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North Rhine-Westphalia: Investors’ First Choice in Germany

November 21, 2018 • BUSINESS & INNOVATION, Global Giants, Editor’s Choice, Top Investment Destinations

­­North Rhine-Westphalia (NRW) is strong, dynamic and ideally located. The state is the most important economic region in Germany and has for years been one of the most popular locations for foreign companies in Europe. For them, the location is a real success factor – NRW is an innovative and cosmopolitan state with plenty of room for investment.

 

North Rhine-Westphalia (NRW) is a highly diversified and attractive business location with conditions that offer investors optimal opportunities for success. Above all, companies value its central location in the heart of Europe. With 17.9 million inhabitants, NRW is the most populous of Germany’s 16 federal states. Around 160 million people live within a radius of 500 km around the state capital Düsseldorf – equivalent to almost one third of all EU consumers. From no other location in Europe can so many people with such high purchasing power be reached within such short distances as from NRW. The state accounts for 21.5 percent of Germany’s purchasing power. The inhabitants of NRW annually spend more than 360 billion euros on private consumption and already constitute an interesting consumer market in themselves. In 2017, the state generated 21.2 percent of the German GDP at 692 billion euros, or 4.5 percent of the European GDP (EU-28). This could have put NRW among the top 20 in a worldwide ranking if it was an independent state.

The size of its market attracts companies to the Rhine and Ruhr. 20 of the 50 highest growing German companies have their headquarters in NRW, including Bayer, Bertelsmann, Deutsche Post, Deutsche Telekom, E.ON, Henkel, Metro, Rewe, RWE and thyssenkrupp. The trading volume in NRW is also impressive: 15 percent of German exports are “Made in NRW”, with a total value of 191.4 billion euros and 21.9 percent or equivalent to 228.4 billion euros of the total German imports go to NRW.

 

Strong business location for foreign companies

NRW’s favourable location conditions also attract foreign investors. Amongst the 16 German states, NRW has established itself, by a wide margin, as Germany’s No. 1 investment location for international companies. With 179.3 billion euros or 26.1 percent at the end of 2016, the state recorded the largest share of a total of 686 billion euros of direct investment in Germany. There are now approximately 20,000 foreign companies based in the Rhine and Ruhr. They include global players such as 3M, BP, Ericsson, Ford, Huawei, QVC, Toyota and Vodafone, as well as numerous SMEs. And the trend is rising – in 2017 alone, around 421 foreign companies opted for NRW as their investment or expansion location.

North Rhine-Westphalia is a highly diversified and attractive business location with conditions that offer investors optimal opportunities for success. Above all, companies value its central location in the heart of Europe.

A lot of these international firms have settled in NRW for many years and continue to grow – forging ever stronger ties and partnerships in the region. One of them is the Japanese company Shimadzu, the world’s leading developer and supplier of analytical instruments, laboratory technology and medical devices. Founded in 1875, Shimadzu settled in Düsseldorf as early as 1968 and has had its European headquarters in Duisburg since 1987. Last year, the company reached a new milestone in NRW by opening the Shimadzu European Innovation Centre, an innovative think tank that combines academic, scientific and technical know-how and develops innovative solutions specifically for customers.

Another example of those long-established foreign companies in NRW is the British IT service provider, Computacenter, supplying complete computer networks including software and hardware to companies and public clients. For 25 years, Computacenter has been located in Kerpen, where the construction of a new German headquarters began last year with an investment of 40 million euros. In addition, the company is renting a further 29,000 square meters in a logistics centre to expand its configuration and logistics capacities.

With regards to logistics, the U.S. online retailer Amazon also seeks to continually grow in NRW despite having greatly expanded its presence in recent years. Since the start of logistics activities in Rheinberg and Werne seven years ago, further locations in Bochum, Dortmund and Krefeld in various functions were added in 2017. In addition, Amazon operates a research and development centre in Aachen. More locations, for example in Mönchengladbach, are planned. All in all, Amazon provides full-time employment to about 6,500 people in NRW.

 

Top position in international comparison

The attractiveness of NRW as an investment location is yet not only confirmed by those figures but also by several studies conducted by the London-based specialist journal for foreign direct investments, fDi Magazine. In the overall ranking of all major European regions with more than four million inhabitants, NRW occupies 1st place in 2018/2019 in the category “Human Capital and Lifestyle” ahead of the region’s South East England and Paris, as well as second place in the categories “Large Regions of the Future”, “Western European Regions of the Future” and “Best For FDI Strategy”. In particular, investors are attracted to the region’s superior business conditions.

U.S. online retailer Amazon also seeks to continually grow in NRW by greatly expanding its presence since the start of their logistics activities seven years ago. Amazon provides full-time employment to about 6,500 people in NRW.

There are good reasons for this. The state’s excellent infrastructure plays an important role. All major European cities can be reached within three hours from the two major international airports in Düsseldorf and Cologne/Bonn, Germany’s third largest cargo airport. A dense network of waterways, railways and roads provides fast routes to the sales and procurement markets in Europe and the rest of the world. In Duisburg, the world’s largest inland port with more than 131 million tons of goods handled per year ensures reliable connections to the Belgian and Dutch seaports. Another reason is the many available industrial and commercial sites which provide ample room for investment. But NRW has even more to offer.

 

Excellence through diversity

As a creative and innovative business location, NRW is characterised by its diversity. Here, science and research deliver first-class performance. The more than 110 technology centres and non-university research institutes in NRW form the densest research network in Europe and provide ideal conditions for technology transfer. And the wide range of studies offered by the 70 universities and universities of applied sciences ensures that companies from all industries can find qualified employees here. For this reason, many of the companies based in the state are market leaders in their sectors. This is also reflected in the more than 100 international trade fairs that take place in NRW every year.

The more than 110 technology centres and non-university research institutes in NRW form the densest research network in Europe and provide ideal conditions for technology transfer.

In 2017, industries in NRW turned over around 350 billion euros and thus formed the basis for the success of many sectors. These include the business-oriented and knowledge-intensive services. Overall, the service sector alone generates 72.1 percent of the state’s economic output. Nevertheless, NRW remains the industrial heartland of Germany. The state is home to large industrial corporations of world standing as well as dozens of smaller companies which are leaders in their respective business fields.

 

Research in future technologies

The broad mix of global players and SMEs in combination with a powerful research network ensures the innovative strength in NRW. Numerous sectors benefit from the close collaboration between industry and applied research establishments. One of them is the automotive industry – NRW being a central location for Germany’s automotive supply industries. At least a small piece of NRW is part of almost every car built anywhere on this planet. To keep it this way, companies and scientists are doing intensive research in future technologies such as electromobility.

For instance, researchers at RWTH Aachen University have developed the innovative electrically-powered “StreetScooter” together with 80 technology partners. The electric vehicle has a range of 130 kilometers and a top speed of 120 kilometers per hour. Researchers have completely re-thought the structure of the car by building it centered on the battery. This way, they were able to reduce the assembly stations from 100 to just 20.

Subsequently, the StreetScooter GmbH commenced to develop delivery vehicles for postal services and presented the first commercial vehicle for Deutsche Post DHL in 2012. Since 2014, it has been in nationwide use and in the medium term Deutsche Post DHL plans to replace its entire fleet of 50,000 vehicles with electric cars from NRW. In the meantime, the logistics giant has acquired all shares of the StreetScooter GmbH, making it one of the leading manufacturers of electric cars. Moreover, StreetScooter and the U.S. carmaker Ford cooperate in the production of larger trucks. Due to this cooperation and increased demand, StreetScooter is now operating two production plants in NRW with an overall production capacity of up to 20,000 cars per year.

But RWTH Aachen University is not yet done with the development of electric vehicles. Recently, they have started the production of the electric city car “e.GO Life” – which takes only 17 hours for a single vehicle. With a starting price of around 16,000 euros, the company wants to show that electromobility is competitive and affordable.

 

An outstanding talent pool

But not only the classical industries like the automotive sector are moving forward towards future technologies in NRW, the state is also poised to become the leading location for the digital economy in Germany. Although everyone talks about Berlin when it comes to startups in Germany, surveys such as the German Startup Monitor show that NRW is in the lead. Today, the state is already ahead of Berlin and all other German regions in terms of the number of digital startup companies. Every fifth German startup today comes from NRW, and their number is rising.

In NRW, startups find the framework they require for growth. Outstanding market prospects due to customer proximity, numerous networks, as well as support provided by the authorities and above all a considerable pool of qualified specialists all add up in favour of the location. There are around 764,000 students at the state’s universities. That is more than in the Paris metropolitan area and four times as many as in Berlin. Around 80,000 of them are studying in the fields of computer science and electrical engineering, bringing core competences to the digital economy. So it is not surprising that companies in the digital economy in NRW can cover three quarters of their staffing requirements with local employees. By comparison: In Berlin, every second employee has to be recruited outside Germany in order to cover the personnel requirements of the companies.

In NRW, startups find the framework they require for growth. Outstanding market prospects due to customer proximity, numerous networks, as well as support provided by the authorities and above all a considerable pool of qualified specialists all add up in favour of the location.

This talent pool has also been one of the reasons why the online travel portal Trivago has chosen to stay in Düsseldorf for its new company headquarters. Since its foundation in 2005 in the state capital of NRW, the company has grown to become the world’s largest hotel search engine. When it was sold to the U.S. investor Expedia, Trivago earned 477 million euros, one of the biggest exits in German startup history. Although the company is now listed on the U.S. stock exchange, Trivago has built its new corporate headquarters in its hometown Düsseldorf. Here it can attract enough employees for its enormous growth. In the past two years alone, Trivago has more than doubled its workforce from 500 to over 1,200 employees.

 

NRW.INVEST accompanies the settlement process

The state-owned economic development agency NRW.INVEST conducts international marketing for Germany’s No. 1 investment location, North Rhine-Westphalia. In doing so, it campaigns worldwide for foreign direct investments for NRW. Besides subsidiaries in Japan and the U.S.A., NRW.INVEST operates branch offices in China, India, Israel, Korea, Poland, Russia, Turkey and the United Kingdom. With its international representations and the head office in Düsseldorf, NRW.INVEST supports companies with investment projects or business locations in NRW.

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