ISRAEL & GERMANY: Strong Partners Strong Business

Chris Schmidt - istockphoto ISRAEL & GERMANY: Strong Partners Strong Business Industry Forum on Security Technology and Chemicals Dr. Jürgen Friedrich Chief Executive Germany Trade & Invest Tel Aviv, December 14, 2011

I. The Company s Profile: About Germany Trade & Invest II. Israeli-German Economic Relations III. Eastern Germany: Advantages as a Business Location IV. Eastern Germany s Emerging Industries V. Contact Tel Aviv, December 14, 2011 www.gtai.com 2

The Agency Germany Trade & Invest is the foreign trade and inward investment promotion agency of the Federal Republic of Germany. The agency is promoted by the Federal Ministry of Economics and Technology and the Federal Government Commissioner for the New Federal States in accordance with a German Parliament resolution. Germany Trade & Invest supports export-oriented companies based in Germany with comprehensive foreign market information. promotes Germany abroad as a high-performance economic and technology location in order to attract investors who create/secure jobs in Germany. consults potential foreign investors in terms of their settlement plans and realizes the required project management support in Germany. An additional special focal point of activity lies in promoting the economic development of the new federal states including Berlin. Tel Aviv, December 14, 2011 www.gtai.com 3

Focus Eastern Germany The unique situation of the New Federal States in Germany results from their history. In the more than 20 years since the fall of the Berlin Wall, both the German State and business have invested successfully in infrastructure. As a result, Eastern Germany is now one of the most attractive locations for foreign investors. This special region offers access to a modern logistics and communications network, an excellent R&D landscape, a highly-qualified and motivated workforce, comparatively lower costs, and some of the most attractive federal and state investment support packages available in Europe. This makes Eastern Germany a cutting-edge field at the heart of Europe. Tel Aviv, December 14, 2011 www.gtai.com 4

How We Support You Germany Trade & Invest closely supports you throughout the process of establishing a well-operating business in Germany. Steps to establish a business Idea Preparations Founding Start Growth Germany Trade & Invest s Information and Consulting Services I. Project Management Assistance Joint project management with regional development agency Market research & market entry strategy II. Site Selection location factors Cost factor analysis & Site visits Support in final location decision III. relevant tax and legal issues Entry & visa regulations Choice of company form Tax issues & company structure Employment & social security law IV. Financial Consulting business opportunities financial solutions Consulting on government funding and available incentives programs V. Finding Business Partner Project partner identification and contact Contacting lawyers & local authorities Supporting meetings with authorities Contact with employment agencies Tel Aviv, December 14, 2011 www.gtai.com 5

I. The Company s Profile: About Germany Trade & Invest II. Eastern Germany: Advantages as a Business Location III. Israeli-German Economic Relations IV. Eastern Germany s Emerging Industries V. Contact Tel Aviv, December 14, 2011 www.gtai.com 11

Eastern Germany: Advantages as a Business Location The strengths and potential inherent in Eastern Germany provide investors with numerous arguments to choose Germany as a Business Location. Global Player Quality of Life 10 1 2 Leading Economy Secure Investment Environment 9 3 Excellent Workforce Competitive Tax Conditions 8 4 Power of Innovation Inviting Incentives 7 5 High Productivity 6 First-Class Infrastructure Tel Aviv, December 14, 2011 www.gtai.com 12

Advantages as a Business Location Global Player Germany is the focal point for goods and services in Europe. Leading Economy Germany is Europe s largest market. Excellent Workforce Germany has a well trained and highly motivated workforce. Thanks to stable labor relations, German workers rarely go on strike. Germany has the most stable labor costs in Europe. Eastern Germany offers a highly industrialized investment location with the lowest labor costs in western Europe. Power of Innovation Germany is the global number one in creating innovations for the future. Germany has one of the highest productivity rates in Europe. Tel Aviv, December 14, 2011 www.gtai.com 13

Advantages as a Business Location High Productivity Germany has one of the highest productivity rates in Europe. First-Class Infrastructure Germany s highly advanced infrastructure is leading in Europe. Germany s logistics strength is confirmed by the World Economics Forum s Global Competitive Report 2009-2010 in which the German economy took first place for infrastructure. Inviting Incentives Germany offers competitve incentives packages to reimburse an investment project s expenditures. To reduce capital expenditures, Eastern Germany offers investment grants of up to 50 percent for investors, depending on the region and the company size. Competitive Tax Conditions The 2008 reform of German company tax law has reduced the average tax burden for corporations from 38.7 % to 29.8 %. Tel Aviv, December 14, 2011 www.gtai.com 14

Advantages as a Business Location Secure Investment Environment Germany provides a solid base for investment projects. Office Rents Eastern Germany offers low office rents and provides a competitive environment for investors. Company Setup Times In Eastern Germany investors will find low levels of bureaucracy and fast approval procedures involved in establishing new operations. Tel Aviv, December 14, 2011 www.gtai.com 15

Advantages as a Business Location Besides ideal investment conditions Germany offers best living conditions. Scenic Attractions 2,389 km of beautiful coastline, 20 mountain ranges, 125 natural landscape protection areas and 10,200 km of bicycle tracks to ride through all of it Cultural Devotion 80 operas, world renowned symphonic orchestras, 5,600 museums and over 550 annual classical festivals attracting million of people Hearty Cuisine 1,250 breweries with more than 5,000 different kinds of beer along with sausages and more than 300 different kinds of bread Recreational Activities 12,000 km of German Autobahn alongside Porsche, BMW, Mercedes and Audi, luxury vehicle manufacturers all situated in Germany Sporting Enthusiasm 26,000 soccer clubs with 6.3 million active players, 1.8 million active tennis players and 646 golf courses Living History More than 700 medieval castles and magnificent palaces, the longest castle wall within Europe and cities with chronicles reaching back to Roman times Picture Credits: German Tourism Association 2007 Tel Aviv, December 14, 2011 www.gtai.com 16

Israeli-German Economic Relations In the last three years, Germany Trade & Invest supported 15 Israeli companies that sought to expand into the German market. Year Planned FDI-Israeli Projects* Federal State in Eastern Germany Investment Volume Planned Jobs Industry 2009 9 4 in Berlin 2 in Brandenburg 2 in Saxony 83 340 Chemicals & Healthcare 2010 3 1 in Saxony-Anhalt 1 in Berlin 30 95 Chemicals, Mechanical & Electronic Technologies 2011 3 1 in Berlin 1 in Saxony 1 in Brandenburg 4,5 560 Mechanical & Electronic Technologies, Service Industry * Assigned to Federal State Tel Aviv, December 14, 2011 www.gtai.com 18

Trade Partner Israel In 2010, Germany primarily imported Computer Electronic & Optical Products and Chemicals from Israel. Imports from Israel to Germany (2005-2010, in EUR m) Imports from Israel to Germany by sectors (2010) 2000 1800 1600 1400 1,252 1,478 1,653 1,551 1,335 1,702 Others 32.1% Computer, Electronic & Optical Products 15.3% 1200 1000 Chemicals 11.4% 800 600 400 Rubber & Plastics 6.3% Pharmaceuticals 9.6% 200 0 2005 2006 2007 2008 2009 2010 Other Vehicles 7.5% Electrical Equipment 8.3% Agricultural Products 9.4% Note: Imports by sector are based on preliminary data; Source: German Federal Statistical Office, 2011 Tel Aviv, December 14, 2011 www.gtai.com 19

Trade Partner Israel Machinery and Chemicals make up for a third of Germany s exports to Israel. Exports German to Israel Exports from Germany to Israel (2000-2010, in(2005-2010, EUR m) in EUR m) German Exports to Israel by sectors (2010) 3500 3000 2,717 2,616 2,702 2,879 Others 22.1% Machinery 16.2% 2500 2,468 2,426 2000 Paper 3.9% 1500 1000 Pharmaceuticals 4.6% Chemicals 16.2% 500 0 2005 2006 2007 2008 2009 2010 Electrical Equipment 8.1% Note: Exports by sector are based on preliminary data; Source: German Federal Statistical Office, 2011 Computer, Electronic & Optical products 13.5% Vehicles & Parts 15.4% Tel Aviv, December 14, 2011 www.gtai.com 20

FDI Projects in Germany In the last 8 years 22 FDI projects in Germany came from Israel. Projects ranked in Germany by country of origin (2003-2010, total number) Number of Projects in Germany by Sector (2003-2010) United States 1,009 UK 316 Switzerland 235 France 226 Japan 207 Netherlands 186 China 121 Sweden 121 Austria 114 Spain 113 Italy 109 India 68 Denmark 66 Canada 56 Israel 22 Others 570-100 100 300 500 700 900 1,100 Note: Preliminary dates for 2010; Source: fdi Markets, March 2011 Hotel, Touris m, Entertain -ment 3% Energy, Min erals, Metals 4% Healthcare, Pharma, Biot ech. 5% Textiles 5% Transportation, Storag e & Logistics 6% Consumer Goods (incl. Food & Beverages) 7% Renewable Energy 2% Electronics & Semiconductors 7% Chemicals, P lastics, Pape r 8% Other Sectors 4% ICT & Software 19% Business & Financial Services 16% Automotive, Industrial Machinery & Equipment 14% Tel Aviv, December 14, 2011 www.gtai.com 21

International Companies in Germany Around 450 Israeli companies are listed in the German commercial register. Number of Foreign Companies and Employees in Germany (2010) Country Number of Companies Number of Employees (Approx. Value) (Approx. Value) Netherlands 8,000 476,000 USA 6,200 741,000 UK 5,200 303,000 France 3,700 328,000 Sweden 1,300 151,000 Spain 1,100 71,000 Japan 980 95,000 Russia 950 4,600 China 700 6,600 Israel 450 10,000 Poland 370 18,700 Canada 390 18,700 India 280 13,000 Czech Rep. 250 2,100 Source: Bureau van Dijk Electronic Publishing, Markus Datenbank, March 2010 Tel Aviv, December 14, 2011 www.gtai.com 23

Israeli Companies Many Israeli companies have already invested in Germany. Important Israeli Companies in Germany by turnover (2010, in EUR m) 160 140 820 128 120 100 80 95 82 60 40 20 39 27 26 22 17 15 0 Source: Bureau van Dijk Electronic Publishing, Markus Datenbank, November 2011; Note: * latest data available referst to 2009; only companies listed in the commercial register Tel Aviv, December 14, 2011 www.gtai.com 24

Industries and Target Segments Mechanical and electronic technologies represent 50 percent of all exports and more than 34 percent of all foreign direct investment in Germany. 1 Electronics With a market share of over 35 percent, German semiconductors dominate the European market. Automotive Industry Germany offers the biggest market potential and is home to an excellent highly-skilled labor force. Machinery & Equipment Germany is the world s leading exporter and reaches a global market share of 19 percent. Aerospace Industry With an average growth of 9 percent the German aerospace industry is one of the most dynamic industry sectors. Maritime Technologies The German shipbuilding industry has a globally leading technological position and its suppliers are among the world s export champions. Source: 1 Fraunhofer Verbund für Mikroelektronik Tel Aviv, December 14, 2011 www.gtai.com 26

Industries and Target Segments Market size and innovation potential within the German services and consumer goods markets offer vast potential for investors. 1 Information & Communications Technology (ICT) Germany s ICT and E-Commerce industries are market leaders in Europe with sales of EUR 146 billion (ICT) and EUR 438.7 billion (E-Commerce) respectively. 4 Consumer Goods/Retail Europe s largest consumer market with more than 82 million consumers and private spending on consumer goods totaling total EUR 363.6 billion. Business Services Food & Beverages 2 Annual employee growth in Germany s contact center at over 15 percent; over 6,000 service centers with more than 450,000 agents. 5 With an annual turnover of EUR 147 billion, Germany is Europe s largest food and beverage producer. Current growth segments include convenience, organic, and functional food products. Transportation & Logistics Tourism & Leisure 3 Annual growth rate of around 8.5 percent with a total turnover of EUR 204 billion in 2007; easy access to all European markets thanks to favorable central location in Europe. 6 129.9 million tourists traveled to Germany in 2007, with 361.8 million registered overnight stays. The number of overnight stays is increasing steadily. Source: 1 onlinebewerbung.de - Fotolia.com 2 www.gettyimages.com 3 Darryl Brooks - Fotolia.com 4 Suprijono Suharjoto istockphoto 5 www.istockphoto.com fogostudio 6 DZT/Hans Peter Merten Tel Aviv, December 14, 2011 www.gtai.com 27

Industries and Target Segments Germany provides foreign investors with an attractive general framework in the chemical and healthcare industry. Chemical Industry and Polymers Germany is the biggest market for chemical products in Europe. Investors benefit from a unique chemical park concept with a range of services and professional management. 3 Red Biotech With nearly 500 dedicated biotechnology firms Germany is home to more biotech companies than any other country in Europe. Between 2000 2004, 30% of all worldwide bio patent applications at the Patent office in Munich came from Germany. 1 Chemicals-Related Process Industry (e.g. paper and glass/ceramic industry) The paper industry is number one in terms of production in Europe. After the USA, China, Japan and Canada it ranks fifth in the world. 4 Medical Devices Industry Germany is the third largest market for medical devices worldwide and leading in Europe. Competitive advantage: decade long experience in the art of engineering, creativity and enthusiasm for innovation. 2 New Materials/ Composite Materials Composite materials and composite material systems have gained in importance. There is an increasing demand for light, lowabrasive and temperature-resistant polymers, metals and ceramics. 5 Pharmaceuticals Industry Germany is Europe s largest single market for pharmaceuticals. The market is attractive due to Germany s stable and broad health system. Furthermore, Germany is open to both innovation and lowpriced providers. Source: 1 Gustavo Alabiso/ Visum, Papierfabrik Palm, www.igbce.de, 2 www.bam.de, 3 VfA Lilly Pharma; 4 BVmed B.Braun Melsungen AG; 5 VfA Takeda Pharma Tel Aviv, December 14, 2011 www.gtai.com 28

Contact Thank you for your attention! Dr. Jürgen Friedrich Chief Executive Germany Trade & Invest Foreign Trade and Inward Investment Promotion Agency Friedrichstraße 60 10117 Berlin Germany T. +49 (0)30 200 099-0 F. +49 (0)30 200 099-111 office@gtai.com www.gtai.com Villemombler Straße 76 53123 Bonn Germany T. +49 (0)228 24993-0 F. +49 (0)228 24993-212 info@gtai.de www.gtai.de 2011 Germany Trade & Invest All information provided by Germany Trade & Invest has been put together with the utmost care. However we assume no liability for the accuracy of the information provided. Tel Aviv, December 14, 2011 www.gtai.com 30