[Futur en Seine] The latest challenge the German government has set itself – to support growth in the digital field in Germany and encourage the creation of startups – could prove profitable for French companies looking for a suitable place to set up.
Might French companies find it advantageous to set up in Germany? The largest economy in Europe appears to be bubbling with opportunity and might well be an ideal place for ambitious entrepreneurs to put down roots. This at least this is one of the claims made in a report from the Federal Republic’s foreign trade and inward investment agency, Germany Trade & Invest. The agency is represented in France by Raphaël Goldstein, who unveiled the report at the ‘Futur en Seine’ digital festival held in Paris last week. Germany has some ambitious projects up and running, including the ‘Industrie 4.0’ programme, and the government has set a target of creating 30,000 new jobs in the Information and Communication Technology (ICT) sector in 2015, in addition to stepping up its support for ICT-based SMEs and boosting the number of startups working in this field.
So is Germany becoming a digital hotbed? This is what local investors believe. Revenue generated by the ICT sector totalled over €91 billion in 2013. These figures also augur well for the ICT job market, with close to 1 million people working in this sector in 2015.
A range of ICT market opportunities
Germany Trade & Invest lists six areas of tangible opportunity in the digital/ICT field on the German market. The first trend is perhaps the most obvious: digital marketing which generated more than €6 billion for Germany-based companies in 2014 from online and mobile advertising. The second key sector is video games, generating over €2.5 billion in revenue that same year, which pushed Germany to the top spot in Europe’s online and mobile device video games market. Mobile apps constitute the third biggest market, garnering revenue worth €717 million last year, an increase of 31% between 2013 and 2014. The fourth, still very substantial, area of opportunity is e-commerce, a noteworthy example being the online ‘pure player’ Zalando. Germany dominates this trend in Europe, accounting for 25% of total European B2C e-commerce revenue.
Going forward, Germany is also betting on Big Data, which is currently seeing the most spectacular growth – a 440% increase between 2012 and the forecast figure for 2016. According to Germany Trade & Invest, 45% of all German firms will be using Big Data internally by then, generating over €13.6 billion in 2016. The country is also putting a lot of money and effort into Cloud computing, which is set to generate approximately the same amount – €13.65 billion – in 2016. Figures like these certainly provide a reason for foreign entrepreneurs to consider going and setting up in Germany, as French ‘personalised retargeting company’ Criteo decided to do five years ago.
Several innovation hotspots
With its relatively decentralised geographical pattern, Germany has no fewer than six innovation hotspots, each of which has placed the emphasis on a specific field. The region around Hamburg focuses on the smart city, whereas Berlin specialises in digital games, while Cologne, Frankfurt, Munich and Dresden are also breeding grounds for tech innovation. In addition Germany boasts a powerful digital ecosystem with large successful companies such as Zalando, also benefiting from the positive influence of major international corporations such as Google and Amazon, which have set up there.
Another of Germany’s key advantages is its market for mobile device technology. The Internet penetration rate in the country is 95%, putting France’s 84% penetration somewhat in the shade. Moreover, German Trade & Invest says that the future of the German IT industry lies in mobile technology, in particular developments designed for the Android operating system, which in Germany is used by 68.7% of mobile device owners compared with just 27.8% who use an iOS-based device.