Monday 16 December 2019

Bavaria boost for firms looking at Germany

Aerial view of the Marienplatz, Munich, Germany. Photo: Getty Images
Aerial view of the Marienplatz, Munich, Germany. Photo: Getty Images

Eddie Goodwin

Irish exports to Germany received a boost last week with the opening of Enterprise Ireland's new Munich office by the Minister for Business, Enterprise and Innovation, Heather Humphreys.

Munich is capital of Bavaria, Germany's wealthiest region, with a GDP of €625bn and a population of 13 million. On its own, Bavaria has a GDP higher than 22 of the EU's 28 current member states.

But scale alone is not the reason for establishing a permanent presence there. The region boasts many sectoral strengths which represent a good fit from the point of view of Irish businesses.

In the industrial products and manufacturing area, Munich and the surrounding region have well-established engineering, automotive, agri-tech, life sciences and medtech sectors. There is also very good potential in services, including construction and ICT.

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Growth prospects are also excellent. Munich ranks first among 71 German cities for dynamism of economic development, 20pc of the population have third-level degrees, unemployment stands at only 3.5pc and the economy has grown by more than 20pc over the past five years - far outstripping the rest of Germany and, indeed, the eurozone.

Germany is already Ireland's third largest export market and its strategic importance has increased significantly since the UK's vote in June 2016 to withdraw from the EU. Since then, Enterprise Ireland has encouraged Irish firms to diversify dependence away from the UK market and to seek new customers in other markets, with the eurozone and Germany being prime targets.

There are now more than 600 Enterprise Ireland-supported companies actively selling into Germany across a variety of different sectors.

These companies had exports of €1.1bn in sales to Germany last year, which represented growth of more than 20pc in only two years. Within that total, the industrial sectors had strong growth at 12pc overall, while ICT exports had a stellar performance with an increase of 26pc over the period.

A particular feature of that very strong performance is the number of Irish companies coming into Germany and investing in putting people on the ground. This level of commitment is important in the German market.

The Germans are not known for quick decision-making and like to see business partners develop long-term relationships. Those investments will be repaid handsomely in future years.

Overall, 55 Enterprise Ireland client companies have set up a presence in Germany. They include Perigord Life Sciences Solutions, which is investing €2m in buying a German company. Also building relationships in Bavaria is Cubic Telecom, which has established a technology partnership with Audi.

Both of these companies participated in a trade mission to Munich which coincided with the opening of the new Enterprise Ireland office. They were joined by 19 other Irish companies and a large number of German business representatives at an event hosted by Minister Humphreys.

While export promotion was the primary purpose of the event, the mutually beneficial nature of the trade relationship between the two countries was also noted. Those 55 Enterprise Ireland client companies now employ 15,000 people in Germany, while German firms employ 13,700 people in Ireland.

The evidence of the past two years is that Irish companies are indeed diversifying into new markets, and Enterprise Ireland is supporting that through a number of programmes and initiatives.

One of the most significant of these is the Enter the Eurozone Programme, an educational programme for early-stage exporters delivered by ESMT University in Berlin. Its objective is to assist companies to win their first piece of business in the eurozone.

In addition, in the last month alone, Enterprise Ireland has led Irish participation in three major trade fairs where we hosted Irish pavilions at the Medica show for medtech in Dusseldorf, the Agritechnica show in Hanover and CPHI pharmaceutical industry fair in Frankfurt.

Finally, Enterprise Ireland is running a special Ambition Germany, Switzerland and Austria event in Thomond Park, Limerick, on December 6. The event will feature presentations by a number of market experts from the three countries, who will offer valuable insights into the business landscape and culture and export opportunities which exist for Irish companies in those markets. Attendees will also hear from Irish companies who have succeeded in these countries.

Eddie Goodwin is Enterprise Ireland's overseas manager, based in Dusseldorf

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