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Information and communications technology opportunities in Germany

February 1, 2020
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Why this is important to Wisconsin businesses: The industry is not yet fully developed, and Wisconsin companies can help propel it forward.

Germany is Europe’s strongest economy. Among its most important sectors are the automotive industry, with revenue of $466 billion in 2019; mechanical engineering ($248 billion); and the chemical industry ($214 billion).

In 2019, Germany generated a GDP of $3.6 trillion, which makes up 25% of Europe’s total GDP. Yet, there is an economic slowdown, as GDP growth for 2018 was 1.4%, while in 2019 it was only 0.6%. The world’s fluctuating economic situation, as well as Brexit, had negative effects on its GDP. 

Despite the negative trend, Germany’s economy is expected to grow by 0.8% in 2020 and 2021 because of solid private consumption, higher government spending, relatively brisk construction activity and more working days. It continues to be the fourth-strongest economy in the world and achieves the world’s largest current account surplus thanks to its strong exports.

Germany’s potential as a profitable hotspot for information and communications technology (ICT) is not fully developed yet, as relatively low per capita investments in the industry result in slow growth compared to other European countries. At the same time, Germany’s booming startup scene speaks for itself. Every 14 hours a new start-up is founded in Berlin, many of them belonging to the ICT sphere. Key industry players that drive global development, like Deutsche Telekom AG and SAP SE, have their headquarters in the country. The annual revenue of the ICT sector continues to grow and is already a significant branch of the German economy. In 2019, the industry generated $186 billion, and it is projected to reach $188 billion in 2020. With expected revenue of $104 billion in 2020, information technology is the largest segment of the industry. Its most important product branches are software and information technology services and hardware. Telecommunications makes up the second-most-important segment, including telecommunications services and infrastructure. North Rhine-Westphalia makes up for almost half of the annual revenue in Germany in the ICT industry, followed by Bavaria and Berlin. North Rhine-Westphalia is an interface between traditional industrial companies and a diverse, dynamic and emerging ICT economy, while Bavaria houses the headquarters of global key players like Microsoft and Google but also more than 9000 small and midsize enterprises. Berlin is not only home to most startups in Germany, but also to many businesses that specialize in the ICT sector. In addition, Berlin has the highest number of technology students in Germany.

With continuous investment in digitization, Germany’s ICT industry will keep growing. Solutions in the fields of consumer electronics, information technology and telecommunications software and services, as well as data processing equipment, electronics and optical products are especially in demand in the German market. Wisconsin companies can take advantage of this demand and increase their exports to Germany. Currently, 3.5% of all Wisconsin exports go to Germany. In 2019, computer and electronic goods worth $113 million were exported to Germany, which only represents 0.1% of Germany’s current demand in that segment.

Since German companies and the German government strive for quick progress in digitization, cooperation and trade with foreign enterprises is essential. The U.S. is one of Germany’s most important trading partners. In addition, as German companies have a large influence on the digitization process in Germany, establishing business contacts with the private sector can ultimately also pave the way for potential future business opportunities in the public sector, where new ICT solutions are also needed.

As Germany’s digitization and investment in the ICT sector progresses, opportunities for Wisconsin businesses will continue to present themselves. From research and development to production and services, there are various spheres in which cooperation and increased trade can significantly benefit both Germany and Wisconsin.

Hannover Messe (https://www.hannovermesse.de/en/, July 13-17, 2020) is the most important international platform for all technologies related to industrial transformation, including the ICT sector. It is a great event to establish first contacts in the industry through business-to-business meetings and networking. In addition, the Digital Hub Initiative (https://www.de-hub.de/en/) which is supported by the Federal Ministry for Economic Affairs and Energy, can help companies find the right contact in the different ICT spheres. The initiative connects midsize businesses and larger corporations with new innovation partners from the scientific and startup communities.

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