrial heat to keep
buildings and whole neighborhoods warm. Or it
can be about developing systems that allow us tobe more flexible in how and when we use energy.
These are all important levers in Germany’s plans
to become CO2-neutral by 2045.
Historically, Germany has been a country thathas relied on technology and innovation, notvast stocks of natural resources. So it stands toreason that Europe’s largest economy must also
be a leader in energy efficiency. But there is botha demand and space within the market for international companies to come here and prosper aspart of this transition.
Energy is a serious topic — perhaps the most critical challenge facing the world today — but wealso find time in this issue for a bit of recreation
and relaxation. The fitness industry has emerged
from the coronavirus pandemic in robust healthand more diverse than ever before. And Germans
are traveling again, albeit in different ways and todifferent destinations, which means fresh opportunities in the tourism sector. So we invite you tosit back and enjoy a bit of mental stimulation withthis issue of Markets Germany.

right for pictures is held by Germany Trade & Invest.
Order number: 21354
Cover: J örg Gruel/Getty Images

Dr. Robert Hermann, CEO
Email: invest@gtai.com

Photo: NÜWIEL, Anne Gaertner

NATALIA TOMIYAMA: CO-FOUNDER AND MANAGING DIRECTOR, NÜWIEL
Hamburg attracts no shortage of brightyoung entrepreneurs looking to join the vibrant logistics sector of Germany’s largest
port city. Natalia Tomiyama is one of them.
Raised in Russia by Asian parents, Tomi­yama
came to Germany to study mechanical engineering at Hamburg University of Technology. While working as a project manager atthe university’s Startup Dock, she met her
future business partner Fahad Khan, and in
2016, they founded NÜWIEL, a company thatdevelops and manufactures electric cargo
trailers for bicycles.
Today, NÜWIEL’s eTrailers are used by UPS
and the Belgian postal service to deliver
packages, while Ikea rents out the eTrailers
to customers, enabling them to conveniently transport shopping items home withoutcars. The system’s versatility is a major selling

point — it can be connected to electric andconventional bicycles within seconds andserves as a handcart when disconnected.
“Our eTrailer automatically synchronizes
its movements with the bicycle or person
in front, making it very comfortable to use
even when moving 200 kilos,” Tomiyama
explains. “There is no push and pull.” Thebiggest start-up challenge Tomiyama’s team
faced was developing their prototypes. But
Hamburg’s support ecosystem for fledgling
businesses helped them: “It gave us accessto the funding and technical equipment weneeded,” she says.
2023 is a big year for NÜWIEL: it plans toscale up production and enter new markets. And it plans to complete a EUR 10
million financing round and enter a new
European market.

Quick facts
NAME

Natalia Tomiyama

JOB TITLEManaging Director

QUALIFICATION 	M. Sc. ­Mechanical­ ngineering / MBA TechE
nology M­ anagement

COMPANY NAME

NÜWIELLOCATION 	Hamburg
INDUSTRY

Last Mile Logistics

HAMBURG-BASEDSTAFF:

January 2023: 34;
January 2024: 40+

CLIENT BASE:	UPS, bpost, Ikea, ADFC

4

MARKETS GERMANY | Focus

MARKETS GERMANY | Focus

5

WASTE NOT,WANT NOTAll over the world, rising prices have underscored the need to use energy more
efficiently. Ordinary German citizens, along with the municipalities they live in and businessesof all shapes and sizes, are eager to use less energy and make it go further. That’s good news
for both service and equipment providers.

Daimler Trucks is investing in modern waste heat and ventilation systems in its factories. Schott is developing climate-neutral melting technologies
to improve the energy-intensive processes in
producing glass. And then there are the small
and medium-sized enterprises, the backboneof Germany’s economy: Bath and heating
fixture company Josef Küpper and Sons isself-supplying energy using hydrogen, while
BSH Hausgeräte is tinkering with metal processing innovations and GEA Refrigeration
is developing a high-temperature heat pumpthat uses natural refrigerants.
Those were the winners at the latest Energy Efficiency Awards given by the German
Energy Agency (dena) for outstanding achievements in energy management. And they’re agood representation of the broad spectrumof energy-­efficiency innovations currently inhigh demand in Germany.
Russia’s attack on Ukraine made Russian
gas imports politically untenable in Germa-

ny. When they came to an abrupt end, theycreated a sharp rise in supply concerns andcalls for private households and businesses
to save energy. Germany responded, and thecountry got through the winter of 2022/23 without significant hardship. At the same time, it
became clear that energy thrift and alternative
gas supplies won’t be enough to help Germany
to achieve its clean energy and climate protection goals. In addition to all of the above andto renewable energy, Germans must use power

THE BOTTOM LINE
Industrial companies are striving to be more energy efficientin order to cut costs, ensure reliable heat and power supplies,
and become climate neutral.
The German market for energy-­
efficiency technologies has ahuge potential for growth.

and heat more efficiently. And nowhere is thistruer than in industry.
“What we saw in German industry lastyear were mainly short-term, fast-acting­energy-saving measures in a first step to copewith the energy crisis,” says Alexander Sauer,a professor at the Institute for Energy Efficiency in Production (EEP) at the Universityof Stuttgart. “Because energy prices suddenly
skyrocketed and there were major economic
uncertainties at the same time, companies wereprimarily looking to save energy costs quickly — and initially with measures for which they
had to invest as little as possible.” He predicts
companies “will now shift from short-term,
low-investment measures to larger-scale, longterm energy-efficiency strategies.”
For ten years now, Sauer and his researchteam have been monitoring German industrial
companies’ energy-saving methods, publishing an Energy Efficiency Index twice a year.
The latest edition offered an important insight.
“There is now a great need for information, forPhoto: Cavan Imagest

“WE MUST COMBINEQUICK SUCCESS WITH
A LONG-TERM, STRATEGIC APPROACH.”
Photo: DENEFF

Henning Ellermann is MD of the energy efficiency initiative DENEFF, whichbrings together companies from all sectors to learn how to save energy.

How big was the energy price shock lastyear for companies in Germany?
HENING ELLERMANN: At the beginning of the
Ukraine conflict, the main concern was supply
security. The main thing was to get through thewinter safely! Some companies even reacti­
vated old oil-fired boilers as an emergency
reserve and looked everywhere for potential
energy savings, especially in the short term.

energy costs structurally?” It’s no longer aquestion of sticking Band-Aids on the acuteproblem areas, but of finding sustainable solutions. In recent months, DENEFF has offered
many digital consultations and workshops on
efficiency measures. The demand is huge! At
times, our platforms were overloaded because
so many people have registered. We hope thatcompanies will use the breather offered by
the summer to prepare for next winter — andmany are already thinking far beyond that.

The issue of energy efficiency is hardly new
for German companies. Should they havebeen better prepared?

What specific factors are adding momentum to the demand?

HE: Many companies were already fully en-

HE: Prices continue to be very high and thegaged with energy efficiency measures, but the
topic didn’t yet have the urgency we see now.
Companies that had already set up an energy
management system and had carried out energy
audits had a definite advantage. They were able
to reach into their desk drawers, pull out theirconsumption analyses and lists of measures,and quickly get an overview of where they could
save energy most quickly and efficiently. Many
then brought forward measures that had alreadybeen planned anyway and implemented themmore quickly.

regulations around energy consumption andCO2 emissions are now stricter. This situation
is now affecting everyone from German industrial SMEs in mechanical or electrical engineering to the energy-intensive industries.
Many of them are looking for service providers
who can help them navigate these complex
issues, who can also take care of applications
for subsidies and who can bring together thenecessary experts to quickly implement efficiency measures.

Despite the worries about natural gas
supplies, German industry got throughthe winter surprisingly well. What’s thesituation now?
HE: Things have calmed down a bit. Companies are now at a point where they are asking
themselves: “How do I get away from highIs it difficult for foreign service providers
to gain a foothold in the German energy
services market?
HE: Not necessarily. Of course, you need topresent certain qualifications if you want tooffer energy services on the German market,
but the industrial processes and the norms andstandards for audits that are involved are simi-

lar worldwide and largely standardized within
the EU. Individual framework conditions inGermany naturally require specific attention,
but there is a lot to be done and great openness
for new and innovative solutions and providers.
Those who establish themselves on the Germanmarket and can convince demanding German
industrial companies are well placed to thengain a foothold in other European countries.
What do providers of energy services andefficiency technologies need to bring to thetable to be successful now?
HE: We need to combine quick success witha long-term, strategic approach. After all, thepressure to act and cut costs right now is very
high, but at the same time, companies also
know that we are in the midst of a profound,longer-term transformation toward a more sustainable and resource-conserving, circular economic world. There is a great need for support
on both short-term and long-term challenges.
Providers should keep this in mind.

What role do digital technologies play inthese developments?
HE: A major bottleneck will be the availabilityof skilled workers. After all, it takes a lot of
people who have the necessary knowledge andexperience to then implement all the projects
in practice. So anyone who can use digital solutions, such as artificial intelligence and theInternet of Things, to support these experts
and implement efficiency measures even fasterwill certainly have an advantage.

MARKETS GERMANY | Focus

advice and for help in implementing energy
efficiency measures,” explains Sauer. “Companies are looking for solutions on how to become
more independent of volatile energy prices
overall and regain planning security.”
Huge industrial conglomerates in traditionally energy-intensive sectors like chemicals or metals aren’t the only ones focusing on
efficiency. Smaller companies are just as eager
to get more by using less. “This now applies tothe entire manufacturing SME sector in Germany,” says Sauer. “There is huge pressure to act.”
This pressure from below is being matched bygovernmental legislation from above.
Saving as much as Spain uses
In March, the European Union agreed to a revision of the bloc’s Energy Efficiency Directive,
mandating energy savings of 11.7 percent by
2030. That means that EU countries must reduce total energy consumption by about 1.5
percent per year. Targets will be enforced by
the European Commission.
“Those who dawdle get homework,” tweeted the German Member of European Parliament Jutta Paulus, a Green Party stalwart who
was involved in the negotiations. Paulus added
the mandated savings in the legislation would
be roughly the size of Spain’s total energy consumption.
In late April, Germany's governing cabinet
approved draft legislation for the Energy Efficiency Law (EnEfG). It sets a binding target ofa 550-terawatt-hour reduction of final energy
consumption compared to 2008 levels by theend of this decade, with Germany’s nationaland regional governments directly responsible
for a 50-terawatt-hour cut. For comparison,
Germany consumed 2407 terawatt hours ofenergy in 2021, according to the German Environment Agency.
The legislation requires all companies withan annual energy consumption of more than
15 gigawatt hours a year to introduce energy
management systems and draw up concrete,

HOW HAS GERMANY’S
NATURAL GAS SUPPLYCHANGED SINCE 2022?
For many decades, Russia was Germany’s main supplier ofimported natural gas. But with Moscow’s invasion of Ukraine
in February 2022, that relationship became politically unviable.
It was resoundingly clear that Germany’s energy security was
threatened by its over-dependence on a single supplier country,
and the German government took immediate steps to rectify
the situation.
Germany has increased gas imports from other countries suchas Norway, the Netherlands and Belgium. It has also stepped up
deliveries of liquefied natural gas (LNG) via its European neighbors and terminals built at short notice in its North Sea ports.
Some were already in operation by late 2022/early 2023.
Meanwhile, German industrial companies are working on
solutions to supply themselves with alternatives to natural gas.
They are also hard at work on increasing energy efficiency andreducing the energy consumption of their machinery, buildings
and processes.
By September 2022, Germany was importing no gas whatsoever
from Russia, and the country suffered no shortages during thewinter of 2022–23. In line with Germany’s long-term policy oftransitioning to clean energy, efforts continue to further reduce
the use of natural gas in the country.

publicly accessible energy efficiency measures.
Specifics of the measures will be left up to thecompanies themselves.
In addition, data centers will have to fulfill
energy-efficiency standards and use the heat
they generate. Industrial waste heat is to begenerally avoided or, where unavoidable, be
put to use.
“The new Energy Efficiency Law adds further momentum to the changes that are alreadygoing on in Germany society and the German

economy,” says Germany Trade & Invest (GTAI)CEO Robert Hermann. “It’s hard to think of abetter time than now for international energy-­
efficiency companies to expand to Europe’s
largest economy.”
A new market for new services
No wonder then that consultants and companies that offer services and technology to
improve energy efficiency are already noticing
increased demand.

7

8

Photo: Indigolotos

MARKETS GERMANY | Focus

SPOTLIGHT:
Germany’s Food IndustryF

ood production — encompassing
both the agricultural and food industries — currently accounts for around30 percent of global energy consumption and28 percent of global greenhouse gas emissions.
As the world’s population grows, demand forfood is also rising steadily — by as much as 60
percent by 2050, according to projections —and that rise threatens to significantly increase
the energy consumption of this industry.
The Food and Agriculture Organizationof the United Nations says food prices need
to be decoupled from fluctuations in energy
prices on the world markets. To achieve this,the agricultural and food industries as a wholeneed to get more energy efficient.
Likewise, the food production industry inGermany is under great pressure to reduce its
energy consumption. The food sector is thethird-largest industry in Germany, with annual
sales of around EUR 216 billion, and currently
has the second-highest gas consumption in
the country overall, just behind the chemicalindustry. Overall, the industry is responsible
for around ten percent of Germany’s total energy consumption.
The industry encompasses both SMEs andlarge, international companies; all together
there are around 6,000 businesses in the sector.
The potential for energy savings is particularly great among companies that require large
amounts of heat or cold in their production
processes, such as meat processing plants, dairies, breweries and bakeries. All in all, these
sectors account for around half of the energy
consumption in the food industry.
Chilled food producers hardest hit
Producers of both frozen food and fresh produce, as well as their logistics providers, are also
particularly susceptible to rising energy prices.
The main consumers in production are process heating, process cooling, refrigeration andpowering electric motors. A large potential forenergy savings in the industry therefore arises
particularly in the heating and cooling circuits.

In April 2022, the Federation of German Foodand Drink Industries (BVE) launched the industry’s first energy efficiency and climate
protection network. The German Ministry
for the Environment, Nature Conservation,
Nuclear Safety and Consumer Protection is
also promoting the industry, with the aim of
reducing energy consumption in production
and making greater use of renewables.
“I am very pleased that we have been able
to launch our first dedicated network,” says
Peter Feller, deputy CEO of the BVE. “German
food manufacturers are working resolutely to
produce in a more climate-friendly way. Thisis demonstrated simply by the fact that evenin the predominantly regional cross-sector
networks, most committed companies comefrom the food and beverage industry.” The associations and climate protection networks
are a good starting point for providers of energy services and energy-saving technologies
to enter into discussions with companies inthe sector.

MARKETS GERMANY | Focus“HELP! I NEED SOMEBODY”

SAVING ENERGY IS A GROWING SECTOR

Where manufacturing companies in Germany are looking foradvice and implementation support

Proportion of energy service providers in Germany who expect market growth
92
88
88

90 %
85 %
70 %

80 %

60 %

70 %

84

75 %

75

73

74

68

67

68

65 %

30 %

20 %

59

55 %

40 %

58

55

50

47

43
33

79

67

64

60 %

50 %

91

2018

2019

2020

2021

2022

Energy advice for private households

Energy advice for state institutions

Energy consulting for companies

Source: BFEE

BIGGER COMPANIES LOOKING FOR BIGGEST SAVINGS30

How German companies rate the importance of energy efficiency

10 %

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“Many customers come to us and ask for ourassessment: what is coming from the European
Union (EU), what new laws and regulations are
we facing at the national level in Germany?,”
says Attila Kovacs, sustainability and energy
efficiency advisor for the Danish consultancy
Rambøll.
Rambøll is a perfect example of a company banking on the rapid change in Germany.
Headquartered in Copenhagen and operating in the German market from its offices in
Hamburg since 2000, the global architecture,engineering and consultancy company plans
to focus its entire German consulting and service portfolio on the topics of sustainability
and energy transition over the next four years.
“Many companies now want very comprehensive advice and support, which is not justabout purely calculating the carbon footprint,
energy audits or optimization in individual
areas of production or individual processes,”says Rambøll sustainability expert Delia Carls.
“They want integrated, holistic solutions andideas on how energy efficiency measures canMedium-sizedcompanies

8%

Small
companies
Very small
companies
Relatively low

44 %

52 %

58

Source: EEP/Fraunhofer IPA

Large
Companies

4%

0

42 %

50 %

19 %

45 %
38 %

46 %

Equal to other factors

be efficiently combined with other important,strategic issues such as the short- and longterm reduction of CO2 emissions and othersustainability goals.”
Russia’s war on Ukraine not only drove up
energy prices, say the experts, but made morecompanies worry about the security of their
supplies. That has also affected their thinking
on energy efficiency. “If possible, they now
want fixed all-inclusive prices,” explains Kovacs. “They want to know the costs of energy
efficiency measures very precisely and prefersecure, easily calculable solutions.”
Demand is high for systems that provide inhouse electricity production. Kovacs describes
his clients’ reasoning thus: “Because with those
I can calculate exactly, ‘What do I have to invest
today, and what reduction in energy requirements will follow the conversion?’”Greater efficiency means more planningsecurity and less exposure to volatile prices.
It is more difficult to convince customers ofother services such as digital monitoring systems for the energy consumption of buildings

36 %Comparatively high17 %Source: Fraunhofer IPA

or machines because the data is sketchier inthese areas.
Consultants and service providers are expected to be fully versed and up-to-the-minuteon the current political framework not only at
the EU level, but also in Germany. It’s a major
reason for international companies to invest
in local offices to gain a secure foothold in theGerman market and be ready to profit from theenergy efficiency trend.
On the ground in Germany
German industrial customers want reassurance that service and technology providers
understand the specific ins and outs of theGerman market and are fully abreast of the
dynamically changing framework conditions.
“It is much easier to win over German
companies as customers if you are on site andcan act as a German provider,” says Bénédicte
Winter, expert in energy ­efficiency. So it pays
for international companies to set up German
subsidiaries.

9

MARKETS GERMANY | Focus

Taking the Magma for a SpinDrive:
Janne Heikkinen, CEO of Finnish start-up
SpinDrive, modifies some equipment. His
company makes customized magnetic
bearing systems that increase energy
efficiency.

energy-­efficiency competition called the Leitstern Energieeffizienz (“Lodestar Energy Efficiency”) for its 44 municipalities. Participation
Photo: SpinDrive

10

Winter says that potential industrial clientsin Germany are very open to innovative, newsolutions, because they see energy efficiency
as an essential step on the pathway towards
decarbonization and digital transformation.
“However, this is precisely why companies
want to select service providers and technology partners for this transformation on a very
long-term basis,” she adds. “After all, manyenergy efficiency measures also involve criticalproduction processes and data that companies
don’t allow just any provider to see.”Getting started in Germany
For equipment providers, a sensible first step
into the German market can be to invest in anexperienced technical sales representative onsite. This was the route chosen by the Finnish
start-up SpinDrive, a manufacturer of innovative, customized magnetic bearing systems
that increase energy efficiency in industrial
machinery.
Initially, the company hired a sales representative in Germany. Then, as the demand formagnetic bearings in German-speaking Europe
started to grow, SpinDrive took the next step.
In 2022, it registered a subsidiary, SpinDrive
GmbH, in Heilbronn, southwest Germany.
“Germany has always been an important
market for SpinDrive,” says Nikita Uzhegov, SpinDrive’s chief operating officer. “With the supportof new investments and proven results from customers in different industries, we believe it is theright moment for us to take action in the Germanmarket, including in other German-speaking
countries. It’s important for us to have a local
presence and demonstrate our commitment tothe customers by being close to them.”More suppliers of innovative solutions
could follow SpinDrive’s lead and enter theGerman market, Winter asserts. “Companies
are making quick decisions now. And the variety of technologies that are being used is increasing. Furthermore, industrial companies
in Germany will also become more involvedin the expansion of the country’s energy infrastructure.”
Putting waste heat to good use
A large part of efficiency is, of course, reducing
waste. To take one notable example, the copper
manufacturer Aurubis feeds waste heat fromits energy-intensive industrial processes directly into the heating network of a residential
neighborhood in Hamburg.
This cooperation is typical of the sea change
that’s taking place throughout the Federal Republic. Municipalities are taking it upon themselves to become more efficient in energy generation, energy transport and consumption.
Meanwhile the southwest German regional
state of Baden-Württemberg runs an annual

in 2023 is at an all-time high, and nearly all thestate’s rural and city districts have taken part.
Local and regional governments work
closely with research institutes like the Fraunhofer Institute for Solar Energy Systems (ISE),
which is located in Baden-Württemberg’s
fourth-largest city, Freiburg. Researchers there
are working on a wide variety of innovations,
including hyper-efficient solar cells and modern heat-pump and heat-exchange systems.
There are plenty of opportunities for international companies to take advantage ofthis available expertise and the need for new
solutions. “In Germany, in the coming years
we will see innovative solutions and projects
in which industry, research institutions andmunicipalities work together more frequently,”says Winter. “However, such solutions are also
complex. They present major challenges interms of technology and expertise.”
For this reason, so-called contracting
services may also be required to operate andmanage these comprehensive energy systems,
so that industrial companies can continue toconcentrate on their core business.
The government energy efficiency consultancy BfEE (Bundesstelle für Energieeffizienz)
has put total annual turnover in energy consulting at just under EUR 900 million. Even before
the energy disruptions of 2022 the sector was
growing steadily, and it is now set to become
considerably more dynamic.
Flexibility, plus a lot of open questions
Alexander Sauer sees another trend in themaking: what are known as energy-flexible
technologies. “Increasingly, fluctuating energy sources such as solar and wind mean morevolatile prices, so it makes sense to use energy

MARKETS GERMANY | Focus

EMERGING
STRONGER
4 energy efficiency sectors to watch

ROBOTICSRENEWABLES

The International Federation of Robotics predicts thatcompanies will increasingly introduce automated androbotic controls capable of converting kinetic energy
into electricity and feeding it back into the power grid.
The application of an intelligent, power-saving modefor production robots will become critical in manufacturing. Many big German industrial companies are expected to make big investments in these technologies.

If clean energy is to supplant fossil fuels, the generation and distribution of electricity will haveto become more efficient. Solutions providers willfind a fertile market in Germany and high-profile
partners for R&D projects. For example, with thehelp of a new anti-reflective coating, researchersat the Fraunhofer ISE set an efficiency record for
quadruple solar cells of 47.6%.

CONSTRUCTIONHEAT PUMPS

Energy efficiency regulations and incentives
will drive investment in refurbishments andimprove operations. There are large incentives
for construction and retrofitting — some EUR
750 million in low-interest loans are on offer for
first-time purchases of domestic buildings andprivate homes. The fund is part of a program called “Climate-Friendly New Construction” fromthe state economic development bank KfW.

The German government is offering subsidies
of up to 40 percent on domestic heat pumps toreplace conventional heating systems, and many
regional governments provide assistance as well.
There are also incentives for commercial heatpumps. The leading makers of heat pumps in Germany all reported record turnover, output and investment in 2022, and the unprecedented growthis predicted to continue in 2023 and beyond.

Illustration: www.flaticon.com

as flexibly as possible — for example, by notbuying energy when there are price spikes on
the markets,” Sauer says.
The problem is that industrial companies
can’t simply ramp up and down their machines
at will just because prices are fluctuating. One
solution is to use modern production machinesthat can switch back and forth between different energy carriers during operation. “So, forexample, a machine could run on both electricity and gas or hydrogen,” Sauer explains.
Many industrial companies are also hoping to achieve big leaps in energy efficiency

from the switch to electric machinery. “With
all these new technologies, there are then alot of questions around implementation,” says
Sauer. Questions like: Where is the best place
to put a hydrogen electrolyzer on the factory
floor? How can processes be reorganized sothat all the machines can be supplied with direct current? How to integrate energy storage
into industrial operations? How to use digitalmonitoring systems most efficiently for tracking energy consumption and emissions alike?
With a long queue of manufacturers, construction companies and SMEs waiting to beadvised on a whole host of questions like these,
Sauer is confident that “there will be a lot for
consultants and equipment suppliers to do in
the coming years.”

CONTACT
benedicte.winter@gtai.com
GTAI expert for energy­efficiency

11

IN BRIEF
Germany is admired around the world for its tradition of technological ­creativity
and imagination. Here Markets Germany shines a spotlight on some of the
breakthroughs made by the country’s many research institutes and start-ups.

LIGHT SECURITY
A new approach to data encryption offers enhanced
protection from hacking.
Conventional data encryption uses algorithms. The drawback of thismethod is that any algorithm can potentially be hacked if sufficientcomputing power is applied. Quantum Optics Jena, a spin-off from
Fraunhofer Institute for Applied Optics and Precision Engineering (IOF),
has developed a new solution for encoding data and preventing its being
stolen: light particles.
“Our invention is special because the encryption functions purely randomly,
according to quantum physics, rather than mathematically,” explains
Quantum Optics Jena's general manager Kevin Füchsel.
The company plans to commence serial production in 2023, with all key
software and hardware components being produced in its home cityof Jena, a region in eastern Germany known for its optics technology.
www.qo-jena.com

Photo: banjongseal168

The managing directors of Quantum
Optics Jena GmbH: Oliver de Vries(left) and Dr. Kevin Füchsel.

MANMADE PHOTOSYNTHESIS
Synthetic semiconductor leaves can generate energy using
photosynthesis.

Photo: Quantum Optics

In October 2022, a team from the Technical University of Ilmenau and its research
partners announced a breakthrough in artificial photosynthesis. They unveiled a“leaf” made of semiconductors and catalysts that uses sunlight to turn CO2 into
raw fuels including methane and carbon monoxide. Mimicking nature, the artificial
leaf runs tiny power plants along its surface area. The international project is partof the German government’s strategy to reduce Germany’s reliance on fossil fuels.
“It’s my dream as a scientist to use artificial photosynthesis to open the gates to aworld where green energy sources contribute decisively to widespread mobility andstable energy storage,” says Thomas Hannappel, head of TU Ilmenau’s Fundamentals
of Energy Materials group.
www.tu-ilmenau.deCLEANER MEDICAL DIAGNOSTICS

NANOTECH TO COMBAT DISEASE

An innovative start-up from Dresden has developed a better

Nanostructural engineering could open the door to a brave

way of purifying plasma.

new world of DNA design.
Of all the substances in the world, DNA contains the highest density of information, and the possibilities that entails are intriguing to say the least. Two German
nanotech start-ups, Tilibit and Nanogami, are developing methods for the programming of DNA to self-assemble into a wide range of defined structures when
triggered by an external signal. Nanometer-scale features can then be transferred
onto semiconductor materials using lithography. This could shape the future ofsemiconductor device production. Another potential application is targeted drugdelivery to deliver medications to specific parts of the body.
Photo: XXXXXXXXX
Photo: μAcoustiX

from left:
Dr. Andreas Winkler,
Dr. Stefanie Hartmann,
Dr. Melanie Colditz,
Uhland Weissker“Whether 2- or 3-dimensional, rigid or flexible, solid or hollow, our nanostructures can adopt any shape with nanometer precision,” Tilibit says on its website.
“These objects can be stored for months in solution, frozen or dried, and willretain their shape.”
www.nanogami.bio
www.tilibit.com“The completely automatable process can be
integrated into existing
diagnostic devices.”
Photo: lotus_studio

Dr. Stefanie HartmannµAcoustiX, a spin-off from the Leibniz Institute for Solid State and Materials
Research in Dresden, has something to celebrate. The start-up was awarded theCluster Prize Life Sciences of the IQ Innovation Competition Middle Germany 2022
for a new process of automatized blood plasma extraction.

In 2022, µAcoustiX received EUR 4 million in support from the GO-Bio initialfunding program from the German Ministry of Education and Research. “Thecompletely automatable process can be integrated into existing diagnostic d­ evices,”says Stefanie Hartmann of µAcoustiX’s founding team. “That represents a key
practical advantage and paves the way for groundbreaking diagnostics in a wide
range of fields.”

REFRIGERATION MAGNETS
A new cooling technology could dramatically increase refrigeration efficiency.

Photo: Klaus Mai/Magnotherm

The CleanPlasma technology increases the efficiency of blood-sample purification,
thereby improving the chances of early diagnosis of common diseases, including
cancer. Conventional purification requires plasma to be separated from the blood
cells in a centrifuge. The CleanPlasma method employs sound waves on a chip tofree plasma of blood cells, bacteria and other contaminants.

www.ifw-dresden.de

AUGMENTED VIDEO CALLSHolograms could improve remote human interaction using
augmented reality.
The start-up Gixel, based in the southwestern German city of Karlsruhe, hascome up with novel augmented reality glasses the company claims will makeremote video communication more natural and effective. The device allows users
to address life-sized conversation partners individually, preserves spatial audio
and retains eye contact and body language. “We have the lightest glasses in theworld and the widest visual field in the world,” Gixel co-founder Miro Taphanel
told computer magazine c't.

Refrigeration accounts for around 10 percent of all greenhouse gas emissions — somaking it more efficient is imperative. MAGNOTHERM, a spin-off from the Technical
University of Darmstadt, has developed a cooling technology that works withmetal, turning respectively warm and cold when magnetized and demagnetized.
MAGNOTHERM claims its method is far more climate-friendly and 40 percent
more efficient than conventional processes that use cooling gases The company
believes its magnet-powered refrigeration will become common supermarket
practice within the next five years.

www.gixel.de

www.magnotherm.com

14

MARKETS GERMANY | Technology

DEMANDAND
SUPPLYThe clouds that hung over the photovoltaic (PV) industry inGermany have lifted, and opportunities are now emerging
for manufacturers of PV systems and components. Professor­Andreas Bett, director of the Fraunhofer Institute for Solar
Energy Systems, tells us what has triggered the revival.

MARKETS GERMANY | Technology

ANDREAS BETT: You have to distinguishbetween demand and production. The main
reason that demand for photovoltaic systems
has risen recently is that the proper politicalframework has been created. The government
has set climate protection targets for 2030 that
require a rapid, subsidized expansion of solar energy. Initially, companies that sold andinstalled photovoltaic systems were the ones
that primarily benefited from the subsidies.
By the end of 2022, solar systems with a total
capacity of around 67 GW were installed in Germany — this means that the installed capacity
has doubled in the past ten years.

What about domestic production of PV
systems in Germany?
BETT: This is a little more complicated. Solarsystems consist of many individual components, such as cells, cables and inverters. In
Germany, there is only one manufacturer ofphotovoltaic cells. And the wafers needed forcell production aren’t produced here at all.
The situation is not much better throughout
Europe: currently, almost all components forphotovoltaic systems, in some cases up to 99
percent of the world’s demand, are produced

THE BOTTOM LINEThe solar industry has largely recovered from the supply
difficulties of the past few
years, and Germany is getting
ready to significantly ramp up
domestic production at costs
competitive with China.

in China. In Germany, there are a few manufacturers of photovoltaic modules, but they do
not fully cover the market demand. This meansthat Germany imports individual components
and partially manufactures the end product,
the solar modules, at home.

What does the current market situation
look like for solar modules in Germany
and Europe?
BETT: During the pandemic, solar module
production came to a standstill in Germany.
Because production in China stopped due to several lockdowns, Germany lacked the necessarycomponents to manufacture solar modules. In
addition, the transport of modules produced in
China became more expensive. Together, this led
to a significant increase in the price of PV modules.
The situation on the German market is currently

easing again, and some German module producers are expanding their production capacities.
The pandemic made it clear that there wasa downside to such a heavy dependence on asingle supplier country. So we assume that theGerman government will take measures in thenear future to bring production along the entire
value chain back to Germany.
What advantages does Germany offer as alocation for internationally active manufacturers who want to build new production facilities?
Germany scores points as a strong research
location. For example, the country is setting
world records in the performance of new types ofdevelopmental solar cells. In addition, Germany
has a good infrastructure and highly trained
experts who can drive innovation. If the German
government further improves the framework
for the photovoltaic industry, for example bylowering electricity prices for the industry andoffering companies support for the necessary
investments, Germany will once again be competitive as a location for mass production.
Does this mean that Germany could compete with China in terms of production
costs in the near future?
BETT: Yes, that’s possible. In a study, we
found that solar modules could be produced
roughly as cheaply in Germany as in China —if state support here were as high as there.
Production costs in Europe would be about

Photo: AdobeStock

The photovoltaic (PV) systems industry inGermany has seen a strong rebound aftera few difficult years. What’s driving this
boom?

15

16

MARKETS GERMANY | Technology

INCREASING NUMBER OF PV SYSTEMSMORE EMPLOYEES IN THE SOLAR SECTOR

Development of the annual installed capacity of photovoltaic systems inGermany from 2018 to 2021 (in peak megawatt)

Number of employees in the solar energy sector in Germany from 2016 to
2021
60,00050,00057,30058,5002020

2021

44,30040,00039,90030,00042,00048,90020,00010,000

2,681
2018

4,041

5,175

2019

2020

5,460

0

2016

2021

Source: Fraunhofer ISE

2017

2018

2019

Source: BMWKHEALTHY RISE IN REVENUE
End customer turnover with photovoltaic systems in Germany(in EUR million)

2.58
2018

4.22
2020

Source: German Federal Statistical Office

10 to 15 percent higher, all other things being
equal. Transport costs of products from China to Europe level out this difference. Thismeans that photovoltaic systems can be produced competitively in Germany. However,this calculation only works if companies in
Europe have sufficiently large production
capacity.
That can only happen with expansion.
Where should international companies
be looking to invest at the moment?
BETT: Opportunities exist along the entire

value chain, from polysilicon to modules.
Inverters and installation materials are also
in demand. In Germany, the law states thatphotovoltaic systems with a total capacity of
215 GW are to be installed by 2030 — this corresponds to an annual increase of as much as
22 GW. By 2040, the capacity is supposed toreach 400 GW. This means a huge market is
opening up for companies in this country.
Which sub-sectors are particularly promising?

7. 72
2022

48.3%

95%

of electricity consumptionin Germany already comesfrom RENEWABLE ENERGY
SOURCES. By 2030, at least 80
percent of the gross electricity
consumption is to be covered byrenewable energies.

is the projected share of China's
share of global capacity for
POLYSILICON, INGOT AND
WAFER PRODUCTION BY
2025 unless investment into
production capacity in otherregions is made now.

Source: Fraunhofer ISE

Source: IEA/ BMWK 2023

ANDREAS BETT
Director of the Fraunhofer Institute for Solar
Energy Systems (ISE) in Freiburg and Professorof Solar Energy Materials and Technologies in
the Faculty of Mathematics and Physics at the
University of Freiburg. He joined ISE in 1987.

BETT: There are currently two trends s­ haping
the market in Germany. On the one hand, companies are currently researching how they canmake solar systems even more efficient anddurable. Optimized products are particularly
popular with German buyers, who are paying
more and more attention to whether their systems are sustainable in the long term. On theother hand, many companies are working on
developing photovoltaic modules that can be
individually adapted to buildings. The modules
are designed to blend into the cityscape betterand visually disappear into façades — for example with tailored colors, shapes and patterns.

Products from suppliers who specialize in such
solutions are currently in great demand.
Where does the PV sector in Germany standin relation to other renewable energy sectors?
BETT: The government wants to bring abouta transition to clean energy and convert theentire energy sector to renewables in the longterm. Photovoltaics naturally play a major role.
Last year, solar installations in the country covered 11.4 percent of German electricity consumption. All renewable energies combined
came to 48.3 percent. In addition to classic
photovoltaic systems, mixed technologies inparticular have good prospects for the future.
Companies that, for example, offer solar facilities in combination with wind farms or electricity storage systems are likely to determine
the market in the future.

CONTACTthomas.grigoleit@gtai.com
GTAI director of energy, constructionand environmental technologies

PUBLIC FINANCING
FOR CLIMATEPROTECTIONINVESTMENTS
Since the beginning of 2023, there has been additional financial support in Germany for companies who plan to invest inenvironmental protection and energy efficiency.

01

WHAT’S NEW?

In order to support selected regions in Germany in theirtransformation to a climate-neutral economy, the national
government and the German states realigned the GRW
funding program (Gemeinschaftsaufgabe “Verbesserung derregionalen Wirtschaftsstruktur”) at the beginning of 2023.
The program was upgraded to support investments thatserve environmental protection and energy efficiency. Companies can apply for subsidies if they use them to achievegoals that go beyond German or European Union standards.

CONTACTmichael.schnabel@gtai.com
GTAI financial expert

02

WHAT’S SUBSIDIZED?
Large companies can get reimbursed for some of the investment costs required to achieve the highest tier of environmental protection and energy efficiency. State subsidies
can be up to 40 percent of those costs for environmental
protection investments and up to 30 percent for energy
efficiency investments.* Companies can also receive subsidies if they are struggling to meet their energy needs byinvesting in energy production from renewables.

03

WHAT’S THE SITUATION WITH SMES?

The GRW also provides for increased funding for small andmedium-­sized enterprises (SMEs). Investments in environmental
protection, energy efficiency and self-generation of energy fromrenewables in order to meet operational needs are subsidized byan additional five percent in the assisted regions — in addition
to the subsidy rates above.

04

WHAT’S THE PROCESS FORGETTING A GRW SUBSIDY?

Illustration: Surf Ink

Interested companies are required to submit application
documents to the GRW officein the regional state in which
they are located before making
their investment. As a rule, theoffices are part of the states’
development banks, which also
advise companies free of charge
on GRW regulations.

*Depending on investment
location and respective
Federal State Investment
Grant regulation

18

MARKETS GERMANY | Technology

MECHANICALFARMHANDSE

rik Jonuks is in no doubt which European market he wants to enter next:
Germany. As CEO of Ekobot, a Swedishcompany that makes autonomous field robots,
Jonuks believes he can offer something more
and more German farmers need: state-of-theart machines that remove weeds from crops
without using harmful pesticides.
Germany could be very fertile ground for
Ekobot as the country pushes forward with
its policy to make its agriculture sector more
eco-friendly. “Organic production is advancing quite fast compared to other markets, andour services are especially relevant for organic
farmers,” Jonuks says. “We also see that a lotof farmers in Germany are very savvy about
technology. They are interested in new technology and adapting to it quite fast.”
Ekobot’s weeding robots are particularly
well-designed for the kinds of crops that aregrown in Germany: open-field and cash cropsthat grow in rows, such as small leaves andsugar beet. But what makes the Swedish firm’s
robots unique is its high-precision tool systems,
which work well in narrowly-spaced rows. “So
we can operate in much more difficult crops,
like carrots and onions,” Jonuks says.
Other original equipment manufacturers
have already had success in Germany — among
them the Dutch company AgXeed, which
specializes in manufacturing autonomous,
sustainable farming solutions. The company unveiled its AgBot 5.115T2, whose multiple functions include blockage control, clod
management and tillage, to German farmers

THE BOTTOM LINE
German farmers are keen toinvest in new technology as
the government incentivizes
organic farming. This represents a substantial opportunity for international agritech
companies with autonomous
solutions.
on a demo tour in 2021. “Germany is a nearby
market with fitting structures for our AgBots,meaning that the field size and the crops produced provide significant potential for autonomy,” the company says. “The geographicalproximity also allows us to monitor the firstmachines in operation very closely.”
New government priorities
Following the announcement by Germany’s
Federal Agriculture Minister Cem Özdemir(Green Party) last year, the government wants
to see 30 percent of Germany’s agricultural land
turned over to organic production by 2030. The
result will be a growth spurt.
“The problem with organic farming is
usually that you lower productivity: You needmore land to produce the same amount,” says
Jonuks. “But we’re hoping to prove that you
can in fact raise productivity by using robots
instead of manual labor.” More organic farming
means fewer pesticides to control weeds, andin fact many conventional farmers already use

tractor-pulled weeders. “Those are good, butthey can’t do the same job as a robot can,” says
Jonuks. “They can only weed between, not in
the rows. So a conventional farmer not using
pesticides will have lower crop yield.”
To promote the technological evolutionof agriculture, the government has set up avariety of investment programs including an
accelerator scheme for agritech start-ups andan investment fund for farmers investing in
the latest technology.
“The German government is funding research projects and investments to further
advance the digitalization of agriculture, andworld-renowned research institutes such as the
Fraunhofer-Gesellschaft have launched flagshipprojects in the field of smart farming,” says GTAI
digital farming expert Marie-Christin Menke.
“Germany also offers international businesses opportunities for cooperation with leading
research institutes and agritech companies.”
An agritech revolution
Germany is home to several innovation
clusters that bring research and tech firms
together. The Agronym network, based near
Dresden in eastern Germany, is one of them.
“A lot is happening in the area of field robots, driven by the ban on glyphosates,” says
Agronym project coordinator Benjamin Striller. Researchers are now hard at work finding
alternatives to the herbicide. Field robots
and drones are also becoming increasingly
important to compensate for the scarcity ofmanual labor.

Photos: Ekobot

The German agriculture sector is boosting organic production at a time ­when finding seasonal manual labor is increasingly hard. The next
generation of farm machinery — namely, robots — could provide the solution,and ­international companies are seizing this opportunity.

The Ekobot trundles across anopen field. The robot’s hoodprotects its precision cropmonitoring and weed-removal
tools, which eliminate theneed for herbicides..

“Drones are used to monitor stock, and to see
how it is developing, and where it might bedamaged,” explains Striller. “Robotics can be
implemented flexibly and can be less damaging
for the soil.”Henning Müller, the chairman of Agrotech Valley, a business and research cluster innorthwest Germany, agrees that technology has
become essential for the future of agriculture
and the conservation of biodiversity. He adds
that Germany is in a strong position to promotemechanization because of a high level of agricultural education. “In vocational schools, on
farms, in every aspect related to agricultural
education, we are excellent. However, in smart
farming we must make sure to keep pace.”

CONTACT
marie-christin.menke@gtai.com
GTAI digital agriculture expert

MARKETS GERMANY | Technology

A FEW FACTS ABOUT
FARMING IN GERMANY
Germany is one of the four largest agricultural producers in
the EU, with half of the territory used for a farming sector that
employs some 937,900 people. Just over 50 percent of the country’s arable land is used to feed a livestock population of over
200 million animals, and more than 70 percent is used for crop
cultivation. On top of animal products, Germany’s farmers mainly
produce bread cereals, potatoes, sugar beets, oilseeds, fruit andvegetables.
There are around 262,800 agricultural firms in the country,
82,600 of which cultivate over 50 hectares of land. At 31.5 percent, that proportion puts Germany in the top four EU countries
where 50-hectare-plus farms are most common. Furthermore,some 89 percent of German farms specialize in a single product.
More generally, the number of organic farms has risen significantly in recent years, with 35,396 counted in 2020, a 61.3
percent increase on 2010. Those farms account for 10.3 percentof Germany’s agricultural land, just above the EU average.

19

20

MARKETS GERMANY | Logistics

HEADING FOR­UNCHARTED WATERS
The digitalization of Germany’s logistics sector promises to increase efficiency in harbors and­transform the maritime economy. Central to this change is the “smart port” concept — and­Hamburg, Germany’s second biggest city, is intent on being its flagship.

Imagine an intelligent global logistics system that connects the world’s biggest traderoutes and can steer sea traffic via a networkof intelligent buoys, ships, freight and sensors
that are constantly exchanging data. That vision is becoming a reality in Germany’s largest
port, Hamburg. The city is on a mission to havethe most modern, digital and sustainable port
in the world and is seeking international partnerships to achieve this goal.
Speaking at the International Port Symposium in September, Norbert Aust, president of the Hamburg Chamber of Commerce,
said ports must become engines of economic
growth and drivers of Germany’s energy transition. International business investment, headded, is particularly important in this regard.
“Capital-rich partners can increase cargo
turnover through innovation,” he said. Austcalled for greater investment by international
shipping companies in dedicated terminals
and for the government to encourage andfacilitate the participation of international
players.

explains. “The country’s shipping industry
generated annual revenue of more than EUR
50 billion in 2022.”“Germany’s location at the EU’s geographic
center, the leading strength of its economy andits world-class infrastructure all make it one of
the world’s most important logistics hubs. And
the rapid digitalization of its ports and logistics
market is creating further growth opportunities
for international businesses.”

Bigger is better in logistics
There are good reasons why international logistics players would want to get more involved in
Hamburg and other German ports. Conversely,
opportunities abound for international companies in sectors from IT to mechanical engineering to consulting.
The sheer size and diversity of Europe’s
largest logistics market is what makes Germany especially attractive to foreign investors,
says Germany Trade & Invest logistics expert
David Chasdi.

Tech talent wanted
The digitalization of maritime logistics is also
attracting young tech companies. A new agreement between business groups in Hamburg
and Israel is expected to attract Israeli start-ups
and scale-ups to the northern German city.
Sectors that could benefit include logistics,
maritime economy, fintech and cyber security.
“Israel is an international center of innovation and can offer important impetus for boosting the digital transformation of Hamburg’s
economy,” says Philip Koch, ­international

THE BOTTOM LINE
Europe’s largest logistics market
is undergoing a sea change as
Germany’s ports adopt cutting-­edge technologies. That will
drive growth, lower costs andincrease efficiency, safety andenvironmental protection —and create opportunities forinternational companies.
“Germany already accounts for 30 percent of
the global container-shipping sector,” Chasdi­director at the Hamburg Chamber of Commerce. Hamburg is encouraging digitalization
not only to drive growth and reduce costs but
also for reasons of climate protection and energy efficiency.
Sustainability is an integral part of thesmartPORT strategy of the Hamburg Port
Authority (HPA). The ambitious goal is to become carbon-neutral by 2040. By employing
advanced digital intelligence, sensor technology and information systems for better analysis
and forecasting, the port has already madehuge efficiency improvements that benefit theenvironment.
State support for a digital twin
The German government is backing this massive transition. Since 2016, the national Ministry for Digital and Transport (BMDV) has beenfunding research and development projects
focusing on innovative technologies for sea andinland ports. Its current Innovative Port Technologies scheme (IHATEC II) provides EUR 64
million for the period 2021 to 2025. It aims toensure that Germany’s ports remain state-ofthe-art and internationally competitive.
An example of the sort of projects fundedis the EUR 3.65 million “digital twin” projectat the Eurogate Container Terminal Hamburg(CTH), one of Hamburg’s four container terminals. The BMDV is funding 54 percent of
the joint initiative between terminal operator
and logistics group Eurogate, the University of
Hamburg’s Institute of Information Systems
and IT company Akquinet Port Consulting.
The TwinSim project will create a digital twin
simulation of the container terminal visually

MARKETS GERMANY | Logistics

21

Control terminal at theport of Hamburg. Port
operators and logistics
companies are increasingly using AI and smart
technology.

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22

MARKETS GERMANY | Logistics

Photo: Jan-Otto/Gettyimages

Hamburg is Germany’s
biggest seaport by a wide
margin.

PORT OF HAMBURG
IN FIGURESGERMAN PORTS
BY THE NUMBERS(in millions of tons)

300,000
jobs

10,000annual ship calls

1200

1839

approx. number
of weekly freighttrain arrivals

12,000logistics companies in Hamburg

279.1

182

105

Freight­handlingin German­seaports
in 2022

Freighttransported
on German
inland waterways in 2022

Freight handlingin Duisburg, theworld’s biggest
inland port,
in 2022

Sources: German Federal Statistical Office

Number of ships in the­German merchant fleet — theseventh largest in the world
Sources: German Shipowners’
Association

Source: German Federal Statistical Office

GERMANY’S 5 BIGGEST SEAPORTS
Freight handling at German seaports in 2022 (in 1,000 tons)
HAMBURG
103,230
BREMERHAVEN
42,682WILHELMSHAVEN
27,941

Sources: Statista

ROSTOCK
21,506

LÜBECK
15,996

23

MARKETS GERMANY | Logistics

with problems such as ship delays. “On thewhole, this ensures better use of resources,
and we can reduce negative ecological impacts,
for example, by avoiding empty shipments or
adjusting speed,” Heilig adds.
More recently, the BMDV funded nearly
half of HPA’s EUR 1.1 million HafenplanZen
initiative, another a digital port twin. HPA ispartnering on the project with Hamburg Port
Consulting, the University of Hamburg, Bremenports, the Port of Kiel and Niedersachsen
Ports in the regional state of Lower Saxony.
Beyond Hamburg
Bremenports, which manages the eight ports ofBremen and Bremerhaven, recently announced
its own smart port strategy.
The company found partners in Eurogate
CTH and logistics and transportation group
Hamburger Hafen und Logistik AG (HHLA),
which operates the Port of Hamburg’s threeother container terminals. Hamburg Vessel
Coordination Center (HVCC), a joint venture
between HHLA and Eurogate CTH, is working
with Bremenports on the Digital Outer Weser
project, which will enhance accessibility tothe ports of Bremen as of 2023. The project isanalyzing the present traffic situation in theOuter Weser estuary in order to improve available terminal capacities, enable predictive ship
arrival planning and reduce fuel consumption.
Meanwhile, the Port of Duisburg, theworld’s largest inland port, recently secured
around EUR 1 million from the regional stateof North Rhine-Westphalia to fund a 5G test
field set up by Deutsche Telekom. A joint
venture between port operator Duisburger
Hafen AG, the University of Duisburg-Essen
and private companies, the project tested thesemi-automated control of port cranes via mo-

Photo: Deutsche Telekom

depicting in 3D its physical properties, such as
container gantry cranes and straddle carriers,
and networking operations. The idea is to optimize processes digitally.
“Container terminals are important hubs
in global supply chains, and they can quickly
become bottlenecks,” says Dr. Leonard Heilig,
who heads the project. “To make operations
run more efficiently in the long term, we needto make them more transparent. The use ofmodern technologies yields data with which we
can precisely understand and steer equipment,
infrastructure, activities and procedures.”Using simulations and AI technology, thedigital twin can analyze past operations andpredict future scenarios in order to better deal

“Digitalization plays an increasingly
important role, especially in logistics
processes. 5G is an important driver
for this. Both the Port of Duisburg andthe companies there will benefit fromthis project.”
Hagen Rickmann, MD Business Customer Division at Telekom Deutschland

bile communications technology in order toincrease the capacity of container handling
operations. This trial could lay the technological foundations for the first semi-automatedcontrol of mobile cargo handling equipment
in an inland port.
“With this project, we will explore and develop new fields of application for 5G together with our partners,” says Hagen Rickmann,
managing director of the Business Customer Division at Telekom Deutschland GmbH.
“Digitalization plays an increasingly important role, especially in logistics processes. 5G is
an important driver for this. Both the Port ofDuisburg and the companies operating there
will benefit from this project.”
Aside from government intiatives and subsidies, there’s other support for such projects.
Germany’s Digital Hub initiative, located in
Hamburg and Dortmund, offers two outposts
specially dedicated to logistics. And Germany’s world-renowned research institutions are
partnering with international logistics companies in the sector. The French smart network
solutions firm Marlink, for example, recently

collaborated with the Fraunhofer Center for
Maritime Logistics and Services on a joint project that will analyze ship data to help shipping companies optimize voyages and vessel
maintenance, reduce fuel consumption andimprove financial returns using enhanced
digital solutions.
“Decarbonization is challenging for many
shipping companies since it represents a fundamental change to their operations and atransformation in their customer relationships,” says Nicolas Furgé, Marlink’s presidentof digital. “This research project will help shipowners implement their decarbonization andoptimization strategies and help them plan
investment and make decisions on a shorter
timeline.”

CONTACT
david.chasdi@gtai.com
GTAI logistics expert

24

PLASTIC­FANTASTIC?
Plastics are crucial in developing better batteries and fuelcells for electric machinery and vehicles. As Germany, theheart of Europe’s automotive industry, shifts to electro­
mobility, the sector is attracting new interest from majorinternational players.

The German — and more specificallythe Bavarian — plastics sector has a
bit of an Asian flair to it these days.
In 2018, Japanese plastics manufacturer Sumi­
tomo entered the German market by acquiring Demag in Schwaig, Bavaria. The location
was chosen because of the close proximity to
manufacturers of all-electric machines, recalls
Gerd Liebig, CEO of Sumitomo Demag.
Purchasing a stake in an established German company, he says, allowed Sumitomo tosignificantly increase its worldwide market
share. The Japanese-German company makes
the injection molding machines used to process

THE BOTTOM LINE
One of the many knock-on
effects of the transition to a lowcarbon economy is an increased
demand for quality plastics.
Germany’s know-how in thearea offers a clear advantage forbusinesses looking to expand toEurope’s largest economy.

thermoplastic compounds into components
for batteries and fuel cells.
“Sumitomo Demag has been able to expand
its strong positioning through the merger,”
Liebig says. “The well-trained engineers andstrong market orientation in Germany offer aninvaluable advantage.”
Sumitomo isn’t alone. For Uwe Herold,
managing director of Waldrich Coburg, a manufacturer of large machine tools, Germany is oneof the most important markets and locations in
Europe. In the fall of 2005, the Chinese company
Beijing No. 1 Machine Tool took over Waldrich
Coburg, also in Bavaria.

Photo plastic pellets: Rattanachat/stock.adobe.com; photo colored wires: fotomowo

MARKETS GERMANY | Materials

MARKETS GERMANY | Materials

25

Biochemically inert plastic pellets waiting
to be molded into a variety of components vital to the production of electric
batteries and fuel cells.

HOW THE SKZ
ENABLES PLASTICSRESEARCH“We mutually recognized each other’s different
perspectives and constructively combined ourstrengths,” Herold recalls.
Waldrich Coburg machinery is used, among
other things, to mill plastic housings used forbatteries. The systems are also in demand in
the automotive industry. “Germany as a business location is decisively shaped by small andmedium-sized enterprises,” says Herold. “Theunique selling points of the German economy
are decades of know-how and very high quality.”
A big market prepares to get bigger
Germany’s transition to clean energy is fueling the plastics industry. In terms of EU andGerman policy, green hydrogen in industry
is seen as the next big thing, while cars withconventional combustion engines are living
on borrowed time. The importance of batteries and fuel cells in everyday life is set to takea quantum leap, and the same will be trueof the plastic components and technologies
vital to them. After all, plastics are needed inbattery production for the housing and insulation of battery cells. They are also used to
manufacture connectors, cables and covers.
“Germany is already the largest market
for plastic products in Europe and a global
innovation leader,” says Peggy Görlitz, GTAI
expert for the plastics industry. “And the energy
transition, along with the battery production
required for it, now make Germany even more
exciting as a location for the industry.”
In 2021, 21.3 million tons of plastic products
were produced in Germany. In the field of compounds alone, German companies have a nearly
20 percent share of the total European market.
But size isn’t Germany’s only source of appeal.

As one of the largest material research institutes in Europe, the German
Plastics Center (SKZ) has been providing practical solutions for the industry along the entire value chain for 61 years. In addition to R&D withdirect practical relevance, SKZ offers testing and certification services
for quality assurance of materials and finished products. Congresses
and conferences for the further education of specialists and industry
managers are organized regularly, and practical seminars and training
courses are offered. The SKZ is supported by a powerful network ofmore than 400 companies.
Together with the Center for Fuel Cell Technology (ZBT), SKZ is organizing an international congress on “Plastics for Fuel Cells and Modern
Battery Technology” in Duisburg on November 21 and 22, 2023. The
focus will be on what role innovative plastics can play in fuel cells andbatteries and what properties new materials can offer. Other discussion
points will be optimal material selection, sensible application options
and long-term stability of the compounds.

Expertise and networks
Foreign plastics specialists who put downroots in Germany benefit not only from proximity to customers in the automotive andmechanical engineering sectors, but also
from specialist expertise and strong networks. For example, at the plastics researchfacility SKZ in Würzburg, scientists and engineers are experimenting with finding theright composition of plastics for fuel cells
and batteries.
Quality standards in Germany are high,and there are specific demands on the way
plastics interact with various substances. “Anyplastics that come into contact with hydrogenmust not affect it,” explains Michael Bosse,
SKZ group leader of material development.
Moreover, plastics will have to be compatible
with demands that batteries be recyclable. The

German government has set a binding recycling quota for plastic waste — it has been 63
percent since 2022.
International businesses that expand toGermany can draw on established networks
along the entire value chain. They can also
benefit from Germany’s cluster structures,
which connect business and science, interest
groups, chambers of commerce, politics andpublic administration. These clusters can help
companies profit from the momentum that theenergy transition has given the plastics industry.

CONTACT
peggy.goerlitz@gtai.com
GTAI plastics expert

26

A group workout at FIBO,
the world’s largest trade
show for fitness, health andwell-being, held every yearin Cologne.

BOUNCING BACKFITNESS AND MORE

HITTING THE GYM

Global fitness industry revenue by country(2019), turnover in billion USD

Most popular forms of exercise in Germany in
2021, in millions of participants

Percentage of German population who spentmoney on fitness and sports in 2022

10

14

11.7
11.5

11.1
11

12

8

10.3

10

10.3
6

10
9.5

8

9.3

9.3

4

9
2

8.5

6

7.1
4

4.7

2

1.4
8

1.3

8

7
4

3

0

Fi
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sh r y ao o ndti ngme
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as me
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I n e m ts cb e ludiv
rcoidu sh b
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on
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22
20

21
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20
20

19
20

18
20

8

1.3

0

Source: Statista Market Analytics(Statista Consumer Market Outlook)

13

Source: DSSV

Source: Statista Global Consumer Survey

Photo: FIBO

10.5

MARKETS GERMANY | Fitness

FITNESS BUSINESSBACK IN GREAT SHAPE
Young and old, inside and outdoors: More and more Germans are catching thefitness bug. As new money flows into the sector, international businesses havethe chance to pump up their balance sheets.

W

hen a couple of Copenhagen-based
designers founded the cycling ap-

ago, at a time when the German fitness studio
market was dominated by single operators.

parel brand Pas Normal Studios
in 2016, it was almost a side project — they
never expected their mix of fashion-forward
design and performance-oriented apparel tosucceed the way it did. In the last two years, thecompany has more than doubled its staff, andgrowth is strong, thanks in part to demand from
Germany’s fitness-conscious consumers. “Ournext store is going to be in Munich,” says Ricky
Buckenlei, Pas Normal’s global marketing manager. “The size of the German market makes it
easy to gain momentum, and that is important
for a brand investing in a new market.”Pas Normal Studios’ story is not unique. A
combination of factors are adding traction toGermany’s fitness market, including a boom in
outdoor hobbies and a gradual return to fitness
studios. So international businesses won’t haveto look far for opportunities.
“Over fifty percent of the population say
they engaged in physical activity at least once aweek,” says Stefan Ludwig, head of the German
sports division for Deloitte. “Our impressionis that the market is growing — more people
are interested in physical activity.”
But if Germany’s fitness culture were a runner or a cyclist, it would be in the middle ofthe pack compared to its European neighbors.
Scandinavian countries and the Netherlands
have a higher proportion of their population
enrolled in fitness clubs, for example. It’s Germany’s sheer size that makes it an attractive
growth market for those looking to sell products or to buy up fitness studios and spas. And
in the last 20 years, Ludwig says, the ecosystem
has grown significantly.

International fitness conglomerates moved inand started buying up smaller outlets, merging
them into bigger, more efficient operations.
Around the same time, fitness discounterslike McFit also entered the market, prompting
business investors from the Netherlands andthe UK to follow suit and introduce similar

Two decades of change
The first big wave of change in the German
fitness market came more than two decades

THE BOTTOM LINE
Europe’s largest fitness market
still has lots of scope for investment. The pandemic drove
Germans to exercise outdoors
and train inside using apps,
but the past year has seen
members flock back to gyms.

offerings. Basic-Fit, a fitness discounter basedin the Netherlands, recently announced plansto open 600 new locations in Germany overthe next few years. “We see a bright future forvalue-for-money fitness,” Basic-Fit CEO Rene
Moos said last year, “and the Basic-Fit proposition in particular.”Higher-end brands also appreciate Germany’s potential. In 2020, Britain’s David Lloyd
Leisure acquired the Hamburg Meridian Group,
investing an additional EUR 20 million in eight
German wellness clubs. And although fitness
clubs took a hit during the Covid pandemic,
Deloitte’s research shows the market recovered
remarkably in 2022 and has lots of room forfurther growth.
“The industry’s willingness to invest is
slowly increasing,” Silke Frank, event director of the FIBO Global Fitness trade show in

Cologne, says. “The fitness industry is back,and the numbers are climbing up again.”
The great outdoors
Additionally, outdoor sports such as cycling,
walking and running are experiencing a boom.
With the onset of the coronavirus pandemic,
Germans started taking more exercise andworking out outdoors. This led many fitness
studios to offer hybrid models giving customers
the option to train at home with professional
guidance using digital technology.
“There is a broad consensus in the industry that in the future, stationary offers will be
supplemented by digital services, thus creatinga hybrid fitness world for the customer in thelong term,” says Frank. “The pandemic has
challenged companies more than ever to evolvewith continuous innovation management andto adapt their service to the needs of a constantly changing market.”
But Germany isn’t just any old market.
Consumers here want to be addressed in theirown language. Before launching in Germany, Pas Normal Studios tailored its marketing strategy to include a German-language
website. And Ludwig says Germany’s fitness
market has a few other characteristics investors should know about, like the extensive
network of “Vereine,” or local clubs, that run
everything from youth teams to fitness studios
on a non-profit basis.
For businesses that get their pitch right,
even Germany’s aging population presents agreat opportunity. “Older people remain interested in fitness, and their discretionary income
is higher,” Ludwig says. “Operators cateringto that market with special classes or trainers
have a lot of potential.” As the impact of thepandemic fades, Germany’s fitness market istoning up. “There’s room to grow,” Buckenlei
says. “We just need to do the work.”

27

28

MARKETS GERMANY | Science­ reativeC
DESTRUCTION
Pharmaceutical companies worldwide are investing in the promising research area of protein
degraders. The US pharma giant Bristol Myers Squibb has signed a billion-dollar deal with its
German biotech research partner Evotec to further develop a new class of drugs.

In the field of international pharmaceutical research, the deal could hardly havebeen bigger. In May 2022, the US pharmaceutical company Bristol Myers Squibb (BMS)
and the German B2B life-science company
Evotec extended their 2018 research partnership on protein degraders for a further eight
years. That entails an investment of an additional USD 200 million. And it’s merely a first
installment of a total of USD 5 billion dollars
BMS is putting into the alliance with German
life-science company Evotec.
Together, the two companies want to develop new drugs and active substances based on the

THE BOTTOM LINE
Many international pharma
conglomerates are teaming
up with German biotech­companies to do research.
They benefit from Germany’s
unique R&D environment
and position in the greater­European market.

principle known as protein degradation, theprocess by which cells naturally destroy proteins. “Protein degradation is one of the hottest
trends in the industry, and it has reached an
extremely competitive phase right now,” says
Matthias Evers, chief business officer at Evotec.
Protein degradation has been in the spotlight since the 1990s. Back then, the effectsof early protein degraders were observed on
individuals but were not fully understood. Today, the field is well-developed enough that big
pharma companies are using it in a targeted
way to investigate ways of fighting cancer. Withtargeted protein degradation, pharmacologists

MARKETS GERMANY | Science

Photo: picture alliance/Hans Lucas/Frédéric Scheiber

WHAT IS PROTEIN­DEGRADATION?

Many medicines today are designed tobind to a specific target structure, blocking
or inhibiting it and thus creating a therapeutic effect. However, this principle
has limitations. For example, not every
target molecule has to have a suitablesite for active substances to bind with.
Targeted protein degradation (TPD) offers a way out: instead of blocking thetarget molecule, it triggers a process thatbreaks it down completely. TPD also has
the advantage that the active substances
have a catalytic effect. At least in theory,
fewer of them have to be administered.
Important findings that paved the way
for the development of TPD came froma ­German-American research project,
and the science of protein degraders has
evolved over time. Today, protein degraders are being designed to have a specifictherapeutic effect achieved by a given
action mechanism. Nearly all big pharmacompanies are investing heavily in researchand clinical trials to push forward a newclass of drugs based on these mechanisms.

Evotec employees survey a state-of-the-art
pharmaceutical reference library.

hope to harness the cell’s own mechanics to degrade disease-causing proteins. These proteins
have largely been considered “undruggable.”On the cusp of a breakthrough?
“Modern targeted protein degradation techniques like the so-called molecular glues arestill in a stage of early research and only justreaching the phase of advanced clinical trials,”
explains Evers.
This means the time is ripe to build on
decades of R&D and cooperation between German-American pharma companies in this field
to discover and develop a pipeline of novel

protein degraders for the market. So it is important for international pharma companies tofind partners who can help them manage theseclinical trials efficiently and productively.
Research service providers like Evotec are
rapidly emerging as trusted and risk-sharing
partners in the high-barrier, high-stakes business of drug discovery research. Today’s pharma and biotech sectors prefer to externalize
the process of discovery research from the idea
stage to phase one trials in an integrated way.
“Classical Contract Research Organizations(CROs) are moving away from simple service
providing to a strategic partnership setting,helping big pharma companies become moreagile and innovative,” explains Harald Mylord,
senior manager of biotech and pharma at GTAI.
“International cooperations and strategic partnerships are on the rise.”
In Germany, international pharma companies can find many highly specialized andproficient partners for their research projects
along the whole value chain. “German biotech
companies are particularly good when it comesto highly complex, sophisticated production
processes,” adds Mylord.
Successful international alliances
Evotec, Germany’s third-largest biotech company, aims to cover the entire spectrum of research, discovery, development and manu­
facturing with what it calls its “data-driven
R&D autobahn to cures.”“We are convinced that the challenges thepharma industry is facing are so complex thatit needs a shared research and development
economy based on international collaboration and partnerships,” says Evers. “Our rolein these partnerships is to provide digital andtechnological platforms to push forward medicines that matter.”
At its sites in Munich, Göttingen and Hamburg, Evotec has succeeded in building a centerof excellence for protein degradation. “We havebuilt data- and AI-driven research platforms
both for our own research and for joint researchwith partners,” says Evers
The alliance with BMS, for instance, makes
use of Evotec’s platform for high-throughput
panomics generation as well as an integrated
data analysis software developed by Evotec.
Bristol Myers Squibb’s Celgene unit has beenclearly impressed by the speed, productivity
and innovation efficiency in its alliance.
Evotec employs more than 4,500 highly
qualified staff at 17 sites in six countries in Europe and the USA. But despite the company’s
international focus, Germany remains a crucial“Protein ­degradationis one of the­hottest trends inthe ­industry, andit has reachedan ­extremely­competitive phaseright now.”
Matthias Evers,
chief business officer at Evotec

location. “We find a very high level of talentand know-how here, so we are continuously
investing in the expansion of our German sites,”says Evers.
Evotec particularly appreciates the close andwell-established cooperation between research
institutions and industry players in Germany,
as well as the international integration into
R&D networks. “Our partner network includes
all of the top 20 pharmaceutical companies andhundreds of biotechnology companies, as wellas academic institutions and other players in
the health sector.”
This highly efficient ecosystem typifies theGerman pharma and biotech sector, Mylord explains. “Pharma and biotech companies can finda very agile and tightly knit ecosystem of researchand development institutions, technology parks,
biotech clusters and top universities here.”
Furthmore, firms that set up on the groundin Germany and find partners can use the location as a door opener for to Europe. “All inall, Germany offers pharmaceutical companies
very good opportunities to establish strategic
collaborations and build an efficient researchand development infrastructure,” says Mylord.

CONTACT
harald.mylord@gtai.com
GTAI biotech and pharma
science expert

29

30

MARKETS GERMANY | Tourism

DIGITAL
WANDERLUST
The coronavirus pandemic battered the tourism industry, but it also accelerated
Germany’s digital transformation. As Germans rediscover their love of travel, it’s
springtime again for travel tech and digital services providers.

T

oday, we all look online for our next
get-away destination — whether it bean elegant apartment in New York, awellness resort on Tenerife or a picturesque
Alpine hut. Germans are no exception, even
if they might be slower than some to embrace
new travel trends. Four out of five companies
surveyed by the German Tourism Association
say that digitalization is on the rise.
This change in how Germans book their­vacations represents an opening for international providers like the Dutch travel portal­
Booking.com. And as the citizens of Europe’s
largest economy rediscover their wanderlust
following the Covid-19 flatline, companies
providing new ways to “get away from it all”
are having a field day. “Germans have always
been avid travelers, and once restrictions started easing in 2022, their appetite for exploring
the world returned,” explains Nadine Stachel,Booking.com manager for German-speaking
Europe.
Before the pandemic, Germany ranked
third internationally in tourism spending.
Only travelers from China and the USA spent
more money on holidays. The sector was also
on a strong growth trajectory: travel spendingby German holidaymakers typically increased
year by year, reaching around EUR 69.5 billion
in 2019. That figure was back up to EUR 58.6
billion, and the industry hopes the remaining
gap will be closed soon.
The lure of the new
But as the sector makes a comeback, German
travelers’ tendencies and tastes are changing,as the president of the German Travel Associa-

tion (DRV), Norbert Fiebig, noted at the end of
the 2023 ITB travel trade fair in Berlin in March.
It was the first time since the pandemic thatthe world’s largest travel event had been held
live. “The booking numbers show the world’s
top travelers, the Germans, are back, and theworld is looking forward to German visitors,”
Fiebis said. “That was reflected in the mood at

THE BOTTOM LINE
The German travel industry is
rebounding from the coronavirus pandemic slump, but times
have also changed. Innovativeinternational companies cantap this massive market.

the fair. We had a lot of positive conversation
with both classic German tourist destinations
like Spain and Turkey and ‘newcomers’ likeUzbekistan or Saudi Arabia.”
Booking.com agrees with that assessment.
Germans are not booking their holidays in thesame way they used to before the crisis and are
now particularly open to new providers and newdestinations. A recent survey by the company
showed almost a third of German travelers want
to experience “a complete culture shock.”“Culture shock means traveling somewherewith completely different cultural experiences
and languages or exploring lesser-known cities
with hidden gems that aren’t already on theradar,” explains Stachel.

Booking online and going green
But the changes are not just about where to
go but how to get there. German consumers
now book trips online more often than at a
travel agency. A good internet presence andup-to-date online booking tools are therefore aprerequisite for providers thinking of entering
the German travel market, which is the biggest
in Europe. Thus it was no surprise to see lotsof exhibitors from the tech travel industry at
the ITB.
Also, many Germans now attach particularimportance to sustainable travel offers — morethan a third say that recent reports about climate change have influenced them to makemore sustainable travel choices.
The demands on travel providers are
therefore great. They must find out what
exactly their German customers want andhow their booking and travel behaviors havechanged. They also must be able to answer
new questions about travel destinations. What
can I experience there? How sustainable is myhotel? How can I offset CO2 emissions frommy trip? Online travel customers expect tofind offers that directly match their own personal criteria.
“The competition of the future will be
the competition for customer trust,” explains
Fiebig. Travel providers must also offer German consumers maximum flexibility. Ben Brahim, managing director of the German branchof the French hotel chain Accor, observes:“Whereas people used to book long-termwith noncancellable and therefore cheaper
rates, many of our guests now prefer to be
more flexible.”MARKETS GERMANY | Tourism

Travel to Berlin in booming. Berlin
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Photos: picture alliance/dpa/Bernd von Jutrczenka, picture alliance/dpa/dpa-Zentralbild

32“A welcoming ­culture isan ­essential factor for­SUCCESS.”The German government is making it easier for people from outside the EU to
get jobs in Germany. Alexander Wilhelm from the Federal Employment Agency
explains how the changes will benefit employers and employees alike.

MARKETS GERMANY | Employment
German Minister of the Interior and Community Nancy Faeser and German Ministerof Labor and Social Affairs Hubertus Heilpresent the government draft for the new
Skilled Worker Immigration Act.

Since the pandemic, there has been a shortage of skilled specialists in Germany. The
German government is addressing the issue head on. What’s the plan?
ALEXANDER WILHELM: The government haspresented an overall strategy intended to makeit easier for job seekers from abroad to look forand find employment in Germany. It involves
various improvements, especially in the legal
framework for targeted labor migration. The
recognition of professional qualifications obtained abroad will be simplified. In addition,
job seekers outside IT professions who do nothave a qualification recognized in Germany but
who do have relevant professional experience
are to be given faster access to the labor market.

The shortage of skilled workers in Germany is not new. Why the change right now?
AW: The German labor market is characterized by three trends. First, the demographics
in Germany are negative: we have fewer andfewer young people in the labor market andmore and more older people leaving it. The
second challenge relates to digitalization.
It causes jobs to be lost but also creates new
employment relationships. So, for example,
there’s very high demand for labor and skilledworkers in IT professions and the expanding
digital infrastructure. Last but not least, measures to combat climate change will have to be
implemented in the course of decarbonization,
creating a need for workers in a wide range ofoccupations: from the construction industry
to the electrical industry to the skilled trades.
Where is the demand greatest for highly
trained workers at the moment?
AW: Our analyses have shown increased demand for labor and skilled workers in a great
many sectors, as well as bottlenecks in the labor market. This does not automatically meanthat there is a need for labor immigration fromabroad everywhere, but it clearly shows that inmany areas we are unable to meet demand. ThisALEXANDER WILHELM
Head of international
relations at the German
Federal Employment
Agency (Bundesagentur
für Arbeit, BA)
The public agency is responsible for the job
placement and the qualification of workers inGermany. Wilhelm oversees all matters relating
to skilled labor immigration.

is particularly true for skilled trades and social
professions such as healthcare and education.
Immigration seems an obvious solution.
What exactly is the government planningto do to simplify the procedures?
AW: Job seekers from abroad will benefit from
simplified framework conditions as a resultof the planned new regulations in immigration law in Germany. The government has
just announced its first plans for this. As a
key element, the hurdles for proving formal
qualifications will be lowered. In the future,
the introduction of a points system may also
allow skilled workers to enter the country tolook for work. Qualified immigrants can receivea job seeker’s residence permit for up to one
year, based on a points system that recognizes foreign degrees, language skills and work
experience. During the job search, probationary and part-time work will be allowed. This
gives employers and foreign specialists time
to discover if they are a good fit for each other.
Recruiting skilled workers from abroad canbe a lengthy process for German employers.
How will these new laws benefit them?

AW: In the future, it will be easier for employers
to hire foreigners who have relevant professional experience but do not have a degree recognized here. This option previously applied
only to the IT sector and will be extended tomore industries under defined conditions in
the future. Furthermore, applicants with recognized training are to be allowed to work in

any qualified occupation, not just the one theylearned. Overall, the government’s planned
measures will create more flexibility; however,
it is also important for employers to have realistic expectations: recruiting from abroad needs
a forward-looking HR strategy and investment
and is not a short-term solution in most cases.
How do the government and the Federal
Employment Agency support skilled workers from abroad in their job search?
AW: One example is the “Make it in Germany”
online portal, where job seekers can get a lot of
information about what requirements have to
be met for employment here. They can contact
us by email, phone or video chat for advice. We
also help applicants go through the complicatedprocess of having a degree earned abroad recognized here in the Federal Republic. In addition,
we carry out targeted recruitment programs inselected countries and professions.
How important is a “welcoming culture”
for attracting skilled specialists?
AW: It’s an essential factor for success and aprerequisite for people not only coming to us,
but also staying with us. We have made a lotof progress in recent years. The task now must
be to have good structures for integration, notonly in large cities but also in rural regions.

CONTACT
ruth.nicolai@gtai.com
GTAI expert

33

MARKETS GERMANY | XYZ“GERMANY HASGAINED IN
IMPORTANCE FOR
CANADA.”In 2022, Berlin and Ottawa reached a major
deal that will see Canada supply Germany
with copious amounts of green hydrogen.
Germany Trade & Invest (GTAI) talks with
Yvonne Denz, the President & CEO of theCanadian German Chamber of Industry andCommerce (AHK).
What role does trade with Germany now
play for Canada?
YVONNE DENZ: With its wealth of natural resources, Canada wants to become one of thelargest producers and exporters of hydrogen andrelated technologies. The German-­CanadianHydrogen Alliance was launched last year
during Chancellor Olaf Scholz’s visit to Canada.
It envisages Canada supplying green hydrogento Germany starting in 2025. However, that requires a rapid market ramp-up for hydrogen on
both sides of the Atlantic. The alliance agreed
to create the conditions for this.
For Canada, Germany is number 4 in imports and number 6 in exports — in other words,
an important trading partner, but clearly in the
shadow of its big neighbor, the USA. Canada
is trying to diversify its trade. The CETA trade
agreement, provisionally in force since 2017, hasalready led to an increase in trade between Canada and the EU. But there is still room to grow.

looking for locations in Europe. Historically, for
Canada, Europe has meant France and the UK.
This changed due to Brexit, among other things.
Germany has gained in importance. Germany’s
central location, well-qualified workforce, highproductivity and quality of life, as well as its
stable, innovation-friendly environment andunique ecosystem of infrastructure, suppliersand customers all speak in its favor.

­ otential in the aerospace, automotive, miningpand service sectors. Future-oriented areas suchas artificial intelligence and quantum technology remain exciting. In January, the Canadiangovernment published its quantum strategy,
and Canada is striving for a leading role internationally. In addition, the start-up landscapeis booming. Some of those companies certainly
are looking to Germany.

Which sectors in particular have had Germany on their radar in recent years?
YD: Recently, Canadian companies from theservice sector have shown particular interestin Germany: for example, software companies
with innovative IT solutions, consulting firms
and personnel service providers. GTAI has also
supported Canadian projects in the environmental technology, chemical and health sectors. GTAI’s business expansion consulting
services are very much in demand.

And how do AHK and GTAI work together
to support companies looking to expand?
YD: We work closely and successfully on the
ground with GTAI, and we share our Toronto
office. We connect Canadian companies withan interest in Germany as a business location
directly with our GTAI colleagues because weknow they will be in the best hands.

Canadian companies are also looking toGermany as a business location. What isGermany best known for among Canadiancompanies?
YD: Canadian companies are increasingly realizing that the European market can only be served
to a limited extent from Canada and are therefore

What are your predictions? Which Canadian sectors will likely see the most expansion to Germany in the coming years?
YD: Germany and Canada will cooperate
more closely. Similar sustainability goals create opportunities for business investment in
the energy and clean tech sectors. We also see

yvonne.denz@germanchamber.ca
President & CEO of the Canadian
German Chamber of Industry &	­Commerce

CONTACTgabriela.heinrichs@gtai.com
Executive Unit Strategic Partnerships
	(GTAI) and liaison to the G­ ermanChambers of Commerce Abroad

Photo: Canadian German Chamber of Industry and Commerce (AHK)34

How Germany WorksNATIONAL AND REGIONAL INVEST­
MENT PROMOTION ­AGENCIES (IPAS)
Many economically powerful countries have
Investment Promotion Agencies (IPAs) toassist international companies expanding
and setting up subsidiaries. These government agencies work for free — after all, any
country benefits if a foreign company sets
up operations there. Germany is no exception, but its IPAs operate slightly differently

because of the country’s structure as a federation of 16 regional states. Firms interested
in expanding to Germany often first contact
the national IPA, Germany Trade & Invest.
There, they get important information on
fundamentals like tax structures, labor laws
and business incentive programs. They canalso find out about numerous cities and

PROJECTED VALUE of international ­businessexpansions to and in Germany in 2022

regions in Germany where they could potentially find a home. When a location has
been selected, the regional state IPA takes
care of any further advisory steps needed tomake the expansion a success. For instance,
this was the process by which US chipmakerIntel expanded to Magdeburg in the state of
Saxony-Anhalt.

ESTIMATED TAXBREAKS forcompanies inGermany

NUMBER OF
INTERNATIONAL
BUSINESS EXPANSIONS to andin Germany in 2022

in 2022, granted by thenational government, inbillion euro

25.3 19
billion euro

Source: GTAI

Estimated FINANCIAL ASSISTANCE
for companies in Germany

Source: GTAI, all icons from www.thenounproject.com

in 2022, granted by the national government, in billion euro

27.7

1783

.6
Source: BMF€

Source:GTAI

SOME PROMINENT BUSINESSES that are
expaning to Germany
INTEL

TESLA

GLOBAL FOUNDRIES
Source: BMF

+

CATL

S-VOLT

ROCKTECH

MICROVASTAt your service!

SET UP
BUSINESSIN GERMANY
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companies looking to expand with free, reliable information on thelatest opportunities in the German market.

GET T­STAR INGTE­GERM D IN
ANY
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Germany
Trade& Invest (GTAI)
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Sarah Gholiha
sarah.gholiha@gtai.com

Alexander Walter
alexander.walter@gtai.com

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T. +49 30 200 099-0
info@gtai.com