GERMANY

TRADING ONCOMPLEXITY

Deeptech start-ups are
thriving in Germany
Page 20ALMOSTHOLLYWOOD

How Covid-19 boosted­
Germany’s VFX and­virtual film studios

Insights into Europe’s Biggest Economy 1 / 23

UNLOCKINGGERMANY’SHIDDENHIGHLIGHTS
There are fabulous business locations in­surprising places dotted all over Europe’s
largest economy. The trick is finding them –and Germany Trade & Invest holds the key.

Pu
m
Sa
p
le
s o ing

ar f hea P
ePa sur t p roge gin um fi
ps ts
14 g

Page 26

Photo: Illing & Vossbeck Fotografie

FOCUS

LESSER-KNOWNLOCATIONSWITH LOTS TO
OFFER
Companies expanding to Germany,
including Intel and Tesla, are learning that the fame isn't everything
when it comes to discover an
optimal home in Europe's largest
economy.
pages 4–11

CLIMATETECHNOLOGY»In this issue, we’re­delighted to takeyou on a tour of
hotspots ­waiting tobe ­discovered.«Dear Reader,Home, Smart Home

Sponge Cities

Germans have fallen in love with networked domestic devices within their own four walls.

Germany’s urban environments are adapting towater shortages and climate change.

page 18

page 22RESOURCES

MORE ARTICLES IN THIS ISSUE:

Recycling Metals

More Than Hot Air: Demand for heat pumps
in Germany is multiplying rapidly............ page 12

Competition for critical raw materials is driving
the huge German market for metal recovery.
page 24

New Dawn for Solar: The German PV industry
is back with a bang................................ page 15
In Brief: Self-driving trucks, disrupting disease,and Berlin’s "new space" industry............ page 16
The Long Haul: German start-ups are solving
algorithms............................................ page 20____ The Digital Magazine
Online at:

Back in Action: Covid-19 has put Germany’s
VFX virtual studios in the spotlight......... page 26

www.marketsgermany.com

Printing Prosthetics: Additive manufacturing
is reconfiguring German medtech............ page 32

Publisher: Germany Trade & Invest Gesellschaft fürDistribution: Markets Germany is distributed solely

Außenwirtschaft und Standortmarketing mbH, Fried-by the publisher all over the world.

richstraße 60, 10117 Berlin, T. +49 30 200 099-0,

Notes: © Germany Trade & Invest, February 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.

Managing and Content Editor: Eva Forinyak

No reprints may be made without the prior consent

Editor: Jefferson Chase
Editorial Team Kammann Rossi/wortwert: Imogen
O’Rorke, Christoph Hus, Jürgen Jehle
Design and Layout: Arne Büdts, Verena Matl, ­­of the publisher. Unless specified otherwise, the copyright for pictures is held by Germany Trade & Invest.
Order number: 21353
Cover: S ebastian Köhler/­Jens Tappe, Manuel Köpp, Delk Addotto

stock.adobe.com; Who is Danny/

Print: Kern GmbH, 66450 Bexbach, www.kerndruck.destock.adobe.com

Circulation: 5,000

As many of you might know, Germany is a more
decentralized country than most of its European
neighbors. That means clusters of excellence andpockets of potential are distributed a bit more
evenly. Many business locations that aren’t household names abroad have a tremendous amountto offer international companies expanding toGermany. Intel, for instance, found one such placein the eastern city of Magdeburg last year for its
huge new production facility. So in this issue ofMarkets Germany we're delighted to take you on
a tour of some other hotspots waiting to be discovered. That’s one of the main things we do here
at Germany Trade & Invest: help businesses fromabroad find their ideal locations.
One sector that’s red hot wherever you go in Germany is heat pumps. Concerns about heating prices and reliability have led to a veritable run on themarket and created lots of space for new players.
Even The New York Times noted the trend in a
major article in December 2022 on the industry.
But this February issue also contains some escapism in the form of an in-depth look at the newfilm industry. Germany’s generous film subsidies
and major studios like Babelsberg are familiar to
those in the movie biz, but the cinematic action
doesn’t stop there. Partly because of coronavirus
restrictions, demand has risen incrementally forvirtual studios and all sorts of state-of-the-art visual effects trickery. Thus, we hope you’ll find thisissue both entertaining and informative.

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

Photo: ZPlanA/Presse

LUBOMILA JORDANOVA: COFOUNDER AND CEO OF PLAN A
Few people in the greentec start-up scene
in Berlin have a more impressive track record than Lubomila Jordanova. The Bulgarian-born entrepreneur cofounded Plan A in
2017, a machine-learning platform that uses
the latest scientific methods to automate clients’ ESG reporting and create tailored CO2
reduction plans based on corporate emission
profiles.
Now in her mid-thirties, Jordanova has ashelf-full of accolades: She was an Obama
Leader Europe 2022 and a Marshall Fund
Fellow 2022, an MIT Innovator Under 35 Europe in 2022, and one of business newspaper
Handelsblatt’s Top 50 Women in Tech in 2021.
She also serves as a board member for bitkom,
Germany’s digital industry association.

Plan A’s carbon accounting software has beenused by over 400 companies since its launch.
Its platform is a centralized data hub of morethan 1,000 decarbonization solutions andactivities, best practices and a network ofservice providers and sustainability experts.

Quick facts
NAME

Lubomila Jordanova

JOB TITLECEONATIONALITY

Bulgaria

QUALIFICATION 	Masters in Management
PRIOR EXPERIENCE	Investment banking, ven-

Jordanova anticipates “rapid growth in termsof revenue and personnel in 2023” and says
the focus will be on “deepening our AI expertise, which will allow Plan A to offer its
decarbonizing tools to a wider range of economic sectors.” She adds: “Berlin is one of
the most important innovation hubs, notonly in Germany but also in global terms.
It’s the perfect place for a greentech company
because it has both scientific expertise anda strong tech scene.”ture capital and fintech in
Asia and Europe

COMPANY NAME

Plan A

LINK

plana.earth

LOCATION 	Berlin HQ, offices in

London, Paris, Munich

INDUSTRY

Greentech

4

MARKETS GERMANY | Focus

The future is looking­increasingly bright insome lesser-known locations. In Magdeburg,a massive expansion by Intel and a great
R&D landscape are expected to attract othercompanies to the eastern German city.

ONE GERMAN USP IS
DECENTRALIZATION
Germany's unique economy reflects thecountry's political structure as a federation of 16 regional states. The federal
system generates friendly competition,
resists homogeneity and monopolies, andpromotes experimentation. As a result,Germany has an unusually large number of well-developed locations that vie
with one other to attract international
business expansions. Many locations areoriented around the needs of specific industries and new business trends.
Sometimes multiple regions join forces toform well-connected and sustainably positioned business networks. International
companies from a variety of sectors andwith all manner of specialties can hope tofind an optimally suited German location
for their plans.

MARKETS GERMANY | Focus

5

GERMANY’SHIDDEN HIGHLIGHTS
Berlin and Bavaria are the two best-known places in Germany internationally. But there
are numerous less familiar hotspots dotted throughout the country, and expansionfocused companies are finding that it pays to widen their searches.

U

ntil recently, some international
companies may never have heardof the eastern German city of Magdeburg. But when the US chip manufacturerIntel decided in 2022 to build its new EUR 17
billion megafab production facility in thiseastern German city of a quarter of a million
inhabitants, Magdeburg was instantly put on
the global map. Big time.
In Germany, medium-sized companies
that are world market leaders in their market
segments are known as “hidden champions.”
But the country also has plenty of “hidden
champion locations” offering uniquely attractive conditions for doing business. Thesehidden highlights are scattered all over Europe’s largest economy, and it pays for international businesses to know about them.
In Germany’s northernmost regions, anumber of medium-sized cities and evensmaller towns and communities have become a center of attention for companies in
the renewable energy and logistics sectors.
Not only do they offer direct access to major seaports, they have a modern, renewables-friendly energy infrastructure that is
attracting industrial companies working on
their green transformation.
To the south, modest-sized cities are
becoming magnets for international techcompanies due to the high density of excellent universities and outstanding research
institutes. Tübingen, for instance, is a centerof innovation for future technologies such as
artificial intelligence. And in Bavaria, there
are lots of relatively obscure business locations outside of Munich, where companies
can find large plots of land with excellent
infrastructure and special funding programs
to support their expansion into Europe.
In western Germany, traditionally theheartland of heavy industry in Germany,
completely new initiatives and networks are
now emerging and will transform the economic landscape. Case in point: the Circular
Valley in Wuppertal, where start-ups andcorporations from all over the world networkand collaborate to create solutions for thecircular economy. Or the town of Wetzlar,

THE BOTTOM LINE
Germany’s economy is comparatively decentralized. Its many
thriving and well-connected
local economic centers offer
excellent conditions for ambitious and specialized businessexpansion projects.

which brings together everyone who is anyone in the optical and electrical engineering
industry in Germany.
And to take another example in the east,
the satellite towns surrounding Berlin are
also developing very dynamically. The area
gained global recognition in 2021, when US
carmaker Tesla chose the town of Grünheide
as the location for its first European gigafactory. The list could go on and on.
Variety is the spice of successAs these examples show, the Federal Republicof Germany is relatively decentralized in termsof both political authority and economic power,
especially when compared with its neighbors.
Whereas most European countries may only
have a few business metropolises, Germany
offers a wide choice of medium-sized and specialized locations.
High-tech companies in rural areas thatmight be considered parochial are not an unusual phenomenon. Foreign businesspeople
are often pleasantly surprised when theyrealize they can find optimal locations insmaller, less intensely industrialized, lower-cost towns.
This is one of Germany’s unique selling
points for multinationals, industry leaders
and innovative start-ups looking to set up

Photo: Votimedia/stock.adobe.com

Ralph Lauxmann President HORIBA EuropeGmbH and Dr. Ingo Benecke Managing
Director HORIBA FuelCon GmbH at the
opening ceremony of the new HORIBA
eHUB in Magdeburg-Barleben.

shop in Europe. “Regional disparities in
economic infrastructure and living conditions are much less pronounced in Germany than in other, more centrally organizedcountries,” explains Jörg Lahner, professorof economic development and regional economics at the University of Applied Sciences
and Arts (HAWK) in Hildesheim, northern
Germany.
Furthermore, the 16 regional states thatmake up the country engage in friendly competition with one another. Central politicaldecision-makers ensure that no region misses out when it comes to the distribution of
investment and the development of criticalinfrastructure such as universities, researchfacilities, transport links, energy supply anddigital connectivity.
But above all, says Lahner, it’s Germany’s
strong tradition of small and medium-sizedenterprises (known as the Mittelstand) dotted all over the country that anchors regional
economic growth. “In Germany, you mightgo hiking in a rural region and along theway pass the locations of two world market
leaders,” jokes the economics professor.
SMEs drive economic development
Traditional SMEs located off the beaten trackin Germany have a vested interest in strengthening the economic structure in the places theycall home, thereby attracting other investors
and entrepreneurs. “These companies keep
local economic policy on its toes. Self-confident
entrepreneurs set high standards and drive
the economic development of their locations,”
says Lahner.
Two examples are transport infrastructure and energy supplies. Hidden champions
work with schools and universities, research

institutions and local political leaders. And
they are continually building up their network of suppliers at home and abroad. This
dynamic allows for economic clusters andpowerhouses to emerge all over Germany.
These local hubs then network with eachother and outside Germany, cooperatingwith international partners.
At first glance, this may make Germany’s
economic structure seem overly complex.
But in times when many European companies are looking to shorten international
supply chains and strengthen regional value chains, Germany’s diverse and decentralized hotspots offer a huge advantage.
International investors and entrepreneurs
often find themselves “spoiled for choice”
when it comes to finding attractive locations,even if they have very high standards andspecific requirements.

photo: HORIBA Europe GmbH,
W. Schmidt-Chemnitz

Strong partner for the textile industry:
Digitization throughout the textile value
chain is becoming increasingly important.
As an industry-related research institution,
Sächsisches Textilforschungsinstitut e.V.
(STFI) www.stfi.de in Chemnitz (Saxony) recognized the strategic importanceof digitization for the textile industryand ­began to establish its own area of­expertise several years ago.

MARKETS GERMANY | Focus“INTERNATIONAL COMPANIES ARE SPOILED
FOR CHOICE IN GERMANY.”
Oliver Seiler is director of mechanical and electronic technologies at Germany Trade & Invest (GTAI). He explains how
GTAI supports international businesses in choosing a location
to support their expansion plans.
Oliver, Germany’s economic structure withits multiple decentralized locations andindustry clusters caninitially seem confusing to foreign investors. How can GTAI help?
OLIVER SEILER: It’s usually the case that companies, especially in the high-tech sector, havevery specific requirements for a location.
That’s why we as the German government’s
international business promotion agency
always look for suitable sites throughout thecountry based on the individual, specificneeds of the respective companies. With
the German economic landscape changing very dynamically and new industrial
centers and clusters constantly emerging,it’s important for businesses to have a partner who’s aware of the latest developments.
How exactly does the search process
work?
OS: First, we talk to the companies tofind out what combination of location
factors is decisive for them. Do they needa particularly large site? Is the connection and proximity to certain markets
or business partners important? Howabout the energy supply or access to special sources of financing, sector-specificknow-how or skilled workers? We use thisinformation to draw up a project profile.
So, this information forms the basis fora site search?
OS: Yes, exactly. Our next step is to contact
the economic promotion agencies of theconsidered regional states to find suitableindustrial clusters, business parks and sites
for the business expansion project. Then, we

make a preliminary selection which we present tothe companies. They areoften surprised at how
many suitable locations
we can offer. In Germany,
you can find somethingthat matches every need,
often several alternatives. International investors are spoiled
for choice here.
How long does this process take?
OS: We know that speed is of the essence. In
the case of a large high-tech expansion project to Germany last year, we managed to collect ten suitable offers within just three days.
What happens next?
OS: Once the company has selected one ormore locations from our shortlist, we establish contact with local business promoters,
service providers and business partners
and organize on-site visits. In this way, thecompanies quickly find out whether andhow they can go about implementing theirprojects. And they can clarify directly withthe local contacts whether, for example, themunicipalities are prepared to make additional land available or to invest in thefurther expansion of the infrastructure, if
necessary.
What factors are the most decisive inthe selection process?
OS: That depends. But we have noticed thatthe topics of renewable energy and supply of
raw materials are currently very importantfor many companies when deciding where
to locate. Not just the supply of electricity,
but water supply, sustainable waste disposal and recycling structures for critical raw
materials.

4
FOUR ARGUMENTS
FOR GERMANY’S“SMALL-TOWN”
BUSINESS ­LOCATIONS

1

Decentralized structure is a good fit for
digital business models
As economies and industries worldwide undergo digital transformation, they are also
embracing less unitary and more flexible ways
of working. Germany has many excellent regional role models for decentralized location
strategies.

2

Germany’s rural areas are well connected,
both inside and outside the country
Good transport links, digital infrastructure andconnections to the larger metropolitan regionsin their vicinity ensure Germany’s more rural
areas also benefit from the country’s good
economic infrastructure and can be integrated
into European and international value chains.

3

Special funding for peripheral locations
Many of the more rural economic regions also
benefit from special development funding either from the state itself, the national government or the European Union.

4

Local, national, international
Many of Germany’s less centrally locatedcompanies – often established, small to medium-sized enterprises that form part of Germany’s Mittelstand – have a long tradition as
global “hidden champions.” They are usually
fully integrated into international value chains
and are open to cooperation with both international and domestic business partners.

7

8

MARKETS GERMANY | Focus

GROWTH OPPORTUNITIES:GREAT LESSER-KNOWNLOCATIONS IN GERMANYHEIDEREGIONAL STATE Schleswig-Holstein
SPECIAL FEATURES This northern coastal region offers plenty of open space and direct accessto renewable energy from offshore wind farms.
PARTICULARLY SUITABLE FOR Cleantech companies and energy-intensive businesses looking
to decarbonize production
DESCRIPTION The northern region is working
to make renewable energy 100 percent available
to businesses. To this end, more than a hundred
national and international partners from science,industry, agriculture and the service sector arecooperating in Heide on projects to decarbonize industry and transport. “We are working toestablish a Clean Energy Valley here,” explains

BREMERHAVEN

03

INHABITANTS nearly 120,000
REGIONAL STATE Bremen
SPECIAL FEATURES Bremen’s
smaller sister city Bremerhaven operates one of thelargest container ports in
Europe with production areasin the immediate vicinity.
PARTICULARLY SUITABLE FOR

Companies from the renewables
sector, logistics companies,
food industry and start-ups
DESCRIPTION The traditional
maritime city is now focusedon becoming a “science city.”

LINGENINHABITANTS 58,244

Photo: BIS Wirtschaftsförderung/Fotograf Wolfhard Scheer

02

Dirk Burmeister, CEO of the Heide Development
Agency. Swedish Northvolt intends to build a battery factory for electric cars in Heide. The Swissbuilding materials manufacturer Holcim plansto build its first decarbonized cement plant on
the German coast. And French energy giant EDF
wants to produce green hydrogen (H2) here with
its subsidiary Hynamics. To this end, it’s entering
into a joint venture with the Danish wind power
specialist Ørsted and the Heide refinery, which
belongs to the British raw materials group Klesch.
Together they want to build a wind-powered electrolysis plant for the production of H2. Businessgoes where it can find a secure supply of green
energy, “but it’s equally important to be able tooffer a whole ecosystem of sustainable suppliers
and business partners,” explains Burmeister.

REGIONAL STATE Lower Saxony
SPECIAL FEATURES Direct accessto wind power from the coast
PARTICULARLY SUITABLE FOR

Energy-intensive companies

That means companies settlingon Germany’s north coast canbenefit not only from excellent
port infrastructure but also fromthe renowned Alfred Wegener
Institute for Polar and Marine
Research, the Fraunhofer Institute for Wind Energy and Energy
System Technology, the Institutefor Maritime Transport and Logistics and the various institutesof the local university. Bremerhaven is also pursuing the goal of
becoming a leading test hub andcenter of excellence for hydrogenand fuel cell technologies.

Photo: Holcim/Press

INHABITANTS 21,844

DESCRIPTION The industrial park
in Lingen offers large, contiguous
industrial sites, primarily for companies in the energy sector or that
produce energy-intensive goods:
chemicals, metals and mechanicalengineering. More than 3,800
firms work in Lingen and ensure
a diverse and balanced economic
structure. To supply these companies with a regular flow of greenhydrogen (H2), two internationalenergy companies, BP and Ørsted,
are partnering with other firms tobuild a 50-megawatt electrolysis
plant. Renewable electricity fromØrsted’s North Sea wind plant is
to be used for this. The state-ofthe-art plant will be capable ofproducing a ton of renewable H2
per hour, some of which will be

refined on site into fuel. This could
replace around 20 percent of theH2 the refinery currently producesfrom natural gas. The plant will
be commissioned in 2024, and inphase two, an electricity output
of 150 MW is planned. In the longterm, BP's goal is to replace all thefossil-generated hydrogen at theLingen refinery and thus contribute to a significant reduction in
CO2 emissions in fuel production.
In addition, German energy
company RWE is planning to build
an electrolysis test plant for the
production of green hydrogen.
The Lingen site plays a key role in
RWE's hydrogen strategy.
Photo: Industriepark Linken/PR

01

9

MARKETS GERMANY | Focus

04

BARLEBEN/MAGDEBURG

05

THE “CITY WREATH”

INHABITANTS 9,185 (Barleben)/just under 236.188(Magdeburg)
Photo: picture alliance/dpa/dpa-Zentralbild POOL/Patrick Pleul

REGIONAL STATE Saxony-Anhalt
SPECIAL FEATURES A technology park is being set up
in the area near the city of Magdeburg for development
as an “e-mobility campus.” Magdeburg University ofApplied Sciences is establishing its research center forsustainable drive technologies there.
PARTICULARLY SUITABLE FOR Companies from the mobility sector, industry and logistics
DESCRIPTION Around 140 companies have alreadysettled in the Barleben Industrial Park. Plans are now
underway to establish an e-mobility campus and a Center
for Method Development (CMD) at the University of
Magdeburg. The CMD Magdeburg sets new standards fordevelopment methods in drive and vehicle development.
As early as 2023, up to 50 engineers across disciplines will
establish new virtual R&D methods and processes here.
In future, the center will have several test benches andlaboratories for electric, hydrogen and hybrid drives. For
example, the operating and ageing behavior of batteries
will be investigated. The future fuel cell (FC) system laboratory will focus on optimizing the complex FC systems
in the car, including air supply and water management.
The Saxony-Anhalt Ministry of Economics is providing
the university with a total of EUR 31 million for the CMD,of which EUR 20 million from the European Regional
Development Fund.

INHABITANTS Seven cities, each with
between 40,000 and 100,000 residents

Photo: FuelCon AG, Andreas Lander

REGIONAL STATE Brandenburg

PARTICULARLY SUITABLE FOR Companies seeking proximity to the capital’s
start-up scene but needing a large
amount of space for their own projects

WUPPERTALINHABITANTS 354,572
REGIONAL STATE North Rhine-Westphalia
SPECIAL FEATURES Traditional industrial
location that is transforming regional value
chains to fit the circular economy
PARTICULARLY SUITABLE FOR Start-ups,
investors and companies interested in projects
implementing the circular economy
DESCRIPTION The “Circular Valley” in Wuppertal is set to become an international centerfor the regenerative economy. With universities,
research centers and industrial companies fromall sectors, including the recycling pioneers
Remondis and DSD (Duales System Deutschland), the metropolitan area is equipped toachieve its ambitions. The initiative­extends
across the entirety of the Rhine-Ruhr area and01

02even into Belgian Flanders. The NRW Ministry
for Economic Affairs and Energy and the EU
support the Circular Valley, as does the Frenchbank Société Générale. Twice a year, startups and investors take part in its accelerator
program to develop ideas to combine new andold industries and aid the transition towards
more sustainable business models. This resultsin successful collaborations.

03

05
04

06

07
08
09

Photo: Circular Valley/Presse

06

SPECIAL FEATURES The German
capital of Berlin is booming, but things
are already becoming crowded in themetropolis. The seven towns of what iscalled Städtekranz (city wreath) in thesurrounding regions offer proximity to
the capital but at the same time spaceand development potential as well as
access to renewable energy sources. Elon
Musk, for example, recently took advantage of this by building his Tesla plant in
Brandenburg.

DESCRIPTION The cities of Brandenburg an der Havel, Cottbus, Eberswalde,Frankfurt (Oder), Jüterbog, Luckenwalde
and Neuruppin have joined forces to offer
companies in the Berlin area an attractive
infrastructure. The medium-sized
locations offer a good compromise
between big city life and the advantagesof a rural setting. Berlin is just aroundthe corner but so is nature. Being at thecenter of innovation but still with enough
distance from the hustle and bustle ofthe metropolis is what makes living andworking in the seven regional locations so
special. A hydrogen network has been set
up to supply industrial companies in theregion with green hydrogen. Meanwhile,
start-up accelerators and technology
parks have settled in the city ring around
Berlin and form an axis for innovative
companies and their research projects.

10

11

10

MARKETS GERMANY | Focus

KYFFHÄUSERKREIS DISTRICTINHABITANTS 72,964
REGIONAL STATE Thuringia
SPECIAL FEATURES The Kyffhäuser District offers large commercial areas that are located at thenorth-eastern border of Thuringia
with direct access to the highway
junction of A71 and A38 and thegreater Halle/Leipzig urban area.
ESPECIALLY SUITABLE FOR

Industrial companies with large
scale investment projects of up to
70 hectares.
DESCRIPTION The Kyffhäuser

CHEMNITZINHABITANTS nearly 249.000

panies, form the backbone for astable economy and labor market.
Numerous suppliers to the auto
industry have already settled
in the area – for example, theauto-maker Mercedes-Benz is operating a plant with about 1,400
employees in the region. The
nearby Nordhausen University ofApplied Sciences in combination
with Germany’s unique system ofdual vocational training ensures apool of skilled personnel. Modern
daycare centers, good schools,
numerous healthcare facilities
form the foundation for a great
living environment for the wholefamily. The zoning plans havealready been approved for theindustrial area “Artern Unstrut”.
Nearby wind and solar farms provide accress to green energy.

REGIONAL STATE Saxony
SPECIAL FEATURES Chemnitz isa leading research and development location for microsystems
technology, sensor technology
and the textile industry. It’s also
a future location of the HIC – Hydrogen and Mobility Innovation
Center, which is a part of the
National Hydrogen Center ofGermany.
PARTICULARLY SUITABLE FOR

Technology-oriented companies
from the automotive and supplierindustry, mechanical and plantengineering and the textile
industry
DESCRIPTION At the end of
the 19th century, Chemnitz wascalled the “Saxon Manchester,”a comparison with the English
industrial powerhouse. Today, it isa modern city with a focus on auto
supplier industries, mechanicaland plant engineering and IT.
With the Smart Systems Campus
and the Chemnitz Technology
Center, it offers prime conditions
for tech-oriented companies,
encompassing the expertise of two
Fraunhofer institutes with a focus
on R&D in production technology
and smart systems. This is complemented by the know-how of
the Chemnitz Automated Driving
Alliance (CADA), as well as theindustrial application-oriented
Saxon Textile Research Institute(STFI). The HIC is developing into
an industrial R&D and certification campus for fuel cells andalternative drives for road and rail.

Photo: Susann Nuernberger

District is a traditional industrial
location with many SMEs focusedon metal, electrical and plastics
manufacturing. Approximately
4,500 innovative companies,
ranging from traditional craftbusinesses to high-tech com-08

Photo: HZwo e.V./Thomas Höppner

07

WETZLAR, CENTRAL HESSENINHABITANTS 52,969
REGIONAL STATE Hessen
SPECIAL FEATURES Wetzlar is a traditional
location for companies in the optics andelectronics industries.
PARTICULARLY SUITABLE FOR Companies in
the optics and electronics industries
DESCRIPTION Central Hessen, the region
where the 35mm camera was invented, hascreated the ideal conditions for local players
and foreign investors alike. The unique cooperation between universities and companies
in the fields of optics, electronics and mechanics is the key to success. Leading lightsfrom business and science have joined forces
to form a powerful optics cluster in western
central Germany where collaboration is the
key to success. Wetzlar-based companies
such as Leica Camera, Leica Microsystems,

Photo: Leica Camera AG

09

Buderus, or ZEISS Semiconductor Manufacturing Technology (ZEISS SMT) find sales
markets all over the world. Many high-performance, medium-sized companies incomplementary industries have also settled
in the region.
Three universities – Philipps University
Marburg, Justus Liebig University Giessen
and the Technical University of Applied
Sciences Central Hessen (THM) – haveprofessorships in physics and chemistry andoffer accredited degree programs ranging
from physics to aerospace. As a result, theregion has the highest student density inGermany and STEM education is prioritizedin Central Hessen (which is home to several
science centers), ensuring future generationsof skilled professionals. Also, numerous
wind and solar parks promote green andsustainable economic growth.

11

MARKETS GERMANY | Focus

10

HOF REGION

11TÜBINGENINHABITANTS 100,0000
REGIONAL STATE Bavaria
Photo: Cyber Valley Tübingen

SPECIAL FEATURES Companies that settle in and around the northern
Bavarian city of Hof benefit from special subsidies from the federal
government’s so-called GRW program, which provides grants of up to
45 percent for on-site business investments.
PARTICULARLY SUITABLE FOR Companies from the water supply andwastewater treatment industries, from logistics, automotive, life sciences, textile and plastics processing sectors
DESCRIPTION The city of Hof can fall back on a long history as a business location. Traditionally, the strongest sectors are the plastics andtextile industries, which have driven dynamic business development andfuture-ready industries and produced a wealth of innovative products.
These historical strengths are today enhanced by the modern infrastructure of a forward-looking industrial and service location. The focus on
the city’s periphery and surrounding areas is on technological solutions
for water and wastewater management. In total, more than 50 big players
in the fields of business, research and institutions are concentrated here:
for example, world-leading manufacturers of pumps and pump systems
for water supply and wastewater treatment and disposal, manufacturers
in the field of polymer-based solutions for water management as well as
sealant-free paving made from recycled materials. Bowl technologies for
sludge removal developed here are used in water rehabilitation projects
all over the world. In addition, there are service providers in the specialist
niches of hydrogeology, water testing and sewage treatment plant planning. Excellent connections to the international transport network and atight relationship between business and science – especially through theresident University of Applied Sciences – are just some of the advantages
that make Hof an interesting location for business and technologicalinnovation. A favorable standard of living and pleasant environment forrecreation round off the picture.

INHABITANTS about 90,000
REGIONAL STATE Baden-Württemberg
SPECIAL FEATURES University town with more than 28,000 students
PARTICULARLY SUITABLE FOR Companies that want to apply and devel-

op artificial intelligence
DESCRIPTION Cyber Valley Tübingen is the largest research consortiumin the field of artificial intelligence (AI) in Europe, connecting projects
within the areas surrounding the cities of Tübingen and Stuttgart insouthwestern Germany. It is currently developing into a creative hotspot
for scientific development and lucrative innovations in the field – and is
attracting both large and modestly sized companies both from Germany
and abroad. The research departments of internationally active companies such as Amazon, Bosch, Mercedes, BMW and Porsche conduct research here at renowned R&D centers including the Max Planck Institutefor Intelligent Systems and the universities of Tübingen and Stuttgart.
The multinational engineering and technology conglomerate Bosch, forexample, has announced that it will build a new campus in Tübingento facilitate around 700 AI experts in their research. Amazon has built a
research and development center in the area for around 100 employees.
In a new research building with motorized, mobile laboratories that canliterally go on the road, automobile companies are planning to develop
solutions for autonomous driving, among other things. An excellent
regional start-up and investor network exists to provide financial support
to international business settlers and young innovative technology andsolutions companies. The national and the regional governments jointly
support the Cyber Valley AI Competence Center with EUR 20 million
annually.

01

02

03

05
04

Photo: sergeyryzhov/stock.adobe.com

06

07
08
09
10

11

12

MARKETS GERMANY | Technology

Much
More
Than

HOT AIR
Germany aims to be climate-neutral by 2045 and renewable heating systems
are a big part of this plan. The annual target for heat pump installations wasrecently increased to 500,000 from 2024 onward, presenting huge business
opportunities for ­international suppliers.

Germany is changing how buildings
are heated and the conversion is happening faster than planned. The Ministry for Economic Affairs and Climate Action is
ramping up the expansion of renewable heating
sources, which are set to replace oil and gas
heating systems within the next two decades.
The potential for energy savings is great:
The consumption of heating and hot waterin buildings accounts for about 35 percent ofGermany’s total energy consumption, while
the sector accounts for 40 percent of all CO2
emissions generated. At the present time,
there are 21 million installed central heating
systems in Germany; of those, some 14 million are gas-fired and 5 million oil-fired, withmany being old and inefficient. New heating

THE BOTTOM LINEThe market for heat pumps is
growing rapidly in Germany.
The federal government has defined clear goals and increased
the pace. The heat turnaroundin Europe’s largest market is infull swing.

technologies that are both energy-efficient andclimate-friendly will power the heat transition,with heat pumps leading the way in Germany.
Heat pumps extract heat from the ambient
air, groundwater or ground to supply a house-

hold with hot water and heating, without theneed for backup from fossil fuels. Residents
of a heat pump-adapted property can expect
permanently low heating and hot water costs.
For this reason, the German government
has set itself the goal of installing 500,000 newheat pumps every year from 2024 onward – upfrom 154,000 installations in 2021. If this target
is met, 6 million heat pumps will be in operation by 2030, which will put the country on
track toward carbon neutrality by 2045.
Heat pumps have been growing in popularity in Germany in recent years, especiallyin new builds. For illustration, in 2012 just
24 percent of new buildings were fitted withheat pumps compared to 48 percent gas heating systems – ten years later, this trend has re-

MARKETS GERMANY | Technology

The share of heat pumps
in newly installed heating
systems in Germany has
more than doubled since
2012.

Photo: rh2010/stock.adobe.com­GOVERNMENT ­SUPPORT FOR HEAT
PUMP INSTALLATION

versed: In 2021, used only around 26 percent of
new heating installations were gas systems. “InJanuary and February 2022, just under half of
all installed heating systems in new buildings
were heat pumps. This is a trend toward heatpumps that will not turn around,” says RobertCompton, Germany Trade & Invest’s (GTAI)
sector expert for energy and environmental
technologies. The figure in 2021 was 44 percent.
So far, the majority of heat pumps in Germany have been installed in newly-built detached and semi-detached houses. However,
the technology can also be used to modernize
existing buildings. In many cases, older radiators can be repurposed and plumbers only
have to replace the individual radiators thatare completely outdated.

The German government promotes the installation of heatpumps with subsidies. The maximum subsidy per residential
unit and calendar year is EUR 60,000. The subsidy program
covers 25 percent of the costs for the purchase and installationof heat pumps. Anyone who replaces a gas heating system thatis at least 20 years old, or a coal or night storage heating systemwith the installation of a heat pump, receives an additional
bonus of ten percent of the costs.

In residential apartment blocks, a single heatpump can pivot the community to affordable,
climate-friendly heating. For example, in 2014
a neighborhood in Berlin with 18 apartmentbuildings built between 1930 and 1960 received
a new energy system,” says Björn Schreinermacher from the German heat pump association BWP. “There, one heat pump per building
was used as a heat source for heating.” GTAI’s
expert Compton is also convinced: “Heat pumptechnology can supply every type of building
with heat, even if it has so far been used mainly
in new buildings and single-family homes.”
One thing is certain: In order to meet therising demand, manufacturers in Germany will
have to significantly increase their production
capacities. The ongoing war in Ukraine and the

sharp rise in prices for fossil fuels are boosting
demand for heat pumps further – producers
and installers can barely keep up. “Industry
and the trades must manage the expansionof production and installation capacities forheat pumps in the coming years so that thelarge demand meets an equally large supply,”emphasizes Schreinermacher. Compton concurs: “Companies’ order books are full. Anyone
wanting to install a heat pump in Germany
today can expect to wait several months. This
creates exciting business opportunities inGermany for internationally active suppliers.”
Because of climate change and geopoliticalevents affecting energy prices, fossil fuel-based
technologies will have to be replaced sooner
rather than later. Filip De Graeve, managing

13

MARKETS GERMANY | Technology»‘Made in G
­ ermany’
stands forhigh ­engineering
quality.«
Filip De Graeve, managing directorof Daikin in Germany

director of Daikin in Germany, sees this as agreat opportunity. The Japanese company
produces heat pumps as well as ventilation
and air conditioning systems and announced
at the beginning of October 2022 that it would
expand its site in Germany, which the company
has owned since 2008. To this end, Daikin has
acquired 22,000 square meters of additional
space in the southwestern German state of
Baden-Württemberg. The company plans tocreate 500 new jobs there and at least triple its
current production volume by 2025.
“Germany is the largest market in Europe,”says De Graeve, “and will become even more
the most important market for heat pumps inthe coming years.” The German government’s
decision to provide financial support for the
installation of heat pumps also contributes
to this. “As a producer and developer of heatpumps and technology, we want to profit fromthe boom and produce close to the customers,”
he says.
GTAI’s industry expert Compton agrees
that it is important for producers to be close
to the sales market. Producers depend on local
tradesmen to know and install their products.
In addition, every property owner decides forhimself from which heat source the hot air andhot water should come – and customers are
more likely to choose products from a company they know.
Germany offers further locational advantages: Government subsidy programs forproperty owners make it easier to finance a
conversion, which is driving uptake of heatpump technology. “We have observed that thesubsidy is working, i.e. it triggers investments

Photo: vchalup/stock.adobe.com

14

Many German houses
and apartment blocks arewell suited to heat pump­installations.

that are received by the companies and tradesin the sector,” says Schreinermacher. “Furthermore, the ‘Made in Germany’ stands forhigh engineering quality,” adds De Graeve.
“What companies develop in Germany, they
can therefore also export successfully to third
markets.”
Companies with a production site in Germany can also benefit from the country’s efficient export promotion infrastructure. “Export
promotion in Germany is among the best in theworld,” Compton emphasizes. So the upswingof heat pump technology in Germany results
in a virtuous circle for manufacturers and installers, consumers and the climate.

CONTACT
robert.compton@gtai.com
GTAI heating expert

HEAT PUMPS HAVE SURGED IN POPULARITY
Number of installed heat pumps in Germany since 2015 (in thousands)
Ground source  

Air source

160
140
120
100
80
60
40
20
0
2015

2016

2017

2018

Source: BWP

2019

2020

2021

15

MARKETS GERMANY | Technology

SUNNY SKIES AHEAD
Gone are the clouds that once hung over Germany’s photovoltaic sector.
Concerns about energy security and the need for climate action are drivinga remarkable solar renaissance in Europe’s largest economy.

THE BOTTOM LINE
Russia’s war in Ukraine anda ­Europe-wide surge in fossil
fuel prices has given theGerman photovoltaic sector
a new – and sustainable –boost, offering plenty ofopportunities for foreigncompanies.

Demand driven by Ukraine War“The company is tackling the situation – which has also been
driven by the war in Ukraine – proactively and is using the opportunity to add additional capacity in Germany,” Meyer Burger’s
spokeswoman Anne Schneider said recently.
Meyer Burger is one of several foreign companies now jostlingto enter the German PV market, which has rebounded from thedecline of the last decade. Experts say the impetus to stop buying
Russian natural gas in particular marked a turning point. “Demand has exploded since the war started,” says Germany Trade &Invest (GTAI) analyst Tobias Rothacher, “even without additional
government support or programs.”
Solar strategies, large and small
The increase in demand includes all classes of PV installations,from major industrial projects to so-called “balcony solar” modules of just a square meter or so. Rising prices for gas and electricity, coupled with a steady decline in prices for solar panel
technology, have convinced more and more people to invest in
power generated by the sun. “People are seeking an alternative
energy source, and solar is fast and easy,” Rothacher says.
The effects are visible nationwide. Solar covered 12 percent ofGermany’s electricity production in the first half of 2022, and inJune, which was unusually sunny, it generated 22 percent of thecountry’s total.

up manufacturing capacity in Germany,silicon manufacturers are also ramping
up production.
“Right now, the biggest opportunity is tocome to Germany and source raw materials
and sell directly here,” Rothacher says. “Yousave on logistics costs and it’s secure from
disruptions to the supply chain.”
Major players so far include Portugal’s EDP Renováveis, which
acquired a majority share of German solar developer Kronos Solar
Projects in the summer of 2022. And Rothacher says more suchdeals are in the pipeline. “It’s really a fast ramp-up,” explains GTAI’ssolar expert. “Right now, you can hardly get orders filled – in every
segment.”
This time around, the growth in German photovoltaic solutions
is sustainable and all the indic rs suggest the industry will remainprosperous for a long time to come.

CONTACT
tobias.rothacher@gtai.com
GTAI expert for solar energy

In 2021, Switzerland’s Meyer-Burger, aleading manufacturer of PV equipment,
moved into some of SolarWorld’s former
facilities in Freiberg.

Photo: Gyula Gyukli/stock.adobe.com

doubt over the future of “Solar Valley,” aregional hub of solar panel manufacturing in the eastern German states of Saxony
and Saxony-Anhalt.
Fast forward five years: The region isexperiencing a wave of foreign businessexpansion and the German solar sector isshining brightly once more. In 2021, Meyer
Br Burger, a leading Swiss manufacturer of PV equipment, moved
into some of SolarWorld’s former facilities in Freiberg. Barely a year
later, it announced another round of expansion worth over EUR
250 million for its German plants. Meyer Burger aims to produce
1.4 gigawatts of solar modules in its Freiberg facility alone in 2023.

Investment opportunities abound
The German sector is particularly attractive
to companies seeking to avoid the supply
chain insecurities of sourcing PV panels
in China. And with increasing numbersof solar manufacturers looking to build

Photo: Meyer-Burger/PresseI

n 2017, the German solar panel
manufacturer SolarWorld wentbankrupt. The casualty was symptomatic of a nationwide crash in renewable energy production. The decline in thephotovoltaic (PV) sector cast a shadow of

IN BRIEF
People around the world admire the spirit of invention that drives
the German economy. Here we spotlight some of the trends and research
projects from around Germany.

SELF-DRIVING TRUCKSHIT THE ­AUTOBAHN
An ambitious plan to get
autonomous trucks operatinginternationally is piloting in
Hamburg

Photo: picture alliance/dpa/ Markus Scholz

Hamburg is set to become the “number
one test city in Europe for autonomously
driving trucks.” That’s according to Gruber
Logistics who are conducting a three-year
test in the northern German city’s huge port,
in partnership with Volvo, DAF and Maersk.
Hamburg was chosen because many of its
streets are already highly digitalized. The
initial aim of the project, which has attracted
EUR 23 million in funding from the EU, isto get at least two 40-ton trucks driving
autonomously between the container port
and Autobahn 7 by 2025. The long-term goal
is to have driverless trucks operating via
Hamburg between Rotterdam in the Netherlands and Norway.
www.gruber-logistics.com

BERLIN BLASTS OFF!
Germany’s capital city joins the “newPhoto: ArianeGroup/Astris, Pressefoto

space” race
Berlin may not be the first European city you would
associate with space travel, but it has become a hive ofaerospace activity. That’s thanks to innovative growthcompanies like PTS. The new space outfit, which is ona mission to “democratize access to space,” develops
rover vehicles, cameras and other equipment to support
potential spaceports, dwellings and other infrastructureon the moon.
PTS’s ambitions got a boost in late 2021 when the ArianeGroup awarded it with a major contract as part ofthe development of Ariane 6, the next European heavylift space launch vehicle. And PTS is deeply involved in
the preparations for the first European journey to themoon – and beyond. PTS CEO André Radloff says he’s
sure that human beings will be living on Mars as well ason the moon “within our lifetime.”
www.pts.spaceDIGITAL INNOVATION IN SAXONY
Photo: Alexandr Bognat/stock.adobe.com

The eastern German regional state has been made a ­“digital
innovation hub” for big data, AI and robotics»EDIH Saxony willcomplement existingsupport options for thedigital trans­formation«
GERMANY’S FIRST DRONE DELIVERY AIRPORT

Ines Fröhlich, the state secretary for economics andcommissioner for digitalization

The vertical take-off and landing (VTOL) market will benefit
Saxony is about to become home to a European Digital Innovation Hub (EDIH).
The hubs are one-stop shops providing access to digital expertise for companies
and the chance to “test before invest.” The European Commission formalized the
Saxony EDIH in November 2022, after the consortium qualified for final consideration. The hub will encompass key fields such as big data, artificial intelligence,robotics and cybersecurity.
“With its new and innovative services, EDIH Saxony will perfectly complement
existing support options for the digital transformation of small and medium-sizedenterprises as well as the administration of the Free State of Saxony,” comments
Ines Fröhlich, the state secretary for economics and commissioner for digitalization.
https://edih-saxony.eu/en/

from Kamenz’s new drone port
Initial test flights have been made for what will become Germany’s first airport
for delivery drones. The "ventriport" will be located near the eastern German
town of Kamenz and, when fully operational, will accommodate up to 100 drone
flights a day, with each drone carrying a load of up to 100 kilos. The facility is
the brainchild of the 3D-Aero network, a center of excellence involving experts
from seven universities and regional states across Germany. Pending the required
regulatory nods, construction of the ventriport will start in 2023 and be completed two years later. "It’s astonishing that what two years ago was only abstract
theory is now something we see being practically used,” 3D-Aero’s chief productand innovation officer Rainer Deutschmann told regional broadcaster MDR. The
aim is to create a “real 3D laboratory” with drones flying to and from the nearby
towns of Nardt, Rothenburg and Görlitz.
www.3d-aero.net

FULL STEAM AHEAD!

Photo: Mermaid/Presse

Steam engine technology is back in fashion – for storing­renewable energy
Engineers at the Zittau/Görlitz University of Applied Sciences have been studying
the good old steam engine to tackle one of the most pressing engineering tasksof our time: how to store electricity generated from wind turbines and solar
panels most efficiently.
A research team has conducted trials on a battery that works on the principle
of pressure containers being filled with steam generated from green electricity.
In August 2022, the system achieved a maximum efficiency factor of 60, whichmeans that 60 percent of the fed-in electricity is retained when released.
“If you know that steam trains can pull very heavy freight wagons, you knowthat steam can contain a lot of energy,” says Thomas Schäfer, one of the engineers
involved. “That’s why steam is an excellent choice of a storage medium for batteries.”
www.theresa.hszg.de/en/projects/tms

DISRUPTING DISEASE
A new class of antibody drugs could help healing inside

Photo: Paul Fleet/stock.adobe.com­human cells
The problem with most conventional medical treatments is that they only work
between the cells of the body, not within them. Munich-based medtech company
Mermaid Bio has developed a new class of antibody drugs that links nanobodies(single-domain antibody fragments) and new delivery technologies similar to theones used in the mRNA vaccines for Covid-19 together to effectively turn diseased
cells into nanobody factories capable of treating themselves.
“Antibodies dominate the world of extracellular disease targets,” says Ranja Salvamoser, executive director of Mermaid Bio. “Our innovation is to combine two
cutting-edge technologies to deliver therapeutics into aberrant cells in order totreat diseases at their roots.” Mermaid Bio is supported by Germany’s Federal
Agency for Disruptive Innovation (SPRIND), which facilitates the emergence ofgroundbreaking technologies to tackle the major challenges of our time.
www.mermaid.bio

MARKETS GERMANY | Technology

HOME, SMART
HOME
Germans have a reputation for being slow digital adopters. But when it
comes to networked domestic devices for ­controlling everything fromradiators to lamps and blinds, they are very enthusiastic. International
providers of smart-tech DIY solutions can thrive in this market.

Germany is the fourthlargest smart home market
worldwide – the sector is
expected to be worth USD
9.6 billion in 2025.

Photo: Uwe Umstatter/Westend61/stock.adobe.com

18

MARKETS GERMANY | Technology

Unlock the door, dim the lights, turnup the heaters or send the robot vacuum cleaner off on a chore – all at
the touch of a button or preprogrammed on asmartphone. Smart home applications connect
and control the digital devices that make ourlives more comfortable and convenient.
With sales of around USD 6.6 billion in 2021,
Germany is the fourth largest smart home market worldwide. And the potential is far fromexhausted. According to the Digital Market

That doesn’t mean international companies
don’t have a chance in Europe’s biggest market – they just have to know how to do it right.
“We have partnerships with distributors suchas Tink,” Aartman reports. They also cooperate with German associations, for example
with “CO macht K.O.” This initiative educatespeople about the danger of carbon monoxide
poisoning and how to protect themselves using
smart devices.
“These partnerships help us build trust on

Outlook, the sector is expected to be worth USD
9.6 billion in 2025, an increase of 45 percent
compared to today.
Around 40 percent of Germans already use
at least one smart-home-enabled application.
Another 38 percent are interested in smart lightswitches, light bulbs, thermostats and window
sensors, according to a survey from Splendid
Research in 2021. Entertainment and communication products were found to be the mostpopular (smart televisions and voice control
systems), but temperature sensors and heating
control devices were also doing well.

the German market,” says the Netatmo sales
rep. “German consumers are a loyal audience
once a brand has gained their trust.”
Furthermore, many Germans live in rented accommodation. Smart home solutions
are popular because customers can easily
install them – and take them along if they
move. Thermostats, for example, can simply be screwed onto the standard valves ofGerman radiators, without permission fromthe landlord.
That can mitigate shortages of skilled domestic appliance installers. “Manufacturers are
therefore well advised to develop their products in such a way that they can be installed
and configured with as few craftsmen and asmuch of their own work as possible,” advises
Günther Ohland, chairman of the board of theSmartHome Initiative Deutschland industry
association. And Ohland has another tip: Smarthome products designed for seniors could beparticularly successful in Germany. “They areprobably the most important customer group,”
in a country with an older population and falling birth rates.
Thirdly, providers in Germany shouldtake into account the trend toward industry
standards. Germans, after all, like guidelines.
In October 2022, the Connectivity Standards
Alliance (CSA) group of companies presented
the cross-vendor industry standard “Matter1.0” – a kind of common language via which
products from different suppliers can communicate and connect.
Experts already warn that if companies
want to remain competitive, they must integrate this new standard into their systems
because the big home market players – Apple,
Amazon, IKEA and Google – have already announced that they will be Matter-compliant.

THE BOTTOM LINE
Although Germans are open
to smart home apps, many
households do not yet haveany such installations. International companies could
take advantage of this market
opportunity with DIY and energy-saving solutions.

“The demand for smart heating solutions is highly increasing due to the energy crisis,” reports
Edwin Aartman, the German sales manager of
the French smart home device producer Netatmo. Solution providers promise up to 30 percent
lower costs. In addition to radiator thermostats,
Netatmo also sells alarm systems and room air
sensors in Germany. “Our most successful products are weather and security solutions,” says
Aartman. However, the German market has a few
peculiarities: “German customers prefer talking
to a German-speaking support team. They generally feel more secure with German companies.”

The French company Schneider Electric also
hopes to conquer neighboring markets withMatter-standardized products.
At the IFA technology fair in Berlin, Schneider recently presented its latest innovation:
the first e-car charger that can be integrated
into a home’s energy management system andenables users to monitor the power consumption of their cars in real time. In a time when
European consumers are tightening their belts
and the effects of extreme weather are being
felt, it is more important than ever to reduceenergy consumption – which is the core message of Schneider’s sales pitch.

FIVE GERMAN PRIORITIES
Why did you or would you purchasesmart home devices?
COMFORT
61 %SECURITY
41 %LOWER HEATING/ELECTRICITY COSTS
41 %

FUN
38 %

ENTHUSIASM FOR TECHNOLOGY
35 %ENTERTAINMENT, COMMUNICATION AND ENERGY
What are the most popular smart home
applications?
ENTERTAINMENT AND COMMUNICATION
63 %ENERGY MANAGEMENT
55 %BUILDING/RESIDENTIAL SAFETY
31 %HOME AUTOMATION AND COMFORT28 %HEALTH/AMBIENT ASSISTED LIVING
11 %Source: Splendid Research opinion poll, 2021

19

20

MARKETS GERMANY | Technology

TRADING ON­COMPLEXITY
More and more start-ups in Germany are working on deeptech solutions – based on
fundamentally new scientific-technological approaches and know-how. International
businesses are already starting to benefit from this new wave of innovation.

Bernd Heinrichs is on the road a lot.
The co-CEO of the deeptech startup Wandelbots is currently traveling through Germany and the US to talk toinvestors, customers and business partners
about new uses for the company’s solutions.
A spin-off from the University of Dresden ineastern Germany, the company has developed
so-called “no-code software” that allows people
without programming skills to program robots
for a wide variety of applications.
With the help of Wandelbots, robotic applications from renowned manufacturers suchas Universal Robots and Yaskawa are alreadybeing programmed at industrial companies
including Bayer, Volkswagen, Rotop Pharmaka
and Vitesco Technologies. Heady stuff from acompany that was only founded in 2017.
Last year, Wandelbots raised USD 84 million in Series C funding to drive its international expansion. New York-based global tech
investor Insight Partners stepped in, along withexisting Wandelbots investors 83North, Microsoft, Next47, Paua, Atlantic Labs and EQT.
“We presented our solution at the Founders Forum in New York at the end of 2021,
and then experienced a real investor run,”Heinrichs says. He points out this owes muchto the fact that Wandelbots had already managed to interest large German industrial customers in its solution: “For deeptech start-ups
like Wandelbots, it is an enormously important step to be able to show their solutions inreal-world use.” The deeptech scene is thriving generally in Germany, he says, “because
many founders specialize in B2B solutions
that make the topic of deeptech tangible. And
because they find partners among industrial

companies in this country to put their ideas
into practice.”
Exploiting Germany’s R&D excellence
Deeptech and German R&D are a natural match– both are concerned with developing pragmatic solutions for problem-oriented products
based on intensive research, novel algorithms
and combinations of technologies.
This complexity makes their software solutions easier to protect through patents, andmore difficult to imitate than, for example, thebusiness model of an e-commerce venture.
The disadvantage is that it’s often difficult for
non-techies to understand exactly what thevalue propositions of the solutions are – andthe path to market maturity is often winding.
That’s why deeptech start-ups tend to
emerge from universities and research institutions, where they go through the early stagesof their development. “The step out of the university context is then critical to success,” says
Philipp Kövener, director of the trend & innovation scouting team at Germany Trade & Invest(GTAI). “At this point, the founders, who are oftenvery technically oriented, need significant financial investments to further develop their ideas.”

THE BOTTOM LINE
Germany’s tradition of practical R&D and aggressive government support is driving
deeptech – and international
companies can take part in thisemerging sector.

State support
The German government has recognized theimportance of this segment of the economy andhas launched an early-stage fund specificallyfor deeptech start-ups.
The Digital Hub for Applied AI in thesouthern German city of Karlsruhe is a major
springboard. The hub is one of 12 in the Digital
Hub Initiative – an honor awarded by the Ministry for Economic Affairs and Climate Action(BMWK) – and also works closely with GTAI.
It brings together start-ups, researchersand companies. For example, Wandelbots
implemented one of its first robotic projects
with the Volkswagen automotive group in the
Digital Hub Initiative. “We are one of the big
artificial intelligence locations and unique AI
ecosystems in Germany, so there are a lot of
deeptech start-ups here,” says Josephine Simon, the digital hub manager.
The hub also establishes contact withbusiness angels, venture capital investors andstrategic investors. “We help start-ups attract
funding for their projects,” Simon explains,while adding that access to data and development partners is just as important as accessto capital. “That’s why we’re also building an
infrastructure here as part of the AI Allianceto help data-driven deeptech start-ups develop
their ideas to market faster.”It’s often productive to have various
deeptech start-ups collaborate on solutions
to a company’s specific problem. “That’s a big
advantage of the hubs, especially for medium-sized companies, but also for larger corporations that want to solve a very specificproblem,” Simon tells us. “Because it’s often not
worth it for large, established software vendors

MARKETS GERMANY | Technology

21"MORE AND MORE DEEPTECH INVESTORS ARE TAKINGNOTICE OF GERMANY."

philipp.koevener@gtai.com
GTAI director trend & innovation scouting

Which areas do you find particularly interesting?
OH: Deeptech can be manythings from quantum technology to AI, IT security to materials research. At the moment, I
find start-ups that work at theinterface of biology and algorithms particularly exciting –there are very interesting new
approaches emerging.
What are the characterizing
features of deeptech investments?
OH: The start-ups typicallyemerge from universities andresearch institutions, so thefounders usually have a very
technical background. Not
all of them areable to explain
and sell their
in
ed
Spe
ideas well. So as
Photo:
an investor, you haveto have a great deal of technical understanding yourself inorder to understand what it’s
all about and how promisingthese ideas are.
What are the special featuresof the German deeptech
scene?
OH: Unlike in other countries,
there are not just one or two
deeptech locations here. You
have to travel a lot and lookaround at many hubs and centers. Munich, Dresden, Aachen
and Darmstadt, for example,
are interesting deeptech centers. So it’s all a bit more complicated and confusing thanin other countries, you haveto know your way around andmaintain many contacts. But
the excellence in many technological areas is absolutely
there. We’re convinced that
we’re only at the beginning of
the deeptech wave.

Photo: nobeastsofierce/stock.adobe.com

CONTACTIn recentyears
you havebuilt upa teamspecializing
specificallyin deeptech
start-ups. Why?
OLIVER HOLLE: We
noticed that there were stillconspicuously few dedicateddeeptech funds in Europe,
especially in Germany. At thesame time, however, we see
deeptech as a trending topic.
That’s why we decided to build
up our own deeptech expertise.

ve
st
/P
res
s

to develop a solution for a very specific use caseor a single company.” Start-ups, on the other
hand, benefit from being able to try out theirideas on a concrete use case.
This intense focus on problem-solving has
led to rapid growth in the German deeptech
sector. Although the overall number of startups in Germany decreased in 2022, the numberof deeptech start-ups actually grew.
Danny Rimer, a partner at Index Venturesand one of Europe’s most experienced venture capital investors, explained it this way to
the German business magazine Handelsblatt:“Anyone who founds a start-up now only does
so because they really want to build something
meaningful. No one is just trying to ride a wave,
as we’ve seen a lot recently.”
In addition to Wandelbots, examples ofrecent successful German deeptech include
battery recycler Cylib, quantum computing
specialist Planqc and electric aircraft manufacturer Vaeridion. Technology- and start-up-oriented universities in Germany have produced aslate of promising spin-offs. The German government wants to amplify this trend.
“The German government’s start-up
strategy contains measures to support deeptech start-ups even better in the future,” says
Kövener.

Oliver Holle is founder and managing partner of the European venture capital fund
Speedinvest. His London-based deeptech
team recently identified several investment
opportunities in Germany.

22

MARKETS GERMANY | Climate

Photo: conzorb/stock.adobe.com

THE
SOLUTION

Photo: ADDICTIVE STOCK/stock.adobe.com

German cities are having to adapt to hotter temperatures andto some extent less secure water supplies. Climateresilient “sponge ­cities” offer one solution – and opportunities
are there for international ­companies to soak upsome good business.

Water is attracting a lot of attention
throughout the world, and signsof change are everywhere. For instance, the Spree River that traverses Berlin
now flows backward more than 20 days a year,
as water resources disappear upriver. Meanwhile, the Elbe – the river into which the Spreeflows – “could be crossed on foot fairly often”
last summer, as Environment Minister Steffi
Lemke pointed out in a speech in June 2022.
Lemke’s words came at a research conference called “Climate-Resilient Sponge Cities”,
where researchers and public officials discussed
ideas for how to help urban areas preserve waterand cool down as the hotter summers kick in.
The concept of the sponge city is not new.
It brings together practical ideas that enhance
the urban environment, such as paving stones

that allow rainwater to pass through or between
them, and rooftops and façades covered withgreenery. But turning cities into sponges will
require an enormous and complex effort combining both public and private initiatives.

THE BOTTOM LINE
Germany needs to adapt its cities
to climate change – this meansamong others preserving waterby turning urban environments
into “sponges.” There are subsidies to support that goal andthe government has launched awell-funded new initiative.

Luckily, there has been a revolution in thinking in the last few years. “The idea of sponge
cities has been around for decades, but theopportunities are very good at the moment,”
says GTAI's energy, climate and smart cities
expert Robert Compton. “Both the local andfederal governments are ready to rethink thingsand convert urban areas in order to implement
new ideas.”
Greening the urban skyline
Gunter Mann, president of the German Association of Building Greening (BuGG), explainsthat Germany is one of the largest greening
markets anywhere. “When it comes to greening roofs, we’re the biggest market,” he says.
“There’s no other country that is going green
to the same extent we are.”MARKETS GERMANY | Climate

Greening rooftops and allowing
rainwater to percolate throughpavements are two sponge city
strategies.

“Germany has companies that have been activein this area for decades,” Mann adds. “We havethe expertise and we have guidelines – we know
how it works. And thanks to municipalities
and support instruments, we have not only
subsidies but also regulations. So if you build
a warehouse here, for example, you have tocompensate for it with some kind of greening.
That’s a huge advantage.”
But there is still plenty of potential. “Lastyear, we covered nearly 9 million square metersof roof with greenery,” says Mann. “That sounds
like a lot, but it’s only 10 percent of the possible
roof surface that could’ve been covered.” Inother words, Germany needs more companies,
and especially more skilled workers, to fill thegreening sector.
BuGG counts some 460 companies andmunicipalities among its members, around
60 of which are international companies, andfor June 2023 the association has organized athree-day congress in Berlin to discuss greening buildings. “We’re inviting the whole world,”
says Mann.
A climate protection government
Germany’s coalition government, which now
includes the Green Party, is doing what it canto help. The Ministry for the Environment says
the sponge city has become a leitmotif for thegovernment’s urban development program.
“In urban areas, the development of integrated green space management, the unsealingof public and private surfaces, the restorationand improvement of soil cooling capacity, andfaçade and roof greening are particularly indemand,” a ministry spokesman tells GTAI.
“In total, we are making an additional EUR 60
million available until 2026 with the immediateclimate adaptation program. But this is just the
beginning. This emergency program will befollowed by further measures, such as a climate
adaptation law and an adaptation strategy.”This initiative is part of the German government’s new National Water Strategy, whosebasic purpose is threefold: adapting infrastructure and urban development to the climate
emergency, purifying water resources, andensuring that drinking water remains of highquality and affordable for future generations.

HOW DO GERMAN­MUNICIPALITIES ­FINANCE
THEMSELVES?
Governmental power in Germany is decentralized and has many levels.
There are 11,000 local governments in Germany, known as Kommunen,that have a constitutionally enshrined right to their own budgets. The
budgets for these local authorities are meant to cover basic services
such as waste disposal and sewage systems, as well as town planning.
The budgets come from a variety of sources. The municipalities collectsome taxes themselves, mainly from property and trade, but they also
get a certain percentage of federally collected taxes. For instance, local
authorities get two cents of every euro of sales tax in Germany. Together, these tax revenues make up around 80 percent of city budgets – therest comes from extra fees and loans.
In addition, local authorities can also apply for money from the national government to fund specific building projects. In 2015, the German
government set up a special investment fund for local authorities todevelop infrastructure, including urban development.

The government plans offer a number of business opportunities for domestic and foreign
players in Germany and support infrastructureis already in place. Apart from BuGG, there
are several coordinating organizations likethe Regenwasseragentur (Rainwater Agency)
in Berlin, which has already compiled a catalog of service providers, from construction
companies to engineers’ and architects’ studios, to companies specializing in roofing andlandscaping.
How the funding system works
The government will distribute the subsidies
through the local city authorities responsible
for urban development. Local councils arealso being offered consultancy support fromthe federal government’s new Center for Cli-

mate Adaptation (Zentrum KlimaAnpassung).
BuGG, meanwhile, provides a yearly reportdetailing which German municipalities provide
what kind of support.
Minister Lemke has signalled that this isa government priority. “We can reinvent ourcities and towns as havens of biodiversity,” shesaid. “As a sponge city, cities can contribute toclimate adaptation and climate protection at
the same time – and become more livable in
the process.”

CONTACT
flerida.regueira@gtai.com
GTAI water expert

23

24

MARKETS GERMANY | Resources

Recycling
RAW Materials
International turmoil has shown the dangers of relying too much on
single suppliers. That, plus the drive to protect the climate, has given
industrial countries like Germany without vast stocks of raw materials
all the more incentive to recycle.

T

he majority of Germans would not beable to locate Nachterstedt, a town of
3,000 people in the eastern regional
state of Saxony-Anhalt, on a map. But it is at
the epicenter of the buzz surrounding the German recycling sector right now. Nachterstedt
is home to the world’s largest, most technologically advanced aluminum recycling center,with an annual capacity of 400,000 tons. The
plant is run by the US aluminum processor
Novelis, and they are expanding: investing USD
30 million in the facility.
Together with its partners along the value chain, Novelis is developing innovative,
low-carbon aluminum solutions and creating recycling loops for production and endof-life scrap. “The investment demonstrates
our commitment to serve as a trusted partner
for our food and packaging industry customers and create more sustainable solutions for
consumers,” says Emilio Braghi, executive VP

THE BOTTOM LINE
Germany is heavily invested
in the supply chain for green
technologies such as batteries
and has advanced recycling infrastructure for valuable metals
and minerals. That means lotsof potential for international
companies in this area.
and president of Novelis Europe. “Increasing
the use of recycled aluminum helps us reduce
the use of natural resources, strengthen the circular economy and thus limit climate change.”
Novelis isn’t alone. In 2022, Luxembourg-based international steel company
ArcelorMittal, which is pursuing a robust recycling strategy, announced the acquisition of ten
scrap facilities in Germany from the Alba In-

ternational Recycling unit of the Berlin-based
Alba Group. Together with the recycling specialist Interzero Circular Solutions Germany,
the companies intend to work on strategies forthe transition to a circular economy.
Such deals are becoming more frequentacross Germany – and are likely to continue
because the impetus to go circular is global. As
many industries shift toward greener technologies, steel, copper, lithium, aluminum, rareearth elements (REEs), metals and minerals arein particularly high demand on the world markets. Without lithium and REEs, there would be
no electric vehicle batteries. Without metals likenickel and iridium for electrolyzers, no greenhydrogen. Without steel, no modern mechanicalengineering. And without copper and aluminum,no hardware for digital and electronic products oreven power lines. Pressure on the internationalraw materials markets drives up prices everywhere – and reveals the danger of national over-Share of Europe’s aluminum,c­­opper and zinc supply comingfrom recycling
Sources: KU Leuven;
Eurometaux

CLEAN ENERGY =CLEAN METALS
Global metal demand for clean
energy technologies in the year 2050
(in megatons)
CURRENT CLIMATE POLICIES45 MT

HIGH CLIMATE AMBITION
75 MT

Sources: KU Leuven;
Eurometaux

dependencies on individual suppliers. In Germany, for instance, aluminum and magnesium arelargely sourced from China and Russia. To reducethese dependencies and achieve a lower carbon
footprint, more metals will need to be recycled.
A study by the Belgian University of Leuven, commissioned by the European Nonferrous
Metals Industry Association, concludes that “recycling is Europe’s most important opportunity
to strengthen its long-term self-sufficiency.” By
2050, it could cover 45 to 65 percent of Europe’s
base metal needs and up to 77 percent for battery
metals. Recycling could even provide a surplusof REEs. “Europe’s clean energy system will rely
on durable metals that can be preserved indefinitely in a circular economy,” the report says.
“Germany has a long tradition of recycling
recyclables,” says Adriana Neligan, economist
for environment, circular economy and sustainability at the German Economic Institute(IW). In a survey conducted by IW, three out

ustr
ecyclel lithiand A
ttery rHabBmmercia 22.
:
n
G
m
e
S
o
e
c
r
M
g
y
S
in 20
tals
rer
r-da
ingme manufactu
many
ns-pe
r
o
e
t
G
0
t
#turn
1
s
a
nt
we
en plapened
north
betwe ometals, olant in
p
g
n
e
N
cli
Y
group attery recyhb
eal wit
MPAuN
n
io
O
ralia
tion d
C
t
a
s
r
um
k
e
A
a
p
,
arm
coo
etals
ned a
ry of cNeomalso sig ned subsidia tter's tech
s
iu
b
Primo
olly ow will be the la ion of at
R a whdTnstrucr
LICULA es-Benz, an
TMENSand co nheim, nea
d
e
g
E
c
r
in
V
e
n
IN OJECT ith
er M
uppe
e planeer in th
nt in K m R&D agr
PR Primobius w rrpartne ecycling pla
n
e
t
io
ure
r
long
nerat
y
enture
e
e
r
v
g
h
e
t
t
t
nufact
t
t
in
x
ba
Jo
ithin
nt ma
enle ne
v
la
W
c
p
y
.
t
c
e
n
in
e
h
a
r
u
jo
ill
Germ
KarlsrSMS
ass. Thebius w
mistrie ach (NRW) w
Primo.
ment, ats and chebnch
Hilcheresearrm
cell foased in ee years of
b
ud
o
is
r
p
h
S IN
r
hic
th
e are
W
“
TION Y:ture, w by around
A
id
to
a
u
C
s
a
d
O
e
e
d
N
h
L
e
e
R
A heimin t
preced ls’ MD Chris
ames
ard
n
GERchM
test nKuppe
nt tow
eta
a
,
e
e
m
r
m
o
g
a
it
e
b
e
N
y
m
n
r
h
e
t
e
m
h
t
o
c
f
t
a
Hil
ar c
ne o
hium be a clethat ong.” Lit resources,
s mad
li
a
c
h
y
y
c
r
e
t
r
of
indus
atteryY
ation
nce,
able bonserv hain resilie s
PACitIhTcapacityAsustain “supports c
c
it
C
ly
in
p
p
s
w
su
de
ng
nt
ay
ng plaMerce
recycli ization andRecycli 0 tons per dassist
n
o
o
t
b
r
.”
d
a
1
ls
c
e
f
o
it
ia
r
de
c
e
x
t
e
a
e are
ed m
and w use recovererogoal tof five German manufacturing companies said
they were working on internal recycling strategies. “Many recycling structures are alreadyin place that companies can now build on. In
this respect, Germany is further ahead thanvery many other countries; we are not startingfrom scratch, as recycling has a long tradition.”
The topic is gaining additional momentum thanks to the European Green Deal andthe reform of the EU’s Ecodesign Directive.
“Policymakers in Germany also see the circular economy as an important success factor
in the shift to a climate-neutral economy,”
says Neligan.The German government offers
incentives to support the transformation to acircular economy, such as the DigiRess program, which helps companies harness thepotential of digital solutions for streamlining
resource-efficient production and circularvalue-creation processes. The Minister for
Economic Affairs and Climate Action, Robert

Habeck, has indicated that circular economy
quotas and a new fund for financial aid are in
the works. He’s also planning to set up a fundjointly supported by the state and the private
sector to provide equity, loans and guarantees
to finance projects for raw material extraction,
processing and recycling.

CONTACTraphael.goldstein@gtai.com
GTAI expert for industrial
decarbonization

CONTACTnicolas.brahami@gtai.com
GTAI expert forenvironmental technologies

Photo: Rattanachat/stock.adobe.com

40 55%

ETALS
M
O
E
E: N
ture
ECTIV
int ven g
P
jo
S
a
,
R
s
inin
obiu
FDI PEr Primalian m26

MARKETS GERMANY | MediaLights, Camera,
BACK IN ACTION!
The coronavirus pandemic may have temporarily shut down production in theentertainment industry, but it turned out to be a boon for visual effects and virtual
production studios in Germany. It’s a story that’s good enough for Hollywood!

p/dvon Jutrczenkandpicture lianceal

The virtues of virtual
Rather than relying on green screens and lots ofpost-production, virtual production shifts the
VFX work to the front of the schedule. It allowsaIn the Netflix series 1899, passengers
aboard a steamship sailing from Europe
to New York encounter a second vessel
seemingly abandoned in the Atlantic Ocean.
The unexpected discovery unleashes a nightmare.
The supernatural, historical drama series
from the creators of Dark, Baran bo Odar andJantje Friese, wasn’t filmed at dozens of locations or on a traditional soundstage. It was filmed
entirely on a virtual stage in Potsdam – a first inGermany. Called the Dark Bay, the production
facility opened on the lot of the legendary Studio
Babelsberg in 2021 and is now one of the largest of
its kind in Europe. Ironically, while the pandemic
crippled live film production in the short term,
it also accelerated the demand for streaming options and virtual production processes.
This capacity for state-of-the-art visual effects (VFX), combined with Germany’s ample
grants and loans for entertainment production,
is making the country increasingly attractive
for international production companies. “Germany offers filmmakers from all over the world
excellent conditions which allow them to realize
their ideas creatively using state-of-the-art technology,” Claudia Roth, the government’s commissioner for culture and media, said recently.
“International filmmakers have been choosing
Germany as the place to make their films formany years. For good reason: Our country not
only offers a variety of different locations but
also modern film studios with innovative andcutting-edge technology, providing impressive
backdrops for all genres of films and series.”

er
:B
Photo

»Germany ­offers
filmmakers
from all over theworld ­excellent­conditions.«
Claudia Roth, German Commissioner
for Culture and the Media

filmmakers to segue between real and simulated worlds without any restrictions and resultsin more accurate scheduling, budgeting andproduction planning. Expensive travel budgets
can be slashed when you build the worlds in
3D. Arduous post-production VFX are replacedwith real-time effects that envelop the actors.

THE BOTTOM LINE
In addition to offering substantial national and regional funding for film and TV production,
Germany has a cutting-edge
virtual-studio and experienced
visual FX sector attracting
scores of international entertainment producers.

The first show produced entirely on virtual sets,
The Mandalorian, was released to great acclaim
at the end of 2019. It was made in Los Angeles.
At that point, virtual studios were already being
set up in many places around Germany. After
receiving funding from Brandenburg’s Ministry
for Economic Affairs, Labor and Energy, Dark
Bay secured its future by winning a long-termbooking commitment from Netflix, although
the studio remains bookable for all.
Dark Bay has a massive round wall of LED
lights and a modular LED ceiling, allowing
filming to take place in any world the creators
imagine. Its revolving stage is nearly 21 meters
in diameter, allowing for scene changes of complete sets in just three minutes, and water fixtures further expand options for combining thereal and the virtual. “The revolution of virtual
production is in its infancy but growing quite
rapidly,” says Austrian producer Joe Neurauter.
“It’s clear that in the future audiovisual content will be made quite differently than how
it is today.”
Neurauter’s production firm, which isbased in Munich and Los Angeles, is called
Occupant Films. It has produced several hits,
including Guns Akimbo with Daniel Radcliffe.
Recently, when trying to book a location forthat film, the narrow production time frame
didn’t allow the company to use the facility
they had expected.
But that gave Neurauter and Jörn Siegele, the CEO of Germany’s largest film vehicle
renting company, an idea. Penzing Studios – acutting-edge facility at a former airfield about
an hour from Munich – was born. It includes
the Hyperbowl, Germany’s first virtual production stage, established in March 2020. The
Hyperbowl’s virtual stage measures 20 by 14.5
meters, with a full sky and a curved horizon

MARKETS GERMANY | Media

27

€ 365

The Mandalorian was thefirst series to be produced
entirely on virtual sets.
It was released in 2019 tocritical acclaim.

millionGermany’s total national andregional budget for film
funding in 2021

Source: GTAI

THE PROMISE OF VIRTUAL
PRODUCTION
Global market size of virtual ­production inbillion US dollars. Virtual production allows
filmmakers to segue between real and simulated worlds seamlessly.
2021
1.6

2030
6.8

LED wall of 40 by 5.5 meters. The facility has
been used by advertising and gaming clients
as well as for film and TV productions.
Penzing Studios is expanding the facility
with Norwegian architecture firm Snøhetta
to become a creative and digital media hub
for post-production, visual effects, gaming,
digital media and technology companies, withan event center and accommodation. They
anticipate creating more than 1,000 new jobs
by 2025.

Funding to support productions
Germany is increasing its financial support
for creative media productions. The German
Federal Film Fund (DFFF) and the German
Motion Picture Fund (GMPF) awarded a totalof EUR 147.4 million in 2021, an increase of
EUR 11.9 million from 2019. That funding
helped cover a remarkable EUR 740 million spent on German production costs, up
EUR 35 million from 2019. Producers canalso get financial support from the organi-zations German Federal Film Board (Filmförderungsanstalt, or FFA for short) andGerman Film Foundation (Stiftung Deutsche
Kinemathek).
The total funding available from all national and regional film incentives combined was nearly EUR 365 million in 2021.
The Medienboard Berlin-Brandenburg, forexample, expanded its funding for virtual film productions in 2022-2023 to EUR
9 million.

Photo: Star Wars The Mandalorian/Disney Media & Entertainment

Source: Grand View Research

28

MARKETS GERMANY | Media

Photo: Studio Babelsberg AG/Presse

R S PEF D I PE E
IT
CIN E S

:
CTIVE

irm
VFX f
ased
b
ed
s
n
a
o
b
Lond
nich,
u
8
M
1
0
red
rk inIn 2
acqui
le wo
e
b
t
a
i
t
s
o
e
ming,
Cin
se n
omeco
, who
H
r
r
:
e
t
n
x
a
i
Tr
ivil Wa
er-M
erica:­Cs Spid
m
e
A
­
d
in
lu
c
pta
an, CaAnt-M Man 2.
on
ic repand Ir
antastfasaualitymh
ter teahigh-q ngix
g
r
T
in
c
e
“Th
alo
produ
design anin for
acter
r
e
a
utatio
r
h
u
c
t
,
d fea
pt artFX aner, we
conce
t
V
ix
x
r
T
le
with
omp
g
in
r
ctive
e
side c
je
partn
ic ob
g
In
e
.
t
n
a
r
ion inmatio
our stt posit nd
uting
e
c
k
r
e
a
x
e
are
our m
ation aancing ts and animgcof enhefamazinf
isual e
of an
h
v
it
ic
h
f
t
n
e
o
u
b
ben
le in Mg thef peop EO Antonyogettin
m
a
e te
ite C
logy
creativ ,” says Cines
techno d
n
r,
li
e
r
f
s
e
n
B
and
es an
ls trahe skilesourc
r
T
“
d
.
al
t
e
r
n
Hu
, sha
nationration ss our inter
o
s
b
m
a
a
ll
co
ur te
acro
to all o y creaches
s
o
r
it
f
p
e
p
a
he
ben
work ts bringastudio uality of the
taken
s
a
h
eq
s
esite
m
in
ir
C
f
,
and th
n
X
al VF
e the
c
b
in
lo
S
g
it
nal
ing s
ate.”
additio dios, expand
in
e
k
sta
n stu
imatiorther.
and anven fu
e
h
c
a
e
r
l
globa

Foreign investment flowing in
A number of German production studios
have also been acquired by foreign corporations in the past few years. London-based
VFX firm Cinesite acquired Trixter in 2018.
The Munich-based post-production company
has collaborated with Marvel Studios to bringmemorable characters to life, including Iron
Man, Black Panther, Rocket and Baby Groot.
And US streaming giant Netflix has madelarge investments in German production.
When Chairman Reed Hastings attended
the opening of Netflix’s Berlin office in September 2021, he pledged that the company
would spend EUR 500 million on TV showsand movies produced in Germany, Austriaand Switzerland over the next three years.
In late 2021, Netflix announced it was
acquiring Scanline VFX for an undisclosed
amount. The firm, founded in Munich in 1989,»The revolution ofvirtual production
is in its infancy
but growing quite­rapidly.«
Austrian producer Joe Neurauterhas worked on a number of Netflix projects,
including Stranger Things, Slumberland andCowboy Bebop, as well as award-winning projects Game of Thrones and The Suicide Squad.
But while it’s an exciting time for the entertainment industry, it’s also a challenging

one. As virtual production is so new, there arevery few global teams that have established
end-to-end workflows. “Some big project leaders try to keep that info proprietary to staycompetitive, but we need different disciplines
to collaborate,” Neurauter says. “People arecoming up with new iterations and figuring
it out. There is a new crop of filmmakers andtalented crew entering the space.”
That collaboration is paying off – a USD
70-million remake of The Crow, directed by
Rupert Sanders and filmed in part virtually at
Penzing Studios, is the biggest international
production ever filmed in Bavaria. “Many producers and financiers think Germany is too
expensive compared to eastern Europe, butthey should all take a serious second look,”
Neurauter says. “For the right project, there
are real advantages to Germany.”

CONTACToliver.wilken@gtai.com
GTAI digital expert

Called the Dark Bay,the production facility opened on the
lot of the legendary
Studio Babelsberg in
2021 and is now oneof the largest of its
kind in Europe.

al

fisc
sales in
Gross ear 2021
y

+
0
0
0
,
2
X

VF
rking inowlePeop globally376

inctionsProdu

rs
30 yeaThe German actress Emilia
Schüle in Traumfabrik,
which was produced inBabelsberg.

FINANCIAL SUPPORT FOR THE GERMAN
FILM INDUSTRY
Total sum of financial support for the film industry in 2019 and 2021 by
the German Federal Film Fund (DFFF) and the German Motion Picture Fund
(GMPF) in million US dollars
2019

2021
147.7

Source: German Commissioner for Culture and the Media

GMPF
Europe uses 9 percent of all microchips produced worldwide,and 37 producers of films, high-end TV and video-on-demand (VoD) series in Germany can apply for a grant of up to
EUR 10 million from the German Motion Picture Fund, basedon local production costs.

GERMAN STREAMING MARKET­REVENUE FLOWS
The coronavirus pandemic led to a dramatic expansion

2018

2019

2020

2021

1,201

1,577

2,044

2,485

Source: Grand View Research

Subsidies and tax credits from both national and regionalsources in Germany can be combined to have the maximum
effect on a production’s budget.
DFFF II
This grant offers funding for VFX and production services
carried out in Germany. Films spending at least EUR 8 million
in Germany out of a total budget of at least EUR 20 million
can claim 25 percent of the German spend, up to EUR 25
million per project.

135.5

Turnover withstreamedmoviesFUNDING FOR FILM AND TV
PRODUCTIONS IN GERMANY

FFF in BavariaInternational productions with a German coproducer may
qualify for a conditionally repayable loan for 30 percent offilm and series production costs, up to EUR 2 million in total.
MBB in Berlin-Brandenburg
Film, TV and media productions in Berlin and Brandenburg
may qualify for a conditionally repayable loan of up to 50
percent of total production costs, up to EUR 1 million.

Photo: Studio Babelsberg/ARRI Media Productions/Pantaleon Films/TOBIS Filmproduktion/herbX

M
9
.
9
8
£

30

MARKETS GERMANY | Agriculture

K&P Hendlhof uses
ethical and sustainable breeding methods
for its poultry.

Photo: picture alliance/Jeff Mangione /KURIER/picturedesk.com

EVOLVINGGERMANY’S­AGRICULTURE
Germany is shifting to a more sustainable agricultural model – the ­coalition
government plans to triple the country’s organic ­farmland by 2030. That means
fertile ground for international solutions providers, ­machinery ­manufacturers
and biofertilizer and feed producers.

STRONG SUSTAINABLE AGRICULTURE TRENDS IN GERMANY

4

1

3

From year to year, the proportion of agricultural land in Germany used for or-

In 2021, the market for organically produced food in Germany grew by 5.8

ganic farming is increasing. In 2021, around 11 percent of cultivated land waspercent. That year, Germans also spent a total of almost EUR 16 billion on

farmed organically. The government’s target is 30 percent by 2030.

organic food and beverages.

Animal husbandry

Meat alternatives

Organic farming

2

Organic food4

Demand for organic meat in Germany now exceeds domestic supply. In 2021,

In 2021, companies in Germany produced 98,000 metric tons of meat sub-sales of organic beef and pork increased by 20 percent, and organic poultry

stitutes worth EUR 458 million. Compared to the previous year, production

by 10 percent. The only limit on market growth is supply.

therefore increased by 17 percent.

MARKETS GERMANY | AgricultureG

erman Agriculture Minister CemÖzdemir thinks the time is ripe forchange. “We are united in the German government,” says Özdemir, a Green Party
veteran who is now part of a coalition government with the center-left Social Democrats andbusiness-friendly Free Democrats. “We want
to transform our agricultural and food system
sustainably with 'organic' as our guiding principle for sustainable agriculture. More organic
farming is needed now, not less.”
Right now, only about 11 percent of German
farmlands is devoted to organics. The aim is
to increase that figure to some 30 percent by
2030. The government also wants to promotesustainable livestock husbandry. From now
on, pork labeling will have to provide transparency about the way the animals are kept,
for example. In addition, CO2 emissions fromlivestock farming – which account for aroundhalf of all agricultural emissions – are to besignificantly reduced.
Germany may be known foremost as anindustrial nation, but half of its land area (some17 million hectares) is used for agriculture. The
reforms therefore entail nothing less than arapid overhaul of the country’s entire – andvery lucrative – agricultural system.
Fantastic growth potential
This top-down drive toward sustainable agriculture opens up new business opportunities forcompanies from various sectors. For example,
growth opportunities are also opening up in Germany for manufacturers specializing in biofertilizers and for producers of ecological animal feed.
Or take the agricultural equipment sector:
When the use of chemical fertilizers and weed
killers is restricted, farmers will need new machinery to fulfill those functions.
To support food producers in this transition, the Landwirtschaftliche Rentenbank,
Germany’s development agency for agribusiness and rural areas, has launched a four-year
program offering subsidies of up to 40 percentof costs for businesses investing in organic
farming.

»In the coming
years, the proportion of organicallyraised animals inGermany will increase, and with
that, the demandfor organic feed will
also increase.«hanna Treu of the German organic foodindustry federation BOLW

Companies in the agricultural equipment
manufacturing sector, such as Sweden’s Lyckegård Group, which specializes in organicand sustainable technical solutions that reduce
the need for herbicides and pesticides, see thisas a great growth opportunity. “The demand
for sustainably produced food is increasing
throughout Europe,” the firm says. “Our products will play an increasingly important rolefor farmers who want to decrease their use ofchemicals.”

THE BOTTOM LINE
Government directives andchanging consumer tastes are
driving demand for organic
farming and animal husbandry in Germany. Manufacturersof farm equipment and feed
can profit.

Macrobiotic feeding frenzy
Strong growth is also predicted for organic feed.
“In the coming years, the proportion of organically raised animals in Germany will increase,”says Hanna Treu of the German organic foodindustry federation BOLW. “And with that, thedemand for organic feed will also increase.” Already, the demand for these kinds of products inGermany is greater than the amount produced
domestically, and farmers rely on imports. “Iforganic farming triples, there is enormous
potential here for feed producers within theorganic circular economy,” says Treu.
Growth expectations for the sector are fueled
not only by government targets but also by thechanging preferences of German consumers. Demand for organic food in Germany has for a longtime exceeded the country’s capacity to supply.
And more and more German consumers are looking for organic labels when shopping for food.
With sales of around EUR 16 billion in 2021,
Germany is Europe’s largest organic food market. 2021, demand for organic meat alone roseby almost 20 percent. Overall, the organic foodsector recorded an increase in sales of EUR 880
million in 2021. The organic share of the total
food market rose to around 7 percent. Furthermore, the sector is more profitable than it used
to be: On average, organic farmers achieved
around 9 percent higher revenues in 2021 thanin the previous year.
“For several years now, people in Germany
have been placing increasing value on healthy aswell as ecologically and animal-friendly food,”says Daniel Lindel, GTAI industry expert for the
food industry. “This is a trend that is set to grow.”
To meet rising demand and achieve government goals, Lindel expects the pace of change
in agriculture to accelerate in the coming years.
“That opens up a lot of opportunities for innovative companies.”

CONTACTdaniel.lindel@gtai.com
GTAI food expert

31

32

MARKETS GERMANY | Healthcare

NEW DIMENSION
in Medical Technology
Germany is Europe’s leading medical technology market. It’s also home to24 percent of the world’s additive manufacturing companies. Increasingly, those
two fields are coming together, which bodes well for international suppliers.

Every year in Germany alone, for a variety of medical reasons, some 60,000
people have to undergo amputations.
Around the world, there’s a vast demand forprosthetics, which are critical for rehabilitation and patients’ ability to get on with theirlives. And a need exists as well for innovative
solutions to produce artificial limbs.
Additive manufacturing is radically changing the production of medical hardware gener-

THE BOTTOM LINE
Additive medtech manufacturing is a growing trend thatcombines two traditional German strengths. International
molding and medical instrumentcompanies have expanded into
Germany with great success –but there’s room for more.

ally. The greater flexibility of design and adaptability it offers have made bespoke treatments
based on patient-specific data a reality. Afterall, if prosthetics are to increase a person’squality of life, it’s better if they’re custom fit.
One company involved in the convergenceof medtech and additive manufacturing is theAmerican firm Formlabs. Its Selective Laser
Sintering (SLS) printer, called Fuse 1, makes
3D medical printing simpler and more afford-

Precision additive­manufacturing is thestate of the art in­dentistry

Photo: Formlabs/Press.

MARKETS GERMANY | Healthcareable. And it’s found a solid base in Germany.
“Our headquarters are in Boston, but our
EMEA location in Berlin has been growing
rapidly since 2015 – thanks to the high availability of young international talent here aswell as the excellent start-up ecosystem andthe distinctive 3D printing community,” says
Stefan Holländer, Formlabs’ managing director for EMEA.
In 2017, GE Additive, part of the US multinational General Electric, opened its new Customer Experience Center in Munich to showcase its 3D printing operations. “Germany is apioneer for the entire additive manufacturing
movement, so it was no coincidence we chose
Munich to open our first center,” said GE Additive’s Robert Griggs at the time.
GE Additives’ subsidiaries include theMunich-based 3D metal printer manufacturer Concept Laser, which develops machines
for use in the medical and dental industries.
Formlabs and GE Additives are two membersof an incredibly agile business sector.
Collaborations galore
Germany’s medical hardware printing sector
has been attracting major foreign business
investment from the US, Japan and China recently. In 2022, America’s 3D Systems acquired
Munich-based Kumovis, which specializes
in personalized healthcare applications. Its
unique technology was specially developed
for the precision printing of medical-grade,high-performance polymers used for humanimplants and surgical instruments.
The Lübeck-based SME SLM Solutions, a
global provider of metal additive manufacturing solutions for a wide range of industries, including healthcare, recently agreed
to become part of Japan’s Nikon Group.
Chinese molding equipment manufacturer Yizumi is also eyeing Aachen (which
it describes as a global “heartland of plastic
machinery technology”) as a location for oneof its main overseas sites. Established in 2017,
Yizumi’s German subsidiary was set up to
focus on R&D and advance cooperation withresearch institutions for the whole group,
and is described by its chief strategy officer,
Hans Wobbe, as an “innovation engine.”

PROJECTED 2023
REVENUE FOR ADDITIVEMANUFACTURING

Global:€ 21.5billionGermany:€ 2.4
billion24%

Share of all additive manufacturing companies worldwide
that have headquarters inGermany

Why Germany?
Germany’s extra-university research network
has made the country a particularly attractive
location. The Fraunhofer Society’s additive
manufacturing activities alone span 19 institutes across Germany, covering the entire
process chain. GE Additive recently joined
EOS as well as Audi and Siemens in planning
the Bavarian Additive Manufacturing Cluster(BAMC), which aims to further support theindustrial proliferation of 3D printing.
In Bavaria, the regional government isplanning to invest up to EUR 500 million totransform the Max Planck Society’s MartinsriedCampus into a leading international research
hub for taking 3D printing to new levels. Biomedical researchers at the campus are working on the development of new technologies,
including 3D printing biological components,
molecular design, robotics and artificial intelligence.
Meanwhile, Berlin’s economic development agency has set up an innovation platform called Additive Manufacturing Berlin
Brandenburg (AMBER) to support the sector
in the region.
“Germany is the ideal transformation platform for 3D printing: from research and dual
training to highly specialized and globallyunique product and production skills,” says
Professor Claus Emmelmann, advisory board
member of the industry association Verband
3DDruck and head of the iLAS Institute of Laserand System Technologies at the Hamburg University of Technology. “After the manufactureof prototypes and small series with plastics
was established, a technological leadershipfor metallic 3D printing has developed in thelast decade.”
These applications include pioneering 3D
printing in medical technology, such as endoprosthetics and dental products, Emmelmann
adds.

CONTACT
Source: Bitkom Research 2021/GTAI

gabriel.flemming@gtai.com
GTAI medtech expert

33

»NORWAY IS KEY TO SUPPLYING GERMANY
WITH ENERGY.«
With Russian supplies politically off the table, Germany is turning to Norway for more natural gas imports. Michael Kern, the managing director of the Norwegian-German Chamberof Commerce, describes how economic relations between the two countries are developing.
What is the current situation with Norwegian gas imports to Germany – i.e. in thelast quarter of 2022?
MICHAEL KERN: Norway has in fact alreadyincreased gas deliveries to Germany. Even in
2021, 43 percent of Norway’s total gas exports
went to the country, and if production and delivery capacities are increased in favor of gas
over oil, it could provide even more. In August
2022, Germany covered 38 percent of its gas
needs with Norwegian imports.

What sectors in Germany are most interesting from a Norwegian perspective? Is GTAI’s
industry expertise helpful?
MK: Machinery and equipment remain very important and represent the largest segment of Norwegian imports from Germany. Chemicals are also
very significant. Renewable energy, digitalization,and e-health are all sectors worth investing in for
the future. GTAI supports knowledge gathering,and Norwegian companies have praised the help
they’ve received.

How do Norwegians view Germany? How
does Germany Trade & Invest support its
image in this respect?
MK: Germany has a good reputation in Norway
as a competitive, efficient country with a stableeconomy. Germany is a major partner of Norway
in terms of exports and industry. Norway recently
presented its plan for a transition to green industry, emphasizing enhanced economic activities inareas like hydrogen, offshore energy, CCS, battery
production and maritime technologies. There’s
lots of crossover with Germany and the German
economy. In order to scale up these areas, Norway
needs strong economic partners in Europe. With
its overviews of markets and reports on businessexpansion possibilities, Germany Trade & Invest(GTAI) plays an important role here.

What makes Germany a particularly attractive business location for Norwegian companies?
MK: Germany is one of the world’s largest markets.
It’s very productive and has a lot of innovation.
That makes Germany very interesting for Norwegian companies. In addition, Germany is a very
important political partner for Norway in Europe.
For many years, Norway has had a “Germany strategy,” which it constantly updates. It’s intended tofurther deepen the economic, political and cultural exchange between the two countries at all levels.
What sorts of Norwegian companies arethinking about expanding to Germany atthe present time?

MK: Without doubt those in the renewableenergy sector. The Norwegian company Statkraft is Europe’s largest producer of renewableenergy at the moment. The German market
is managed from Düsseldorf. For example, it
supplies the German rail company Deutsche
Bahn with green power. Norway is also a pioneerin e-mobility, and the country has a well-developed charging infrastructure. There havealso been business expansions into Germanyin this sector, for instance the charging infrastructure provider Mer and the fast-growing
Norwegian telecommunications firm BraCom.
The digitalized electricity provider Tibber has
also made the move to Germany.

CONTACT	mk@handelskammer.noMichael Kern, managing director, Norwegian-German Chamber of Commerce	gabriela.heinrichs@gtai.com
	
Executive Unit Strategic Partnerships (GTAI) and liaison to theGerman Chambers of Commerce
AbroadPhoto: AHK/Norwegen

Michael Kern is the managing director of the NorskTysk Handelskammer, the Norwegian-German Chamberof Commerce. He studied economics at the Universityof Kiel and is fluent in multiple languages. Prior to hiscurrent post, he worked for German Chambers of Commerce in Poland, Slovakia and the Czech Republic.

How Germany Works
SHAPE-SHIFTING MINISTRIESIn Germany, the names and areasof responsibility of government
ministries aren’t set in stone asthey are in many other nations.
The Ministry for Economic Affairs
and Climate Action (BMWK) is theperfect example. It began life as
the Ministry for Economics when
the Federal Republic of Germany was formed in 1949. It’s also

been known as the Ministry for
Economics and Technology, theMinistry for Economics and Labor,
and the Ministry for Economics
and Energy. It was also once halfof a super-ministry for 18 months– the Ministry for Economics andFinance. This fluidity reflects
the horse-trading that goes on
between political parties since,

as a rule, German governments
need to enter into coalitions inorder to achieve the parliamentary majorities. The many namechanges also manifest shifts inpolitical outlooks. The current
combination of economics withclimate protection expresses thepriorities of Minister Robert Habeck from the Green Party. In fact,

it’s the first time a Green has held
this office.
There are fifteen ministries intotal plus the Chancellor’s Office,which has the status of a ministry.
Along with the chancellor himself, they form what Germans call“the government,” distinguishingit from the parliament and otherstate bodies.

MINISTRY IN TRANSITION
Over the past 25 years, the ministry has evolved to encompass labor, energy and climate action.
2002

1998

2021

2005

MINISTRY FORECONOMICS

MINISTRY FORECONOMICS ANDTECHNOLOGYMINISTRY FORECONOMICS ANDLABORMINISTRY FORECONOMICS AND
ENERGYMINISTRY FORECONOMIC AFFAIRSAND CLIMATE ACTION

2013

BMWK EXPENDITURES
BY AREA IN 2023
IN EUR BILLION

2.4
Aerospace:
German Aerospace
Center (DLR) EUR
785 million,

The German Aerospace Center (DLR) and the new spaceindustry will receive the greatest share of BMWK funding thisyear, followed by innovation programs.

0.581

0.118

Agency (ESA)EUR 885 million

Innovationin hydrogenprograms

million of which
are earmarked
for SMEs

Industrial
research

685.5

6.2

EUR million
Predicted
income earned

EUR billion
Subsidy
expenditures

5.3

950

EUR billion
Investment
expenditures

EUR million
Personnel
expenditures

civil servants; more than half, 1,149, are women)international trade

118 million, 22.5

EUR billion
BMWK budget

Need to Know

shortages

0.25

13.05

0.7

EUR 223 million for

employees EUR

Tourism

uropean Space

Combattingof qualified

0.035

Globalization, incl.

The Ministry in
Numbers (2023)

Scharnhorststraße 34-37, 10115 Berlin, www.bmwk.de
Number of employees: 2,187 (1,633 are permanent
Six subordinate offices: Federal Cartel Office (BKartA),
Federal Office for Economic Affairs and Export Control(BAFA), Federal Network Agency (BNetzA), Federal
Institute for Materials Research and Testing (BAM),
German National Metrology Institute (PTB), Federal
Institute for Geosciences and Natural Resources (BGR)

At your service!

SET UP
BUSINESSIN GERMANY
Want to be part of Europe’s largest market? We’re your first pointof contact. Germany Trade & Invest (GTAI) provides international
companies looking to expand with free, reliable information on thelatest opportunities in the German market.

GET T­STAR INGTE­GERM D IN
ANY
Our experts ayGermany Trade & Invest (GTAI) is the foreign trade and inward
investment agency of the Federal Republic of Germany. We advise
and support international companies planning to expand into theGerman market and assist German companies seeking to enter
global markets. Our Investor Consulting Department provides
a wide range of information with the aim of facilitating thebusiness expansion process of foreign companies to Germany.

re ther
ou in ae to hll pha ­busin ases of estab elp
lish
ess in G
erman ingy.
www.ggtai-e tai.de/n/invest

Get in touch with our Investor Support Service Team

Our consulting services for international companies
looking to expand and seeking to establish an own
subsidiary or branch office in Germany include:• Assistance with finding the right site location for their business• Information on financing and incentives for businesses• Tax and legal information on setting up a company• Information, data and statistics about key industries in Germany
All investment-related services and inquiries are treated with theutmost confidentiality and are provided free of charge.

Sarah Gholiha
sarah.gholiha@gtai.com

Alexander Walter
alexander.walter@gtai.com

Germany Trade & Invest
Friedrichstraße 60, 10117 Berlin
T. +49 30 200 099-0
info@gtai.com