Germany: Market overview

Aerospace represents one of Germany’s most innovative and highest performing sectors. Germany has a highly active aerospace industry with CAE, Bombardier, Pratt & Whitney Canada, and MDS Aero Support among the Canadian companies with a presence in the country. Aerospace touches all pillars of international commerce – trade, investment, and innovation – and Canadian companies in this sector could further benefit from investment in Germany.

Germany is the largest food importer in the EU. Canada has a market position in grains, oilseeds, sugars/maple products and fruit preparations. Almost 96% of EU agri-food tariff lines will be duty-free with the partial implementation of CETA, helping to facilitate more exports of Canadian products such as:

• fish and seafood
• beef
• value-added food and beverage products
• pet food

Opportunities exist in trade, investment and innovation. Several Canadian parts manufacturers such as Magna, Linamar and Martinrea are well established in Germany with multiple plants. Several other Canadian industry players have sales and engineering subsidiaries in the country.  German companies have continuously grown their presence in Canada, for instance:

• Brose
• Continental / Vitesco
• ElringKlinger
• Robert Bosch/ETAS
• Schaeffler

The digital transformation of the automotive industry and the accelerating focus on Connected, Autonomous, Shared and Electric (CASE) solutions has motivated the German vehicle manufacturers and Tier 1 suppliers to launch innovation scouting platforms.  Interest in relevant and cutting-edge Canadian solutions is high and Canadian auto tech start-ups are encouraged to apply online for the various platforms such as Startup Autobahn or BMW Startup Garage.

Germany enjoys a leadership position in sustainable technologies, renewable energy development and energy efficiency and technologies applied to water, air and soil. German and EU targets for carbon neutrality by 2050 is driving development and investment in this sector. German expertise and demand makes the country a prime location to look for both potential partners and customers. The trade commissioners support increased activity via trade events like the IFAT Trade Show in Munich and through research and development (R&D) involving:

• mining
• energy storage technologies
• e-mobility
• hydrogen fuel cells (Daimler, VW, Ballard, Universities, and Hydro Quebec)

As the most populous country in the EU, Germany is a strong market for consumer goods. Important subsectors include:

• apparel/fashion
• sporting goods and supplies
• natural health supplements & cosmetics
• toys & games
• giftware

Canadian companies regularly exhibit at key trade shows such as:

• ISPO in Munich
• PREMIUM in Berlin
• Ambiente in Frankfurt
• FIBO in Cologne

These shows also offer significant business opportunities beyond the German market thanks to the international audience they attract. It will be important to monitor the impact of the overall economic situation on consumer spending habits.

The German market can be very lucrative, but can also be challenging due to market entry barriers owing to intense competition from established homegrown and international brands (particularly in the luxury segment).

E-commerce platforms as a sales channel for consumer products continues to grow with a variety of online marketplaces (some of which are highly-specialized). It is unclear whether the current surge in online shopping during the COVID-19 crisis will be maintained or whether there will be shift to “shop locally” to support local businesses.

Germany is one of the most densely wooded countries in Europe. According to the Third National Forest Inventory, approximately 11.4 million hectares corresponding to  32% of the national territory are covered with forests. Over the past 50 years, forests grew by more than 1 million hectares in Germany (Sources: German Federal Ministry of Food and Agriculture, Forestry in Germany). Germany occupies a leading place compared with other European countries. Canadian producers have a strong interest in German wood technology and are present at many trade shows and conferences in Germany such as:

• BAU in Munich
• LIGNA in Hannover
• Interzum in Cologne
• DACH+HOLZ International in Cologne
• KWF Tagung in Schwarzenborn
• ZOW in Bad Salzuflen
• etc.

In 2019, the Canadian forest industry contributed approximately $23.7 billion to Canada’s nominal GDP and employed around 205,000 people in 2018 (Source: Natural Resources Canada). The Canadian Wood Associations and Canadian producers/exporters have an interest in creating new synergies and research collaborations in that sector and more collaboration is foreseen in the next decade.

Germany is a leading supplier in this sector with a 16.1% share of the global machinery and equipment exports (Source: VDMA e.V.). As part of its Industrie 4.0 initiative, the country is heavily investing into the automation and decentralization of production. Machinery is an already existing export market for Canadian business in Germany. With EDC “pull financing,” and the intra-corporate trade of German and Canadian companies, there are opportunities to grow this sector through greater Canadian investments and trade.

Canadian companies have been successful in Germany’s ICT sector. They include:

• CGI
• OpenText
• BlackBerry
• QNX
• Redknee (Optiva)

The convergence of manufacturing and ICT, or Industry 4.0, along with the evolution of the Internet of things (IoT), are presenting significant new opportunities for ICT companies. The country is on the cutting edge of artificial intelligence research and development. Germany also offers a very start-up friendly environment with an extensive network of incubators, numerous potential partners, and generous governmental support. Gamescom, Europe’s leading trade fair for the gaming industry and the largest gaming event in the world, is the most important opportunity for Canada’s gaming industry in this market.

Canadian e-commerce powerhouse Shopify has grown its customer base in Germany, proving once again that Germans will use international technology solutions that are advanced and make business sense.  This has been particularly apparent in Consumer Products where sellers are taking advantage of the various online marketplaces and excellent delivery infrastructure that allows products to reach consumers within one or two days.

The German infrastructure sector is highly advanced, competitive, and tightly networked. It contributes more than EUR 300 billion annually to Germany´s economy. CETA is expected to open up new opportunities for Canadian companies in this sector, including the
possibility of increased access to government procurement in Germany.

Given the generally good economic situation in Germany, relatively strong growth is expected in the building sub-sector in the coming years with residential construction as the key driver. Trends that are increasingly shaping the German building sector include sustainability and digitization. Canadian companies have been successful in responding to these trends in the German market, mainly based on wood-type structures and energy efficiency. Canadian exporters can use the opportunity of BAU, Munich and LIGNA, Hannover to highlight Canadian capabilities in the field of building and construction products, solutions and technologies.

The 2019 Global Competitiveness Report by the World Economic Forum gave a high ranking to Germany’s:

• roads and airports
•  rail and port infrastructure
• outstanding electricity and water supply network

Yet renovation and expansion are required in key elements of Germany’s infrastructure, including roads, bridges, and railways. Major modernization projects are planned over the next years which will focus more on maintenance and renovation rather than new construction projects. Canadian exporters can take advantage of the opportunities offered by the air cargo EUROPE exhibition and conference and the transport logistic international trade fair to showcase Canadian capabilities in the field of logistics. The Railway Forum conference and InnoTrans trade fair are other important events for railway infrastructure and related technologies.

As the largest medical devices and pharmaceuticals market in Europe and third largest in the world, Germany is an important market for Canadian exporters and a leading source for FDI and R&D collaboration opportunities.  The COVID-19 pandemic has drawn global attention to the German health care system and industry. German industry has been playing a key role in the development of a  vaccine for the coronavirus and has garnered investment and partnerships from around the world. The country’s medical technology manufacturing sector, especially for ventilators, has been prominently highlighted. There is also an increasing amount of R&D cooperation covering a range of areas, such as:

• regenerative medicine
• vaccines
• neuro-degenerative diseases and allergies

MEDICA, the world’s leading medical technology trade fair, is a great opportunity for Canadian companies to show their capabilities in this sector.

Germany will require strategic raw materials and R&D cooperation in the mining sector. This provides substantial opportunities for Canadian companies with world-renowned expertise in mining.

Themes, including the Arctic and mining permeate the ocean technologies sector. Opportunities exist for increased technological cooperation and new business in marine industries, the latter being connected to the National Shipbuilding Procurement Strategy (NSPS).

Over the past few years the number of German travellers arriving to Canada has steadily increased. However, the pandemic has led to a significant drop in numbers in 2020 as with other countries around the world (Source: Statistics Canada). Strict border measures and travel regulations have largely brought international travel to a halt, making the tourism industry one of the hardest hit industries by the pandemic. Yet Germany remains a priority tourism market and it is time to promote Canada as a tourist destination to stimulate tourism once COVID-19 measures are relaxed. In doing so, it will be important to adjust to new trends in tourism that emerged from the pandemic. Reaching out to consumers, business and media can provide ample opportunities for Canadian tourism enterprise to invest in Germany to promote tourism in Canada, such as at major annual events like ITB in Berlin (for consumers), and IMEX in Frankfurt (Conventions, Incentive travel).