SME - Investment opportunities in Germany -...

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SME - Investment opportunities in Germany

Indo-German SME Forum New Delhi

31st May 2013

www.gtai.com

Germany as an Investment Location

Indian Investments in Germany

How does it happen? – Indian SME sets up a German

subsidiary

Agenda

31.05.2013 Investment Location Germany 2

www.gtai.com

Integral Part of the German Foreign Trade Promotion Landscape

The Agency

31.05.2013 3 Investment Location Germany

German Chambers of Commerce

Worldwide Network

(AHKs)

Chambers of Commerce in

Germany

(IHKs)

Industry Associations

Multipliers

Embassies & Consulates

Economic Development

Agencies of the Federal States

www.gtai.com

Two Headquarters in Germany - 50 Locations Worldwide

The Agency

31.05.2013

Chicago New York San Francisco Toronto Washington D.C.

Buenos Aires Bogotá Mexico City Santiago de Chile Sao Paulo

Athens Brussels Helsinki London Madrid Milan Paris Stockholm The Hague

Dubai Istanbul Riyadh

Accra Cairo Johannesburg Nairobi Tunis

Almaty Belgrade Budapest Bucharest Kiev Moscow Prague Warsaw Zagreb

Bangkok Beijing Hanoi Hong Kong Jakarta Kuala Lumpur Mumbai New Delhi Seoul Shanghai Taipeh

Tokyo

Sydney

Jerusalem

Berlin Bonn

Investment Location Germany 4

www.gtai.com

Macroeconomic analyses and

forecasts

Country and industry analyses (over

125 countries)

International projects and tenders

Foreign economic and tax law

Customs information and tariffs

Practical business tips

Business contacts

Coordination of federal foreign trade

activities

Areas of Activity

The Agency

For Companies Abroad

(Foreign Investors)

Investment Location Germany

For Companies in Germany

(Exporters/Investors)

Identification of attractive markets

and companies

Economic framework in Germany

Site specific information

Industry specific information

Direct contact with potential investors

abroad

Investor consultancy services

Project management support

Fo

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nd

Market

In

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on

In

form

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31.05.2013 5

www.gtai.com




subsidiary

Agenda


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No. 1 Investment Location

7

Leading Economy

Global Player

High Productivity

Excellent Workforce

Power of Innovation

First-Class Infrastructure

Inviting Incentives

Competitive Tax Conditions

Secure Investment Environment

Quality of Life 10

8

6

4

2

9

7

3

5

1

31.05.2013 Investment Location Germany

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Leading Economy

Share of Total GDP and Population in the European Union (2012)

31.05.2013 8

Germany is Europe’s largest market.

Source: Eurostat 2013, US Census Bureau 2013, Japanese Statistics Bureau 2013; Note: France, Spain, Poland GDP 2012 forecast

GDP

(in EUR bn) Share of total GDP (EU 27)

Population (in m)

Share of total Population (EU27)

Germany 2,644 21% 82 16%

France 2,030 16% 65 13%

UK 1,899 15% 63 13%

Italy 1,566 12% 61 12%

Spain 1,048 8% 46 9%

Netherlands 601 5% 17 3%

Sweden 408 3% 9 2%

Poland 380 3% 39 8%

Czech Republic 153 1% 11 2%

Hungary 98 1% 10 2%

Slovak Republic 71 1% 5 1%

USA 12,205 315

Japan 4,643 127

EU 27 12,894 504

Eurozone 9,483 74% 333 66%


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Global Player


International communications made easy: German business hours

correspond or overlap with those of all major international markets.

Note: Assumed business hours in Germany: 7am to 7pm; standard time

6

12

Chin

a

12

6

Brasil

Argentina

Los Angeles

New York

Explanation: Marked area represents the times between 7am to 7pm

in Germany when you can contact your business partner abroad.

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EU’s new geographic center is in Germany: Providing rapid and easy

access to all European markets.

Source: Eurostat 2013

Note: EU-27’s center: 42 km east of Frankfurt/Main in Meerholz, Hessen, *Estimates

First-Class Infrastructure

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A state-of-the-art transportation infrastructure and logistics capabilities able to serve all European markets

From Germany, nearly all of Europe can be reached by air in 3 hours and by road in 24 hours (flight, truck, and railway hours from Berlin).

24 h

3 h

1.5 h

Rome

12 h London

Moscow

48 h

24 h

Warsaw

Prague

Berlin

Vienna Budapest

Brussels

Madrid

Riga

Helsinki

Athens

Copenhagen

Paris

Stockholm

EU member states

Non-EU member states

2012 EU27 Germany

Population mn 504 82

GDP (in EUR bn) 12,894 2,644

GDP Growth (YoY) -0.3% 0.7%

Inflation 2.6% 2.1%

Unemployment 10.5% 5.5%


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Power of Innovation

Patents Granted at the European Patent Office (2012, in absolute numbers)

31.05.2013 11

Germany is Europe’s number one and one of the global leaders in

creating innovations for the future.

Source: European Patent Office 2013

7

12

19

50

62

330

1.735

2.668

4.810

10.294

13.407

15.090

0 2.000 4.000 6.000 8.000 10.000 12.000 14.000 16.000

Slovak Republic

Poland

Czech Republic

China

Hungary

Spain

Netherlands

United Kingdom

France

Japan

Germany

USA


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Power of Innovation

An outstanding high-tech infrastructure combined with a dense network of

incentive programs forms the backbone for high-class R&D in Germany.

Power of Innovation

31.05.2013 12

Highly qualified labor market: 500,000 R&D

employees in institutions, universities, and

industry.

High density of renowned research institutions

and 391 universities.

Platform for innovative and competitive

products, processes, and services: EUR 428

billion in exports of research intensive goods.

Research and knowledge-driven sectors account

for 39% of the nation's gross value added.

Infrastructure Incentives

Many R&D incentive programs in the form of

grants, loans, or guarantees designed for

specific topics.

Program budgets are provided by the European

Union, by the national government, and by each

individual state.

Re-application for R&D programs is possible

allowing multiple funding opportunities.

Nationwide full service advisory centers

guarantee efficient application procedures.

Incentives


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subsidiary

Agenda


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Indian FDI Stocks in Germany (2004-2010, in EUR m)

Since 2004, Indian FDI stocks in Germany have more than tripled.

Source: Bundesbank 2012

II. Individual Analysis of Selected Countries - India


79 79

131

234

302

254

297

0

50

100

150

200

250

300

350

2004 2005 2006 2007 2008 2009 2010

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Number of Indian Companies and Employees in Germany by Federal State (2011)

Most Indian firms are located in North Rhine-Westphalia.

Source: Bureau van Dijk Electronic Publishing, Markus Datenbank May 2012

Note: only companies listed in the commercial register

II. Individual Analysis of Selected Countries - India


Federal States Indian Companies (Approx. Value) Employees (Approx. Value)

North Rhine-Westphalia 80 3,000

Hessen 65 1,750

Bavaria 45 1,350

Baden-Württemberg 35 1,550

Hamburg 35 1,500

Berlin 25 4,700

Brandenburg 25 500

Rheinland-Pfalz 15 500

Saxony 11 1,000

Niedersachsen 10 3,000

Bremen 8 250

Mecklenburg-Vorpommern 5 220

Saxony-Anhalt 5 450

Saarland 4 45

Thuringia 4 180

Schleswig-Holstein 3 5

Total 375 20,000

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Indian Projects in Germany by

Business Activity (2003-2010)

Indian Projects in Germany by Sector

(2003-2010)

Individual Analysis of Selected Countries - India


The ICT & Software sector accounted for the majority of Indian FDI

projects since 2003.

Source: fDi Markets, Sep. 2011

Note: FDI projects refer to greenfield and expansion investment projects. M&A projects are not included.

ICT &

Software 36%

Automotive,

Industrial Machinery & Equipment

17%

Business &

Financial Services

10%

Healthcare,

Pharma,

Biotech-nology 10%

Energy,

Minerals, Metals

8%

Chemicals,

Plastics, Paper 6%

Electronics &

Semicon-ductors

4%

Consumer

Goods (incl. Food &

Beverages) 2%

Transpor-

tation, Storage & Logistics

3%

Renewable

Energy 1%

Other

Sectors 3%

Sales,

Marketing

& Support

40%

Business

Services 19%

Head-

quarters

13%

Manu-

facturing

11%

Design,

Develop-

ment &

Testing

6%

Logistics,

Distribution

& Trans-

portation

4%

R&D

3% Others

4%

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subsidiary

Agenda


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The Investment Process


Starting with the acquisition of the investment project the process

continues with consulting till the final site selection

www.gtai.com

Germany Trade and Invest sees itself as the consultant with Germany

expertise for the potential investor, supported by the federal states

One Face to the customer


Investor Offer to the client

Discussion of site selection criteria

Contacts to potential clients, partners, suppliers

Discussion of business model and market entry strategy

Information about project financing incl. grants and subsidies

Support with application for grants & subsidies

Discussion of international competition in the site selection process

Support in dealing with local authorities

Case Study: Olive Lifesciences Pvt.

Ltd., India (Frankfurt, Hesse)

Investor Reference

Founded in 2007 in Bangalore, India.

The company manufactures and exports herbal/botanical extracts, phytochemicals, cosmetic, food & beverage ingredients.

Excellent R&D capabilities and growing exports are key to the success of the company.

Olive Lifesciences sales decupled since its foundation and reached USD 20 million in 2011/12.

New company: Bioactives Europe GmbH

Location: Frankfurt, Germany

Initial investment: EUR 25,000

Core activities: Liaison office and warehouse

New employees: 4

Critical location factors: Optimal logistics infrastructure within Germany/Europe, frequent flight connections to India, proximity to clients

Company profile (prior to investment)

Project milestones

Project data

Products and location

1

2

Initial contact with GTAI India via the Indo-German Chamber of Commerce.

Oct 2012

2 Definition of location requirements and initial meeting at Health ingredients Europe in Germany.

Nov 2012

3 Nov 2012 Contact to Hessen Trade & Invest and initial site visits.

Dec 2012 Identification of suitable business location in Frankfurt. Signing of rental agreement.

4

5 Registration of limited company in Germany.

Dec 2012

Opening of office and warehouse. Jan 2013 6


Kassel

Wies- baden

Fulda Frankfurt/Main

www.gtai.com

SME-friendly climate in Germany:

funding and policy initiatives of the

Fed.Government

Best performing SME sector in

Europe in terms of

Jobs created

Value added

Degree of innovativeness

HIDDEN CHAMPIONS don‘t grow by

accident

(survey of TUHH 2010)

Critical success factors for Indian

investors (choice)

Focus on superior quality and image

Made in Germany

Bridge cross-cultural gaps in

working culture between HQ and

subsidiary

HR – local factor, market knowledge

Organizational capabilities to

manage bureaucratic hurdles

Investment Opportunities in Germany

MITTELSTAND Business Culture

+ framework policy and funding options

= favorable environment for international SME investors


www.gtai.com

© 2013 Germany Trade & Invest GmbH

All information provided by Germany Trade & Invest is for informational purposes only and not legally binding. Germany Trade & Invest does not accept liability for inaccuracies or errors in translation.

Contacts


For further information, please contact:

31.05.2013 22

Germany Trade and Invest Foreign Trade and Inward Investment Promotion Agency

THANK YOU!

Germany Trade and Invest Mumbai Office Asha-Maria Sharma Director T. +91 22 66652 180 F. + 91 22 66652 179 [email protected]

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