Germany Gateway to Europe Investment Market Trade Productivity

Germany: Gateway to Europe Investment Market Trade Productivity Industries Incentives Contacts Patrick von Wrede – Project Manager David J. Warne Macao International Trade and Investment Fair 21 st October 2005 1

Invest in Germany, headquartered in Berlin, is the primary contact for companies establishing or expanding their corporate presence in Germany. Investment Invest in Germany: Market Trade Productivity Industries Incentives Contacts Financed by the Federal Ministry of Economics and Labour Invest in Germany Gmb. H Anna-Louisa-Karsch-Str. 2 10178 Berlin, Germany Promotes Germany’s advantages as a business location; Provides target groups with sector specific information; Connects investors to Germany’s business development networks; Coordinates site selection proposals and tours throughout Germany. Phone: +49 -30 -206 -57 -100 Fax: +49 -30 -206 -57 -111 E-Mail: office@invest-in-germany. com www. invest-in-germany. com 2

Why Choose Germany? A variety of competitive advantages make Germany a premier destination foreign investment. Tradition of Industry Success Productivity Market Access Investment Market Trade Productivity Kiel Large Qualified Labor Pool Berlin Hannover Potsdam Efficient Infrastructure Magdeburg Essen Business & R&D Cooperation Leipzig Düsseldorf Cologne Bonn Wiesbaden Dresden Erfurt Short Delivery Times Frankfurt Mainz Saarbrücken Contacts Excellent Communication Systems Bremen Industries Incentives Rostock Lübeck Schwerin Hamburg Wilhelmshaven High Quality Specifications Heidelberg Central Location Nürnberg Stuttgart State of the Art Freight Villages Munich Freiburg Dense OEM Concentration Stable Legal Environment Largest Market in Europe 3

Most Attractive Business Location in Europe A recent study by Ernst & Young ranked Germany #1 in several key areas: Transport & Logistics Domestic Market 30 Investment 25 1# Reason: Richest Economy & Biggest Consumer Market 10 5 Germany UK France Poland Local Labor Skills 25 35 1# Reason: Highest Quality & Maximum Skill-Sets Germany 30 1# 25 20 France UK Netherlands Reason: Most Funding & Highest Network Connectivity 20 15 10 5 0 0 Research & Development Complex 30 Contacts Reason: Central Location & Advanced Infrastructure 15 10 Industries Incentives 1# 20 15 Productivity 30 25 20 Trade 35 5 Germany UK France Scandinavia Source: Ernst & Young, “ 2005 European Attractiveness Survey” 0 Germany UK France Scandinavia 4

The Heart of Europe A central geographic location grants access to all European markets. European Union (2005)* Population (millions) Investment GDP per Capita (€) Market GDP Growth 3 h Trade Stockholm Productivity 1. 5 h Industries 460 23, 100 2. 0% Helsinki Riga Copenhagen Moscow London Incentives Brussels 24 h Paris Warsaw Berlin Prague 24 h Vienna Budapest Contacts Madrid 48 h Rome Athens Source: Eurostat (Queen Tree) * Forecasted 5

Europe’s Leading Economy Germany is the largest market in the European Union by both GDP and population. Country Germany Investment Market Trade Productivity Industries Incentives Contacts United Kingdom France Italy Spain Netherlands Belgium Sweden Austria Poland Denmark Greece Finland Ireland Portugal Czech Republic Hungary Slovakia Slovenia Luxembourg Lithuania Cyprus Latvia Estonia Malta European Union (25) United States Eurozone Source: Eurostat GDP € Billion (2004) 2207. 2 Population Million (2004) 82. 5 1715. 8 1648. 4 1351. 3 837. 6 466. 3 283. 8 279. 0 237. 0 195. 2 194. 4 165. 3 149. 7 146. 2 135. 0 59. 5 59. 9 57. 8 42. 2 16. 3 10. 4 9. 0 8. 1 38. 2 5. 4 11. 0 5. 2 4. 0 10. 5 86. 2 80. 8 33. 1 25. 9 25. 7 18. 0 12. 4 11. 1 9. 0 4. 3 10266. 5 10. 2 10. 1 5. 4 2. 0 0. 5 3. 4 0. 7 2. 3 1. 4 0. 4 456. 4 9434. 0 7601. 2 GDP in Percent of EU Total (2004) 291. 7 308. 4 Germany 21% Rest of European Union Percent of Total EU Population (2004) Germany 18% Rest of European Union 6

Efficient Transportation Infrastructure Germany’s advanced infrastructure, in the center of Europe, facilitates access to European markets in all directions. 40, 327 Wilhelmshaven 17, 128 3, 344 8, 317 5, 235 Industries 5, 374 Magdeburg Duisburg 6, 439 3, 228 Aachen Germany 357, 021 France 547, 030 UK 244, 820 Dortmund Essen Düsseldorf Cologne Major Airport Source: Eurostat Halle Leipzig Dresden Erfurt Chemnitz Bonn in sq. km Wiesbaden Mainz Frankfurt Würzberg Kaiserslautern Saarbrücken German Autobahn Kassel Italy 301, 230 Contacts Navigable Waterways Frankfurt (Oder) 16, 014 11, 978 7, 450 Berlin Potsdam Hannover Osnabrück Trade Schwerin Bremen Total Highways Inland Water Transport Market Incentives Hamburg Total Railways 31, 852 Productivity Rostock Lübeck Transportation (in KM) Investment Kiel Major Cities Heidelberg Heilbronn Karlsruhe Bamberg Nürnberg Regensburg Stuttgart Freight Rail Networks Ulm Freiburg Munich 7

Demand for German Products German products find ready markets around the world. Exports 733. 5 (In € Billion, 2004) Investment Market USA 12. 9 64. 8 Japan Trade Productivity Russia 15. 0 UK Incentives France 61. 1 Poland 18. 8 Germany 17. 8 Czech 75. 3 Republic Contacts 52. 4 Industries Italy Brazil 4. 7 Source: German Federal Statistics Office 21. 0 China 8

World’s #1 Exporter High quality, competitively priced goods make Germany the largest exporter. €uro Billion (2004) 1400 Investment Trade World Merchandise Trade 1200 Exports 1226 Market L Top Ten Traders (2004) Imports 1000 Productivity 0 Germany USA China Japan* France Italy UK Canada 229 246 220 254 371 280 282 281 346 200 330 352 Contacts 438 451 477 400 658 600 577 Incentives 800 733 Industries Belgium Source: United Nations Statistics Division - Commodity Trade Statistics Database, *Ministry of Finance (Japan) 9

Main Segments of German Trade Germany is a leading exporter of high quality manufactured products. €uro Billion (2004) Kiel 140 Investment Market Lübeck Cuxhaven Hamburg Wilhelmshaven Emden Bremerhaven Export by Product Segment 120 Import by Product Segment 100 Rostock Greifswald Bremen 80 Trade 60 Productivity Berlin 40 Source: German Federal Statistics Office Medical, Precision & Optical Instruments* Electrical Machinery & Apparatus Communication Equipment & Electronic Components Chemicals & Chemical Products Contacts Machinery & Industrial Equipment Incentives Düsseldorf Cologne/Bonn 20 Motor Vehicles & Trailers Industries Hanover * Includes Watches and Clocks Leipzig/Halle Erfurt Frankfurt Nürnberg Stuttgart Munich Maritime Freight Ports Major Air Freight Centers 10

German Automobile Exports Premium vehicles Made in Germany are appreciated around the world. Motor Vehicles Exports in Billion €uro (2004) Investment Others Destination German Automobile Exports In Percent (2004) Industries 29. 5 28. 3 23. 1 20. 2 19. 8 6. 5 18. 0 Incentives Source: UN Export Statistical Division - Commodity Trade Statistics Database * 2003 stats 3. 5% Belgium 80. 2 Productivity 2. 4% 2. 6% 2. 8% Japan 68. 4* Trade Contacts Switzerland Austria Netherlands 6. 2% Spain 7. 0% France 7. 2% Italy 10. 3% UK 14. 5% USA Market 23. 8% 19. 7% 11

A Leader in Innovation World class human resources and a superlative R&D infrastructure make Germany fertile ground for innovation. Investment Market Trade Productivity Industries Incentives Contacts Countries with the most EPO patent approvals (2004). Top 10 German Patent Segments (2004) Netherlands 3% Switzerland 4% Italy 4% Others 13% 1. Passenger Automobiles 2. Mechanical Parts USA 24% UK 4% 3. Survey and Measurement Equipment 4. Electronic Components 5. Medicine and Veterinary Products 6. Broadcasting Technology 7. Combustion Engines France 7% Japan 18% Source: European Patent Office (EPO), and German Patent Office Germany 23% 8. Packaging and Logistics 9. Data Analysis 10. Electrical Energy Supply* *generation, conversion, and distribution 12

Reducing Costs through Productivity High productivity rates are steadily lowering unit labor costs. Real Unit Labor Costs of Entire National Economies Investment Market Trade Index (1995=100) 104 UK 102 Netherlands Productivity 100 Industries USA 98 France Incentives Italy 96 Germany Contacts 94 92 1995 1996 1997 1998 1999 2000 2001 2002 Source: European Commission, Statistical Annex of European Economy SPRING 2005 2003 2004 2005 13

Chemical Industry The German Chemical Sector is Europe’s industry leader. 1995 Investment 2000 2004 2005* Intra-EU Share % Intra-EU Rank 112. 3 135. 0 142, 1 148, 5 24. 3 #1 Market Sales (billion €uro) Trade Production (% change) - +4. 4 2. 5 - - Employment (in 1000) 536 470 445 443 28. 4 #1 Investment (billion €uro) 5. 8 6. 8 5. 9 27. 2 #1 Exports (billion €uro) 63. 8 76. 6 99. 4 106. 4 22. 2 #1 Imports (billion €uro) 42. 0 52. 7 66. 8 70. 8 18. 7 #1 5. 3 7. 1 7. 7 - 21 #1 Productivity Industries Incentives Contacts R&D Expenditures (billion €uro) Source: VCI 14

Largest e-Commerce Market in Europe Increasing numbers of internet users, acceptance of online payment-billing, and high online security standards promise continued e-Commerce growth. Business to Business and Business to Customer Investment Market In Billion €uro (2004) 180. 3 Germany 22. 3 Trade Productivity 97. 7 UK 22. 6 Industries Incentives 85. 7 France 11. 9 65. 3 Italy 8. 6 Contacts 33. 3 Spain 4. 0 0 Source: BITKOM B 2 B B 2 C 20 40 60 80 100 120 140 160 180 200 15

Information and Communications Technology With a share of over 20%, Germany has the largest ICT market in Europe. Six Largest European ICT Markets Market Share in Percent (2004) Investment Market Trade 21. 2 20. 4 Productivity Industries 14. 9 Incentives 11. 0 Contacts 5. 2 Source: EITO 6. 1 16

Vehicle Production and Export Destination German vehicle production ranks #1 in Europe, and #3 in the world. 10 Largest Auto Producers In Million Units (2003) Investment Market 14 Production Abroad by German Manufactures (2004) 12 12. 0 Trade Incentives 8 6 Units Passenger Automobiles 10. 5 Productivity Industries Y-o-Y Growth 4, 220, 499 4. 6 Commercial Vehicles 10 587, 252 34. 8 4, 807, 751 7. 6 Total 5. 6 5. 1 4 3. 7 Contacts 3. 5 2 3. 0 2. 7 2. 2 1. 9 0 USA Japan Germany Source: VDA 2004 Annual Report China France South Korea Spain Canada Brazil UK 17

Investment Incentives Generous incentive packages reduce investment costs in Germany. Large Companies may receive: Investment For Small- and Medium-Sized Companies these packages can total up to: grants up to 35% in Eastern Germany and Market up to 18 % in Western Germany Trade Productivity Grants 50% Industries Incentives 25% Contacts 28% Gov. Loans, Guaranties, and Holdings Down Payment of the Investor Eastern German States 47% Medium-sized defined: Less than 250 employees with a maximum annual sales of € 50 million or maximum total assets of € 43 million A large company may not hold more than a 25% share in the firm 25% Western German States Small-sized defined: Less than 50 employees with a maximum annual sales of € 10 million or maximum total assets of € 10 million A large company must hold less than a 25% share in the investing firm Source: BMWA, Invest in Germany 18

Regional Distribution of Investment Incentives Investors may profit from a variety of support programs, which vary by region. Kiel Rostock Region Investment Size of the Company Lübeck A B C D E Wilhelmshaven Hamburg Bremen Market Small up to: 50% 43% 28% 15% Trade Productivity Industries Schwerin Osnabrück Berlin Potsdam Hannover Frankfurt (Oder) Magdeburg Medium up to: 50% 43% 28% 7. 5% Dortmund Duisburg Kassel Large Companies up to: 35% 28% 18% 0% 0% Cologne Aachen Bonn Leipzig Erfurt Dresden Chemnitz Incentives Wiesbaden Mainz KEY Contacts Incentive Region A Incentive Region B Incentive Region C Incentive Region D Incentive Region E 100 KM Frankfurt Würzberg Kaiserslautern Heidelberg Saarbrücken Karlsruhe Stuttgart Freiburg Bamberg Nürnberg Regensburg Munich Other state and local incentives are available across all of Germany to small- and medium-sized* businesses. Source: BMWA Database * stipulated by the sizes of the parent company and owners’ holdings. 19

Global Network of Offices Your first step toward investment in Germany: www. invest-in-germany. com Head-Quarters Investment Market Invest in Germany LLC Mr. Michael Rassmann U. S. Representative 345 Park Avenue New York, NY 10154 USA Phone: +1 -212 -454 -1905 Fax: +1 -212 -454 -3220 E-mail: rassmann@invest-in-germany. com Invest in Germany Gmb. H Mr. Gerhart Maier & Dr. Urda Martens-Jeebe Managing Directors Anna-Louisa-Karsch-Strasse 2 D-10178 Berlin Germany Phone: +49 -30 -206 570 Fax: +49 -30 -206 571 11 E-mail: office@invest-in-germany. com Invest in Germany Mr. Iwami Asakawa Japan Representative Sanbancho KS Bldg. 5 F 2 -4 Sanbancho, Chiyoda-ku 102 -0075 Tokyo, Japan E-mail: asakawa@invest-in-germany. com Trade Productivity Industries Incentives Invest in Germany LLC Mr. Kenneth Bremer U. S. Representative Central Region 200 South Wacker Drive, 3 Chicago, IL 60606 USA Phone: +1 312 596 8503 Fax: +1 312 596 8692 E-mail: bremer@invest-in-germany. com Contacts Invest in Germany LLC Ms. Angelika Geiger U. S. Representative Western Region 201 California St. , Suite 450 San Francisco, CA 94111 Phone: +1 415 248 -1246 Fax: +1 415 627 -9169 E-Mail: geiger@invest-in-germany. com Invest in Germany Edgar Horny South America Representative R. Verbo Divino 1488 - 3º Andar 04719 -904 São Paulo-SP, Brasil Tel. +55 11 5187 5166 Fax. +55 11 5181 7013 E-mail: horny@invest-in-germany. com Invest in Germany Ms. Ye Tong China Representative 29 F POS Plaza 1600 Century Avenue, Pudong Shanghai, China Phone: +86 -21 -5081 -2266 Fax: +86 -21 -5820 -6408 E-mail: tong@invest-in-germany. com 20

State Investment Agencies As the federal investment promotion agency, Invest in Germany works closely with the 16 state business development authorities: HAMBURG Baden-Württemberg Incentives Contacts info@berlin-partner. de www. zab-brandenburg. de info@zab-brandenburg. de Bremen www. big-bremen. com mail@big-bremen. de www. hamburg-economy. de/ info@hwf-hamburg. de Hessen www. hessen-agentur. de info@ibh-hessen. de www. ipa-niedersachsen. de info@ipa-niedersachsen. de Mecklenburg-Vorpommern www. gfw-mv. com info@gfw-mv. de North Rhine-Westphalia www. gfw-nrw. de gfw@gfw-nrw. de Rhineland-Palatinate www. isb. rlp. de isb-marketing@isb. rlp. de Saarland www. gwsaar. com info@gwsaar. com Saxony www. wfs. saxony. de info@wfs. saxony. de Saxony-Anhalt www. wisa. de welcome@wisa. de www. wtsh. de info@wtsh. de www. invest-in-thueringen. org info@leg. thueringen. de Eastern Germany * Industries www. berlin-partner. de Brandenburg Thuringia Productivity Berlin Schleswig-Holstein Trade info@invest-in-bavaria. de Lower-Saxony Market gwz@gwz. de www. invest-in-bavaria. com Hamburg Investment www. bw-invest. de Bavaria www. iic. de info@iic. de BREMEN SCHLESWIGHOLSTEIN MECKLENBURGVORPOMMERN LOWER SAXONY BRANDENBURG SAXONYANHALT NORTH RHINEWESTPHALIA HESSEN BERLIN SAXONY THURINGIA RHINELAND- PALATINATE SAARLAND BAVARIA BADENWÜRTTEMBERG *Industrial Investment Council Identifies business opportunities in the “New German States” foreign investors. 21

For More Information Our web-site accesses a wide array of business information on Germany. www. invest-in-germany. com Visit Our Website for More Information Investment Market Trade Productivity Industries Incentives Contacts Phone: +49 -30 -206 -57 -0 Fax: +49 -30 -206 -57 -111 e-Mail: office@invest-in-germany. com www. invest-in-germany. com 22