Germany Trade & Invest Foreign Trade and Inward Investment Promotion AgencyGTAI and the German ICT MarketNovember 2009: NASSCOM Event

Germany Trade & InvestMain TasksPromoting Germany‘s advantages as a prime location for foreign investors in high-tech industries.Providing consultancy and support services for international businesses seeking to expand operations to Germany.Providing companies established in Germany with information about business opportunities in foreign markets.Collecting and processing economic data and information about industries, tender procedures, legal frameworks, and customs regulations in foreign markets.

The AgencyTwo headquarters in Germany - 46 locations worldwide.BelgradeBudapest Bucharest KievMoscowPragueRiga Warsaw ZagrebAthens BrusselsLondonMadridMilan ParisStockholmBangkokBeijing HanoiHong KongJakartaKuala LumpurMumbaiNew DelhiSeoulShanghaiTaipehTokyo BerlinCologneChicagoNew YorkSan FranciscoToronto WashingtonDubaiIstanbulTel AvivJohannesburgCairoNairobiTunisBuenos Aires CaracasMexico CitySantiago de ChileSao Paulo Sydney

Our TeamsGermany Trade & Invest concentrates its market knowledge within a range of industry teams to best support the investorChemicals & Healthcare- Chemical Industry and Polymers- Chemicals-Related Process Industry- New Materials/ Composite Materials- Red Biotech- Medical Devices Industry- Pharmaceuticals IndustryRenewable Energies & Resources Photovoltaics Energy Efficiency Renewable Resources and BioenergyEnergy Storage and Fuel Cells Solar Thermal Energy Geothermal Energy Wind Energy Waste to Energy, Recycling and Sustainable Water Resource ManagementService Industries Consumer Goods/Retail Food and BeveragesInformation and Communications Technology Business Services Transportation and Logistics TourismMechanical & Electronic Technologies Electronics and Microtechnology Machinery and EquipmentTransportation and Technologies- Applied Sciences and Technology TransferPicture Credit: Helmholtz Centre Berlin for Materials and Energy; BMVBS/Amin Akhtar; Copyright Dreadlock/Fotolia; BMU/Rupert Oberhäuser, BSW/Paul Langrock; BMU/Brigitte Hiss; Bundesverband Windenergie e.V; Copyright BMU / Bernd Müller

Photovoltaics

Energy Efficiency

Renewable Resources and Bioenergy

Energy Storage and Fuel Cells

Solar Thermal Energy

Geothermal Energy

Wind Energy

Waste to Energy, Recycling and Sustainable Water Resource Management

Consumer Goods/Retail

Food and Beverages

Information and Communications Technology

Business Services

Transportation and Logistics

Tourism

Electronics and Microtechnology

Machinery and Equipment

Transportation and Technologies

Our E-Trade-Centerwww.e-trade-center.com – the central German internet portal for international business opportunitiesThe e-trade-center allows users free of charge to: Search for business partnersPublish offers or inquiries for products and servicesService of the e-trade-center:Up-to-date of about 4.000 entries: limited timeframe of publication assures that the business inquiries are up-to-dateAbout 48.000 visits per month on the e-trade-center PortalAll entries are scrutinized and, if necessary, amendments to the text are made before being publishedWeekly personalized newsletter free of chargeThe Internet Portal is available in English and German language

Search for business partners

Publish offers or inquiries for products and services

Up-to-date of about 4.000 entries: limited timeframe of publication assures that the business inquiries are up-to-date

About 48.000 visits per month on the e-trade-center Portal

All entries are scrutinized and, if necessary, amendments to the text are made before being published

Weekly personalized newsletter free of charge

The Internet Portal is available in English and German language

3 hHelsinki1.5 hRigaCopenhagenBerlinWarsawBrusselsPragueVienna24 hBudapestMadrid48 hAthensEU’s New Geographic Center is in Germany*Germany is Europe’s largest economyGermany2008EU (27)497Population (millions)82GDP (in EUR bn)12,4662,454GDP Growth (YoY)0.9% 1.3%Inflation2.8%3.7%Stockholm7.6%Unemployment7.3%MoscowLondon12 h24 hParisRomeNote*: EU-27’s center: 42 km east of Frankfurt/Main in Meerholz, Hessen; Source: Eurostat 2009

Facts & Figures: Germany in Numbers Form of Government: Federal Republic (16 states) GDP 2008: EUR 2.5 trillionDKBALTIC SEAGDP per capita 2008: EUR 30.343FLENSBURGNORTH SEA Area: 357,114 km² Coastline: 2,389 km²ROSTOCKKIELSCHLESWIG-HOLSTEINGDP per sector 2008: Services: Industry: Trade: Agriculture:MECKLENBURG- WESTERN POMERANIA50.9%30.4%17.9%0.9%SCHWERIN Population: 82,310,000Working population: 40 mHAMBURGHAMBURGPLNLBREMENBREMENBERLINLOWER SAXONYBERLINPOTSDAMHANOVERBRANDENBURGBiggest Cities: Berlin (3.4 m) Hamburg (1.8 m) Munich (1.3 m)MAGDEBURGGDP growth 2007: GDP growth 2008: Inflation rate 2008:2.5%1.3%2.6%SAXONY-ANHALTHALLEBELEIPZIGNORTH RHINE-WESTPHALIADÜSSELDORFSAXONYCOLOGNEDRESDENFRANKFURTERFURTLUXCZTHURINGIAHESSEInternational Passenger Airports: 19; Seaports: 34; Inner Harbors: 250 Exports 2008: EUR 995 bn Imports 2008: EUR 819 bnWIESBADENNUREMBERGMAINZRHINELAND PALATINATESAARLANDCurrent Account 2008: +6.6% (in % of BIP)FSAARBRÜCKENBAVARIASTUTTGARTHighways: 12,400 km Federal Roads: 41,000 km Railways: 41,300 km Waterways: 7,500 kmAUTGross investment 2008: EUR 479 billionMUNICHBADEN- WÜRTTEMBERGCHSource: Investment Guide to Germany (April 2009), Germany Trade & Invest (April 2008); Federal Statistical Office (2009)

Form of Government:

GDP 2008: EUR 2.5 trillion

GDP per capita 2008:

Area: 357,114 km²

Coastline: 2,389 km²

GDP per sector 2008:

Services:

Industry:

Trade:

Agriculture:

Population: 82,310,000

Working population: 40 m

Biggest Cities:

Berlin (3.4 m)

Hamburg (1.8 m)

Munich (1.3 m)

GDP growth 2007:

GDP growth 2008:

Inflation rate 2008:

International Passenger

Exports 2008: EUR 995 bn

Imports 2008: EUR 819 bn

Current Account 2008:

Highways: 12,400 km

Federal Roads: 41,000 km

Railways: 41,300 km

Waterways: 7,500 km

Gross investment 2008:

Metropolitan Regions in GermanyThe most dense populated metropolitan areas are located in the west of GermanyAverage population density: 231/km240.3 million (48.9%) of the German population live in metropolitan areas with more than 500 people/km2Major metropolitan regions:42Rhein / Ruhr Area(Cologne, Düsseldorf, Dortmund, Essen): 5.7 millioni.e. Telecommunication industry Berlin: 4.2 millioni.e. Internet, healthcare Stuttgart: 2.6 millioni.e. Mechanical engineering Hamburg: 2.6 millioni.e. Logistics, media Munich: 1.9 millioni.e. Automotive, mechanical engineering etc Frankfurt a. M.: 1.9 millioni.e. Finance & banking Nuremberg: 1.0 millioni.e.Embedded systems Hanover: 1.0 millioni.e. Automotive Leipzig: 511,525i.e. Renewable energies, chemistry1821934> 500 people/km2> 200 people/km2> 100 people/km2> 50 people/km2≤ 50 people/km2> 1,000,00 people> 500,000 people≤ 500,000 people657637Cities859Source: Reader's Digest Atlas Deutschland 2007; Federal Statistical Office 2007

Average population density: 231/km2

40.3 million (48.9%) of the German population live in metropolitan areas with more than 500 people/km2

Major metropolitan regions:

MapOverview: ICT Companies in GermanyCOMPETENCE NETWORKS INITIATIVEUnitesthemost innovative and high-performance technologically oriented national competence networks that are characterized by a very close proximity to the market and the industry, deep regional roots, dynamism and flexibility.Source: BMWi – Kompetenznetze Deutschland (kompetenznetze.de), BITKOM/Roland Berger 2008, Bureau van Dijk 2008

Cost of Living – International Comparison Mercer’s survey covers 143 cities across six continents and measures the comparative cost of over 200 items in each location, including housing, transportation, food, clothing, household goods and entertainment.

IncentivesOperational Incentive PackageInvestment Incentive PackageR&D IncentivesLabor-RelatedIncentivesCash IncentivesInterest-Reduced LoansPublic GuaranteesStateInvestment GrantsKfW Loans (National Level)RecruitmentGrants InvestmentAllowance1State Development Bank LoansCombined State/ FederalTraining SupportLoansSilent / Direct PartnershipWage SubsidiesInviting IncentivesGermany offers different incentivepackagestoreimburse an investmentproject’s expenditures. Additional supportisprovidedbystatesorcities.Incentives Available to Investment Projects in Germany+1 only available in eastern Germany

The German ICT MarketGermany‘s ICT industryisranked 5th in worldwidecomparisonofmarketvolumeICT Industry Market Volumes 2008 (in EUR billion) Source: EITO Update 2008

Market Shares EuropeWith a market volume of above 133 billion EUR Germany’s ICT Industry ranks second in EuropeEU25 ICT Industry Market Volumes 2008 (in EUR billion) Source: EITO Update 2008

The German ICT Market822,000 full time employees work directly in the ICT sector Software and IT Services: 49.7%TelecommunicationServices: 29.5%Another 650,000 ICT specialists work in other industries i.e. automotive, finance, etc.Job motor: New workplaces mainly created in medium-sized enterprises in the software and IT services industryProduction of Office Equipment and Data Processing Devices: 12.0%Production of ICT Equipment and Infrastructure: 8.8%Source: BITKOM (April 2009)

Another 650,000 ICT specialists work in other industries i.e. automotive, finance, etc.

Job motor: New workplaces mainly created in medium-sized enterprises in the software and IT services industry

IT Services OverviewSegment experiencing consistent growth with outsourcing services leading at 8,8% CAGRSource: EITO 2008Trends & StatisticsMarket Volume (EUR Billion)IT Services market volume of EUR 32,8 billion with projected growth of 5,5% CAGR through 2012Special feature is the large number of IT subsidiaries of large German companies acting independently, ie BASF-IT-ServicesOther growth drivers include embedded systems, vertical integration, compliance, business intelligence, and ECM

IT Services market volume of EUR 32,8 billion with projected growth of 5,5% CAGR through 2012

Special feature is the large number of IT subsidiaries of large German companies acting independently, ie BASF-IT-Services

Other growth drivers include embedded systems, vertical integration, compliance, business intelligence, and ECM

IT Services OverviewWithinthe German IT-servicessectorprojectservices (6.6%) and BPO (8.3%) showbeyondaveragegrowth. Optimizationandstandardizationarethemainfocus of projectsservices, including ERP packagesMarket value € billion Source: EITO 2008

Withinthe German IT-servicessectorprojectservices (6.6%) and BPO (8.3%) showbeyondaveragegrowth.

Optimizationandstandardizationarethemainfocus of projectsservices, including ERP packages

IT Services – growthareas SOA, Outsourcing SOA is not only technology but can be seen as a mindset demanding a transformation of culture. The German outsourcing market offers much space to grow Market Volume Germany in EUR billionSOA standards will encourage an industrialisation of thesector.SOA helpsSME‘sandstart-upstoeasilyoffertheirservicesandvalueaddSource: GTAI Research; AMR Research, Research & Markets 08/2008, BITKOM

SOA standards will encourage an industrialisation of thesector.

SOA helpsSME‘sandstart-upstoeasilyoffertheirservicesandvalueadd

Software OverviewGermany is the most lucrative software market in Europe, accounting for 26,1% of the European market‘s value. Leading players:Microsoft 9,9%Oracle 5.4% SAP AG 4.2%Others 80,4%Source: Datamonitor Jan.2008

Trends in the German Software market Software OverviewSoftware marketvolumeof EUR 14,70 billionwithprojectedsteadygrowththrough 2009Distinctivefeatures of German softwaremarketarethe strong presence of SMEs andtheomnipresence of SAPGrowingfieldsinclude Software as a Service (SaaS), Virtualisation, Security, and Embedded SystemsERP and CRM remaina majorgrowthdriverBusiness intelligenceandenterprisecontentmanagementtoolsareemergingareas of investment

Software marketvolumeof EUR 14,70 billionwithprojectedsteadygrowththrough 2009

Distinctivefeatures of German softwaremarketarethe strong presence of SMEs andtheomnipresence of SAP

Growingfieldsinclude Software as a Service (SaaS), Virtualisation, Security, and Embedded Systems

ERP and CRM remaina majorgrowthdriver

Business intelligenceandenterprisecontentmanagementtoolsareemergingareas of investment

Software - SaaSA growing number of SaaS products come to the market and European customers catch up with US companies in the use of this business model. SaaS Market Volume (in EUR million)Market growthwith CRM solutionasdriverSaaSisthefuture model for E-Commerce (2013 ca. 40% of all E-Commerce offers will berealized on SaaSbasis)SaaScanhelptoreachgoodstandard in „greening“ the IT (save energyandpackagingmaterials, lesstransportationneeded, lesstraveling..)Source: Verband IT-Mittelstand e.V.

Market growthwith CRM solutionasdriver

SaaSisthefuture model for E-Commerce (2013 ca. 40% of all E-Commerce offers will berealized on SaaSbasis)

SaaScanhelptoreachgoodstandard in „greening“ the IT (save energyandpackagingmaterials, lesstransportationneeded, lesstraveling..)

Software - VirtualisationUsing virtualisation opportunities helps to make better use of existing capacities, managing growing data volumes and lowering costs.Server virtualisationis a hugetrend in Europe, with Germany showingextremelyhighgrowth (61% ofthecomputerspurchasedwithin last 12 monthshavevirtualisationsoftware) Disasterrecovery, back-upandavailabilityarethesectorswithhighestgrowth (customersare large companies + SME‘s)Storage virtualisation will becomemoreimportantastheamountofdataisincreasingand a betteruseofdatastorageitems will save costs + energy.Source: GTAI Research; studyofTechConsult 2008, IDC 2008

Server virtualisationis a hugetrend in Europe, with Germany showingextremelyhighgrowth (61% ofthecomputerspurchasedwithin last 12 monthshavevirtualisationsoftware)

Disasterrecovery, back-upandavailabilityarethesectorswithhighestgrowth (customersare large companies + SME‘s)

Storage virtualisation will becomemoreimportantastheamountofdataisincreasingand a betteruseofdatastorageitems will save costs + energy.

Software - SecurityThe market for IT security (products and services) is growing due to steadily increasing risk potential German market for IT security in EUR MioGerman marketvolumefor IT security was 4 Bn € in 2007 (ca. 8% oftheworldwidemarketestimate) and will increaseto 5 bil € in 2009In international comparison German usersshow a highneedforsecurityWithgrowingconvergenceandmobility in the IT theneedfordataprotectionistheretopreventeconomicdamages due tosecuritylacksSource: IDC 2008, Capgemini IT trendsstudy 2008

German marketvolumefor IT security was 4 Bn € in 2007 (ca. 8% oftheworldwidemarketestimate) and will increaseto 5 bil € in 2009

In international comparison German usersshow a highneedforsecurity

Withgrowingconvergenceandmobility in the IT theneedfordataprotectionistheretopreventeconomicdamages due tosecuritylacks

Software - Embedded SystemsEmbedded Systems is an important cross-sectional area of the German ICT market.Embedded Systems Market Volume (separated by sectors) in EUR billionEmbedded Systems reached market volume of EUR 19 million in 2008 in Germany, generated from both suppliers (EUR 4 billion) users (EUR 15 billion)ES serve (financially) strong verticalmarketslikeautomotivesectorandmechanicalengineering. No other sector of Germany’s information technology industry is growing as stable and continuous as the embedded systems market ES companiesareoftenhighlyspecialisedSME‘s, Bavaria/ Nuernbergregionis a clusterSource: BITKOM, Roland Berger, GTAI Research

Embedded Systems reached market volume of EUR 19 million in 2008 in Germany, generated from both suppliers (EUR 4 billion) users (EUR 15 billion)

ES serve (financially) strong verticalmarketslikeautomotivesectorandmechanicalengineering.

No other sector of Germany’s information technology industry is growing as stable and continuous as the embedded systems market

ES companiesareoftenhighlyspecialisedSME‘s, Bavaria/ Nuernbergregionis a cluster

Internet – Germany‘s Broadband MarketGermany has by far the highest number of internet users in Europe creating large potential for businessInternet Penetration72%72%64%52%38%Number of Internet users Number of internet users and internet penetration in Europe (in million and percent of the population)Source: Bundesministerium für Wirtschaft und Technologie (BMWI), 2008

Internet / Multimedia OverviewStrong industry with consistent growth in relevant sub-segmentsGaming Market Volume(EUR Bn)Online AdvertisingMarket Volume (EUR Bn)E-Commerce Market Volume (EUR Bn)Improved online security standards encouraging more E-commerce among private consumers, yet over 90% of E-Commerce consist of B2B transactions (30% of EU market)Online, mobile, and multiplayer games, as well as portable consoles, are gaining momentum over traditional console and PC gamesOnline search word marketing projected to growth 25% from last year, while classical online ads remain prevalent Source: BITKOM, BIU, PricewaterhouseCoopers LLP, WilkofskyGruen Associates , OVK, Nielsen Media Research

Improved online security standards encouraging more E-commerce among private consumers, yet over 90% of E-Commerce consist of B2B transactions (30% of EU market)

Online, mobile, and multiplayer games, as well as portable consoles, are gaining momentum over traditional console and PC games

Online search word marketing projected to growth 25% from last year, while classical online ads remain prevalent

Telecommunications – Mobile Data ServicesMobile data services is the fastest growing segment withinthe telecommunications servicesMarket Volume in EUR Billion3G penetration expected to reach more than 60% of all German subscribers by 2012 Smart phone market is growing: services as part of the success Data services are the main driver of the mobile internet-> Mobile entertainment (advertising, video, games, and music)-> Social networks and communities are among the most popular mobile applications, driving about 40% of mobile internet traffic worldwideSource: Goldmedia Study 'Mobile Life 2012'; BITKOM

3G penetration expected to reach more than 60% of all German subscribers by 2012

Smart phone market is growing: services as part of the success

Data services are the main driver of the mobile internet-> Mobile entertainment (advertising, video, games, and music)-> Social networks and communities are among the most popular mobile applications, driving about 40% of mobile internet traffic worldwide

ICT - important growth sectors overall market Market growth areas: Green IT + E-Energy +E-health Mobile applications: increase in non-Voice-services like SMS,MMS, data services)Embedded Systems (+10% annual growth at the vendors side): automotive sector, equipment, process measurement & control/ RFID (2012 share of 8% of gross value added in manufacturing logistics, sales, service industries)IT-Services: Outsourcing, SOA, Cloud computing Software : SaaS, virtualisation for better use of IT resources, information on demand, community and collaboration software

Example: OEM manufacturing plantsA large number of OEMs forms a broad customer base and thereby provides various opportunities for suppliersHamburgBremen27254335403908053009240745340447482921444119203218260302163723381514424606131736310128Berlin33HannoverDüsseldorf1011Dresden2212StuttgartMunichdata2map.deSource: Germany Trade and Invest (February 2009)

THANK YOU! We look forward to seeing you soon in Germany

HessenHessen has the highest Productivity in Germany.HessenBasic data (2008)FrankfurtKasselWiesbadenDarmstadtSource: Federal Statistical Office, German Association of Cities and Towns 2009, Note: *Data from 2007

HessenHessen Source: Hessen Agentur

HessenHessen Source: Hessen Agentur, * industry plus the customer service sector