Chris Schmidt - istockphoto High-Tech Market Germany: How Chinese Companies Can Benefit Markus Hempel China Representative Max Milbredt Manager Investor Consulting 01.09.2014
Agenda 1. Chinese Investment Into Germany 2. High-Tech Market Germany 3. R&D Cooperation to Foster Chinese High-Tech 4. Financial Assistance 5. How Germany Trade & Invest Can Help You www.gtai.com 2
1. Chinese Investment Into Germany E&Y survey of 400 managers of Chinese (large) companies "Which countries are currently the three most attractive investment locations in the world?" (Multiple answers possible) China USA Germany India Brazil Japan Russia UK France Africa 2% Ernst & Young, 2012 7% 6% 7% 6% 8% 5% 5% 5% 5% 18% 15% 15% 12% 29% 31% 25% 30% www.gtai.com 3 52% 61% All respondents Companies that have taken part in foreign investment for last 5 years Chinese entrepreneurs choose the US (29%) and Germany (25%) as the most attractive foreign investment locations. Entrepreneurs active in a foreign investment during past 5 years put Germany at almost the same level as the USA.
1. Chinese Investment Into Germany Chinese Companies in Europe: every twentieth located in Germany Does your company have (at least) one location in Europe?" If Yes, in which country? 9% Yes Germany 63% France 13% Netherlands 10% Russia 10% UK 7% No 91% Switzerland Poland 3% 3% Czech Republic 3% Spain 3% 0% 20% 40% 60% 80% Note: Companies in Europe. Multiple answers possible Almost every 10th company has a location in Europe. Chinese entrepreneurs mostly choose Germany. France, Netherlands and Russia are far behind. Ernst & Young, 2012 www.gtai.com 4
1. Chinese Investment Into Germany Western Europe is the future investment focus "Does your company plan to allocate its future investments in the following regions?" (Multiple answers possible) Western Europe 24% Western Europe North America Africa South-East Asia Latin America Eastern Europe India Russia Japan 9% 7% 6% 6% 5% 4% 4% 2% Germany 14% UK 2% Spain 2% France 2% Italy 1% Answers: "Yes, certainly and "Yes, probably," in % All respondents Investment focus is going to shift over the coming years: Western Europe is the most attractive region for foreign investment in the future - one in four Chinese companies has plans to invest in this region. Ernst & Young, 2012 www.gtai.com 5
1. Chinese Investment Into Germany Europe s most attractive investment location is Germany along all varieties of projects "Which country in Europe offers the best conditions for the location of the following institutions?" * Regional Headquarters Research and Development Center Logistics Center Production facility Germany 67% Germany 72% Germany 50% Germany 46% France 8% France 8% Netherlands 14% Poland 12% UK 5% UK 4% France 12% France 9% Italy 4% France 4% Poland 6% Netherlands 5% Switzerland 3% Italy 4% Italy 6% Spain 4% *top 5 countries listed for each Chinese entrepreneurs answered that Germany offers the best conditions for establishing headquarters, research, logistics and production. Other industrialized countries such as France and Great Britain trail by a wide margin. Ernst & Young, 2012 www.gtai.com 6
1. Chinese Investment Into Germany Most foreign investments are centrally managed from China "How have the foreign investments in recent years been carried out?" (Multiple answers possible) With the help of own employees / controlled centrally from China 65% With the help of customer relationships in foreign countries 48% With the help of external consultants 25% Note: In brackets is the data from companies that in last 5 years have already made investments in Europe Hitherto foreign investments were centrally controlled from China by 65% of companies with the help of their own employees. Business partners abroad helped in 48% of all cases. One in four companies also hired outside consultants. Ernst & Young, 2012 www.gtai.com 7
1. Chinese Investment Into Germany but often there is a lack of knowledge about the target market "What were the biggest obstacles for foreign investments in the past?" (Multiple answers possible) 60% 50% 49% 40% 30% 33% 33% 20% 10% 3% 3% 0% Lack of knowledge about market Lack of networks abroad Lack of qualified staff Law and policies abroad Cultural barriers Note: companies that have already invested in Europe during last 5 years Lack of knowledge about market conditions aggravates conditions for Chinese companies to invest. International networks and appropriately qualified staff could help, but are often still missing. Law, politics, foreign culture rarely an obstacle. Ernst & Young, 2012 www.gtai.com 8
1. Chinese Investment Into Germany Foreign business partners and external consultants are to be included more often in the future "How do you plan to implement the investment plan?" (Multiple answers possible) With the help of own employees / controlled centrally from China 55% 55% With the help of customer relationships in foreign countries 33% 39% Companies interested in investing in Europe With the help of external consultants 37% 44% Companies interested in investing in Germany Increasing openness: Despite more than half of Chinese companies trusting investments into Europe centrally controlled from China, almost 40% wish for support from foreign business partners and external consultants. Ernst & Young, 2012 www.gtai.com 9
Chinese Foreign Direct Investment Selection of the most prominent Chinese investment projects into Germany. No Company name Town 1 Baosteel Trading Europe GmbH Hamburg Saarbrücken Mainz Bremen North-Rhine Westphalia Wiesbaden Rheinland- Pfalz Saarland 5 6 Düsseldorf 9 Bedburg Wettenberg 8 Schleswig- Holstein Hamburg 15 Stuttgart Kiel Niedersachsen Schwerin Hanover Potsdam 4 Magdeburg Aschersleben 7 14 Nordhausen Halle (Saale) 13 Thuringia Hessen 16 1 Eschborn 3 Frankfurt 10 11 Baden- Württemberg Mecklenburg- Vorpommern Saxony- Anhalt 19 Erfurt 2 20 17 Arnstadt Königssee Bavaria Munich Brandenburg 4 5 Berlin 11 18 Saxony Dresden 12 7 2 Helipark Eisenach 3 COSCO Europe GmbH Hamburg 4 Schiess GmbH Aschersleben/ Berlin 5 Huawei Technologies Duesseldorf GmbH Düsseldorf/ Berlin 6 Midea Europe GmbH Düsseldorf 7 Hanergy / Solibro Berlin / Bitterfeld-Wolfen 8 ZTE Deutschland GmbH Düsseldorf 9 Sany Germany GmbH Bedburg 10 Air China Frankfurt Branch 11 Bank of China Ltd 12 AVIC International / Thielert / Technify Frankfurt Frankfurt/ Berlin, i.a. 13 Sinoi GmbH Nordhausen St. Egidien / Lichtenstein 14 Greatview Aseptic Packaging GmbH Halle (Saale) 15 Lenovo (Deutschland) GmbH Stuttgart 16 Haier Deutschland GmbH Wettenberg 17 WerköGmbH Königssee 18 Hainan Airlines Berlin 19 Hutchison 3G Austria GmbH NL Erfurt Erfurt 20 Sunways Production GmbH Arnstadt 01.09.2014 Germany Trade & Invest www.gtai.com 10
Excellent Workforce www.gtai.com 11
Excellent Workforce Best Practice: Greatview Aspetic Packaging (GA Pack) In 2011 GA Pack has invested EUR 50 million to build a European production facility in Germany. This marks an important milestone in the company s international growth strategy. In 2013 GA Pack invests a further 38 million euros at the site to build a second production line. 1. Company Information GA Pack is one of a select few integrated providers of aseptic packaging material and related services globally GA Pack is the second largest supplier of roll-fed aseptic packaging material in the world 2. Investment Volume EUR 50+38 million Jobs created:110+26 Location: Halle, Saxony-Anhalt 3. Support provided by GTAI Site selection support & cost factor analysis Tax & legal information Financing & incentives consulting This is a long-term commitment to the dairy and beverage industry, the region and to Europe in general. We are here to stay, and to offer the liquid food industry a choice that creates real value. - Peder Berggren, Director International Business, GA Pack 01.09.2014 Germany Trade & Invest www.gtai.com 12
Agenda 1. Chinese Investment Into Germany 2. High-Tech Market Germany 3. R&D Cooperation to Foster Chinese High-Tech 4. Financial Assistance 5. How Germany Trade & Invest Can Help You www.gtai.com 13
2. High-Tech Market Germany Germany increasingly specializes in industrial semiconductor markets, mass market consumer semiconductors are sourced from Asia. Regional shift in semiconductor market shares Semiconductor market segments Germany 2000-2011 Commoditized semiconductor production shifting to Asia Automotive & industrial electronics German strongpoints 01.09.2014 Germany Trade & Invest www.gtai.com 14
2. High-Tech Market Germany European wafer lines overview Finland 2 10 Norway Sweden 2 Estonia Russia ATLANTIC OCEAN 2 Portugal Spain 2 5 Ireland UK 43 NORTH SEA France Netherlands Belgium 29 4 16 Luxembourg Denmark Germany Switzerland 18 2 86 Poland Croatia Bosnia- Serbia Herzegovina Italy 13 Czech Rep. Austria Slovenia Montenegro Albania Latvia Lithuania BALTIC SEA 1 9 19 2 1 Slovak Rep. 3 Hungary 1 Kosovo Macedonia Belarus Romania 1 2 2 3 Moldova Ukraine Bulgaria 1 23 BLACK SEA Turkey 2 Greece MEDITERRANEAN SEA Cyprus Source: Yole Développement 2012 01.09.2014 Malta Germany Trade & Invest 8 Israel www.gtai.com 15
2. High-Tech Market Germany Dresden is the 5th largest microelectronics cluster in the world Dresden is the semiconductor hub both in Germany and Europe Leipzig Dresden Bautzen Every other chip produced in Europe is Made in Saxony Chemnitz Answers for the future of microelectronics: Organic Electronics Saxony and cluster Cool Silicon Dresden Saxony The place to be for microelectronics in Europe 01.09.2014 Germany Trade & Invest www.gtai.com 16
2. High-Tech Market Germany Germany is the only country in the world with high-volume production of power semiconductors on 300mm wafers Power semiconductors are important tool to conserve and use energy more efficiently building block of energy transition Project InduKoch between Infineon, E.G.O. group and University of Bremen Possible savings: 100,000 cars German strongpoint: harnessing capabilities of mid-size companies, research institutes and government to bring new products to market www.gtai.com 17
2. High-Tech Market Germany BMW s new plant in Leipzig Production completely powered by wind power Automobile manufacturing redesigned 01.09.2014 Germany Trade & Invest www.gtai.com 18
2. High-Tech Market Germany Industry 4.0 will increase the gross value added of some of the most important sectors in the German industry by EUR 79 billion until 2025. Gross value added of selected industries in Germany (2013 and 2025*, in EUR billion) ITC sector Mechanical engineering Automobiles and parts Electrical equipment Chemical products Agriculture and forestry 40.1 18.6 93.7 52.1 21.3 107.7 40.3 2013 Total: EUR 343.3 billion CAGR: 1.74% 52.4 2025* Total: EUR 422.1 billion 74 76.8 88.8 99.8 *Forecast Source: Fraunhofer IAO, BITKOM, 2014 www.gtai.com 19
2. High-Tech Market Germany Investment in ICT solutions for Industry 4.0 are expected to surge to EUR 2.6 billion in 2020. In 2015, IT services are the strongest segment. Forecast investment in ICT solutions for Industry 4.0 (in EUR billion) Distribution of investments in ICT solutions for Industry 4.0 (2015*) 2,616 IT services ITC infrastructure Network services Software solutions 2,311 80 2,016 1,504 105 1,057 347 654 316 425 125 2013 2014 2015 2016 2017 2018 2019 2020 *Forecast Source: Experton Group, BITKOM, 2014 www.gtai.com 20
Agenda 1. Chinese Investment Into Germany 2. High-Tech Market Germany 3. R&D Cooperation to Foster Chinese High-Tech 4. Financial Assistance 5. How Germany Trade & Invest Can Help You www.gtai.com 21
Basic research Applied research 3. R&D Cooperation to Foster Chinese High-Tech Various public and private research organizations create an effective and internationally unique division of labor. R&D Expenditures (in EUR bn, 2011) and Type of Research by Actor 50.3 Division of labor among R&D performing organizations universities non-university R&D institutions 1.2 3.5 HGF 1.2 WGL 1.8 FhG MPG Max Planck Society HGF Helmholtz Association WGL Leibniz Association 1.6 13.5 FhG Fraunhofer Gesellschaft MPG government research institutions 1.6 (federal and state level) further institutions (e.g. scientific libraries) Public funding Private funding private companies / industrial research Note: All figures in EUR billion; Source: Federal Ministry of Education and Research 2010, Federal Statistical Office 2013. www.gtai.com 22
3. R&D Cooperation to Foster Chinese High-Tech With research expenditures of EUR 8.1 bn (2011), non-university research organizations act as key players in the German R&D landscape. R&D Expenditures EUR 1.6 bn R&D Personnel 12,628 Institutes 80 Basic research in natural, biological, social sciences and humanities R&D Expenditures EUR 1.8 bn R&D Personnel 14,823 Institutes >80 Applied research in the fields of health, security, communication, mobility, energy and environment R&D Expenditures EUR 3.5 bn R&D Personnel 27,567 Research Centers 18 Basic research in energy, environment, health, aerospace, structure of matter, and key technologies R&D Expenditures EUR 1.2 bn R&D Personnel 10,987 Institutes 86 Application-oriented basic research on engineering, humanities, social, natural, and life sciences Note: 2010 data Source: Federal Ministry of Research and Education 2011, Federal Statistical Office 2011 www.gtai.com 23
R&D Expenditures (in EUR m) Number of R&D Personnel 3. R&D Cooperation to Foster Chinese High-Tech German SMEs are highly active in research and development, creating competitive Made in Germany innovation. R&D Expenditures and Number of Personnel in SMEs (< 500 employees) CAGR* (2004-2010) Personnel: +8.3% p.a. 10,000 8,000 6,000 CAGR (2004-2010) R&D Budgets : +9.3% p.a. 73,548 76,017 77,729 8,263 8,461 59,607 61,780 7,873 50,681 6,559 6,239 79,905 8,683 88,366 9,491 100,000 90,000 80,000 70,000 60,000 50,000 4,000 5,098 +86% 40,000 30,000 2,000 20,000 10,000 0 2004 2005 2006 2007 2008 2009 2010 2011 0 R&D Expenditures R&D Personnel Note: *CAGR = compound annual growth rate; Source: Stifterverband 2013 www.gtai.com 24
3. R&D Cooperation to Foster Chinese High-Tech More than 350,000 German SMEs benefit from exports to global markets, exporting approx. 200bn EUR p.a. German SME s Export Turnover by Destination (in EUR bn, 2011) Total SME Export Turnover EUR 195.2 bn EU- Countries 54% 104.9 More than 40% of all medium-sized enterprises* in Germany benefit from global markets through exports. About 20.4% of their turnover comes from business abroad. Export activities of German companies are strongly promoted by governmental organizations, e.g. Germany Trade & Invest. Third Countries 46% 90.3 Note: *annual turnover EUR 1-50 m according to IfM definition; Source: IfM Bonn 2013 www.gtai.com 25
Agenda 1. Chinese Investment Into Germany 2. High-Tech Market Germany 3. R&D Cooperation to Foster Chinese High-Tech 4. Financial Assistance 5. How Germany Trade & Invest Can Help You www.gtai.com 26
4. Financial Assistance To reduce cap-ex, Germany offers Investment Grants of up to 40 percent, depending on the region, the company size, the investment volume, and on respective state regulation. Timeframe 01.07.2014-31.12.2020 Small enterprises 1 Medium-sized enterprises 2 Large enterprises Predefined C Region 35% 3 25% 3 15% 3 Border area 40% 30% 20% to Poland Nonpredefined C Region 30% 20% 10% D Region 20% 10% max. EUR 200,000 4 C/D Region 30% / 20% 20% / 10% 10% / max. EUR 200,000 4 The bonus of 20% for a small enterprise and of 10% for a medium-sized enterprise is not granted to large investment projects with eligible investment costs > EUR 50 million. An additional aid intensity reduction would apply in these cases. Notes: 1 Includes a bonus of 20%; 2 Includes a bonus of 10%; 3 Until 31 December 2017; aid intensity 2018-2020 as in Non-predefined C Regions ; 4 Deminimis-rule www.gtai.com 27
Agenda 1. Chinese Investment Into Germany 2. High-Tech Market Germany 3. R&D Cooperation to Foster Chinese High-Tech 4. Financial Assistance 5. How Germany Trade & Invest Can Help You www.gtai.com 28
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5. How Germany Trade & Invest Can Help You In 2013, Germany Trade & Invest accompanied 114 investment projects that are to create approx. 2,050 new jobs in Germany. SANY AG IMG Investment and Marketing Corporation Saxony-Anhalt www.gtai.com 32
Contact us Berlin Beijing Mr. Max Milbredt Mr. Markus Hempel Ms. Jie Zheng Ms. Lijuan Ye Manager Electronics & Microtechnology China Representative - Investment Promotion Senior Manager - Investment Promotion Project Manager - Investment Promotion Friedrichstraße 60 10117 Berlin Germany Tel. +49 30 200 099 408 Fax. +49 30 200 099-77408 Max.Milbredt@gtai.com linkedin.com/in/maxmilbredt/ www.gtai.com Unit 0811, LandmarkTower II 8 North Dongsanhuan Road, Chaoyang District Beijing 100004 P.R. China Tel +86 10 6539 6725 Fax +86 10 6590 6167 Markus.Hempel@gtai.com www.gtai.com/cn Unit 0811, LandmarkTower II 8 North Dongsanhuan Road, Chaoyang District Beijing 100004 P.R. China Tel +86 10 6539 6726 Fax +86 10 6590 6167 Jie.Zheng@gtai.com www.gtai.com/cn Unit 0811, LandmarkTower II 8 North Dongsanhuan Road, Chaoyang District Beijing 100004 P.R. China Tel +86 10 6539 6727 Fax +86 10 6590 6167 Lijuan.Ye@gtai.com www.gtai.com/cn 2014 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. www.gtai.com 33