The German economy - an anchor of stability in Europe and how to attract FDI opportunities

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1 The German economy - an anchor of stability in Europe and how to attract FDI opportunities Hendrik Taulin Senior Investment Officer Embassy of Canada Germany Niagara Falls, September 10, 2017

2 Germany as we might all know it 2

3 There is pro and con to German precision and order 3

4 Germany the facts 82.7 million inhabitants (2016) Capital: Berlin Federal parliamentary republic 16 federal states GDP 2016: 3.5 trillion USD Unemployment rate: 3.8% (June 2017) 4

5 Germany an economic powerhouse in the heart of Europe Relations with fellow EU member nations are particularly strong. Customs duty exemptions within the EU allow free trade between the community's 28 member states By the end of 2015, 19 member countries had introduced the Euro as its common currency which has eliminated exchange rate risks which would otherwise prove an obstruction to bilateral trade Source: gtai.de 5

6 Germany commercially connected with the world Import of Goods (2015) Export of Goods (2015) Country of origin Euro bn Destination Euro bn country 1 China USA Netherlands France France UK US Netherlands Italy China Poland Austria Switzerland Italy Czech Republic Poland UK Switzerland Austria Belgium 41.3 Source: gtai.de / Federal Statistcs Office 6

7 Germany Canada 2015: 10 bn Euro of German goods exports to Canada, Canada is Germany s 15 th biggest trade partner outside the EU Machinery: 3bn Motor vehicles and parts: 3bn Pharmaceuticals: 885m 2015: 2.7 bn Euro of German services exports to Canada, Canada is Germany s 5 th biggest trade partner outside the EU 10,464 German companies export to Canada 73% of them are SME companies Total EU exports to Canada help to sustain 141,000 jobs in Germany and 865,000 in the EU German Foreign Direct Investment in Canada: 12.8bn Euro (2015) Canada is the 7 th most important destination of German FDI outside the EU Canadian firms hold 1.6 bn Euros in assets in Germany All figures: European Commission 7

8 Bilateral investments Companies from Germany Companies from Canada 8

9 Manufacturing the backbone of the German industry Almost 10 percent of Europe's manufacturing companies are German, which generate 30 % of the EU's gross value added in manufacturing alone In fact, they represent more than one fifth of all of Germany's value added one of the highest shares in Europe Increasingly more foreign companies are placing their faith in Germany as an essential location for production sites Share of manufacturing industry of EU- 28 (gross value 2015) Germany 30% Uk 12% Italy 11% France 11% Spain 6% Other EU countries 29% Source: gtai.de / Eurostat (2016), IW Koeln (2015) Productivity of manufacturing industries (2014) US 117 Netherlands 101 Germany 100 France 92 UK 74 Spain 73 Japan 64 9

10 The power of small? 10

11 The power of small! Exports are driven by Germany s backbone of highly innovative small and medium-sized enterprises (SMEs) These constitute 99.6 percent of all companies that employ almost 60 percent of all employees in Germany Company structure in Germany Total SME SME share Number of 3.64m 3.62m 99.6% Companies (2015) Turnover of companies 6,085 bn 2,160bn 35.5% (2013, in Euros) Employed (2013) 27.25m 16.14m 59.2% Net Value-added (2013) 55.5% Only 1.2 % of the world population is German, however, 48% of the mid-sized world market leaders are from Germany Source: gtai.de / ifm Bonn (2016) 11

12 Germany s Hidden Champions are also known as the Mittelstand have created 1.5 million new jobs have grown by 10% annually on average account for about 25% of total German exports register 5 times as many patents per employee as large corporations are resilient: In the last 25 years, no more than 10% have disappeared significantly impact the fact that nearly a quarter of the German GDP continues to come from manufacturing Source: Simon Kucher & Partners 12

13 A Hidden Champion is a company which is among the Top-3 globally in its industry and No. 1 on its continent making annual revenues of less that 5 billion euros normally little known to the general public very often to be found in Germany: more than 1,300 of the world s total of more than 2,700 are German is present globally in its target markets with 30 subsidiaries on average is very often located in remote areas of Germany Source: Simon Kucher & Partners 13

14 Lessons learned 1. Very ambitious targets regarding market leadership and growth 2. Narrow definition of markets and deep work into value chain 3. Globalization 4. Innovation 5. Be close to the customer 6. Loyalty and highly-qualified employees 7. Leadership Source: Simon Kucher & Partners 14

15 Germany you have to deal with it 15

16 Working with Global Affairs Canada in Canada and abroad Priority Sectors Priority Markets Agrifood: Food Processing Americas: United States, Brazil Advanced manufacturing: Automotive, Aerospace and Defence, Machinery and Equipment Asia: Japan, China, South Korea, India, Taiwan, Australia Chemicals and plastics Europe: Netherlands, United Kingdom, Clean technologies: Renewable-energy Belgium, Luxembourg, Switzerland, technologies, Environmental France, Germany, Norway, Sweden, technologies Finland, Italy, Denmark, Spain, Austria, Israel Information and Communication Technology: Digital media, Software, Wireless Communications Life Science: Biopharmaceuticals, Medical devices Services: Business services, Financial services 16

17 The Investment Team at your Embassy in Germany is pleased to work with you! Proactive Investment Development with a strong focus on innovative investment: Detlef Engler Hendrik Taulin Edouard Huot Automotive, Advanced Manufacturing Aerospace, Advanced Manufacturing Life Sciences D. Engler/H. Taulin Energy Industry, Including Renewable /A.Ulland Energies Intensive interaction with our partners (municipal, provincial, federal) is essential! 17

18 Our counselling approach Site Selection Location Costs Soft Facts Incentives Site Specifications Site/Infrastructure Efficiency Direct Infrastructure Labour Related Quality/ Availability of Labour Indirect Business Geography Taxes Quality of Life Challenges Financing 18 18

19 Invest Canada-Community Initiatives (ICCI) What is ICCI? Contribution program to help Canadian communities and non-profit locally-based organizations to attract, retain and expand Foreign Direct Investment (FDI) Provides matching funds of up to 50% of eligible expenses for approved FDI projects Non-repayable contributions range from $3,000 to $300,000 ICCI only supports FDI initiatives ICCI supports initiatives that promote and sustain foreign direct investment in Canadian communities. Initiatives must be directed towards foreign investors or foreign investments. Attracting investors from within Canada, promoting Canadian businesses, or mergers and acquisitions are not part of the scope of the program 19

20 More information on 2018 cycle of ICCI For 2017, the application cycle saw 222 projects submitted from 91 communities for a total ask of CAD 4.9m Finally, 166 projects from 77 communities were funded at CAD 3.5m The 2018 was launched on Sep 5, the application deadline is Oct 19 at 3pm Webinars are hosted in September to share best practice regarding the application process Contacts: christine.laberge@international.gc.ca kimberly.rouleau@international.gc.ca Info: 20

21 Our offer to you Investment strategy input re: Germany Cultural and market briefing on Germany Thorough and prompt follow-up Client and network referrals, where appropriate A relationship of confidence A long-term, two-way partnership 21 21

22 Good luck with the Germans! 22

23 Thank you! Herzlichen Dank! Hendrik Taulin Leitender Beauftragter für Investitionen Botschaft von Kanada Leipziger Platz Berlin Tel.: (030)