Tradition and Diversity Are the Key - Germany s Undenied Technology Capital

Tradition and Diversity Are the Key ” Germany's Undenied Technology Capital

The city of Munich is the capital of the Free State of Bavaria, which is one of the 16 L nder (states) that make up the Federal Republic of Germany, the largest economy within the European Union. Germany has approximately 82 million inhabitants; after Berlin and Hamburg, Munich is Germany's third largest city, with a population of approximately 1.2 million. Since the 1950s, Bavaria and especially the Munich region have emerged as the most important high-tech region in Germany, competing with greater London on a European level, and with Silicon Valley, Boston, and Tel Aviv on a global level.

Table 10-1. Facts at a Glance ” Munich

Population	1.2 million (Munich), 12.1 million (Bavaria), 82 million (Germany)
Political function	Capital of Germany's Free State of Bavaria
State government	Christian Social Union (CSU) Party
Minister president	Dr. Edmund Stoiber
Munich's region's ICT cluster age	Approximately 10 years
Munich region ICT companies	26,000
Employees in Munich region's ICT companies	350,000
Munich region media companies	11,425
Employees in Munich region's media companies	127,000
Students in Munich's higher educational institutions	80,000
Engineers, mathematicians, and other scientists in education	30,000
Foreigners as percentage of total employees	25%
Bavaria's GDP (1999)	Approximately $292 billion ($24,000 per capita)
Bavaria's investment in R&D	2.7% of GDP
Bavaria's FDI	Approximately $114 million (1998), $465 million (1999)
Foreign owned companies in Bavaria (including minority stakes)	1,709 (Revenues: $68 billion, 247,000 employ )
Bavarian unemployment	6.6% (Germany total: 10%)
Sources: www.invest-in-bavaria.de, www.stmwvt.bayern.de , Bayerische Staatskanzlei. Unless indicated, 2000 figures are cited. For European comparisons, see "Facts at a Glance ” Sweden," on page 112.

In Bavaria, information and communications technology (ICT) is concentrated for the most part around the Munich and Nuremberg regions. More large technology companies have located within the Munich region than anywhere else in the world except for Silicon Valley. Traditional German technology companies such as Siemens, BMW, and MAN have attracted many smaller suppliers and partners to the area, and have increasingly been joined by large American high-tech companies such as 3Com, Cisco, Compaq, Intel, Lucent, Microsoft, Netscape, Oracle, and Sun. As of April 2000, 26,000 ICT companies were based in these two regions , employing over 350,000 individuals. ^[1] Currently, the most important Bavarian ICT and media industry sectors are:

• IT hardware, electronic components , and appliances

• Publishing and printing

• Data and IT services

• Marketing, market research, and journalism

• Audiovisual and multimedia

• Software

Of all the software companies present in Germany, 40% are located in Bavaria, as are 30% of all companies quoted on the Neuer Markt, the German equivalent of the Nasdaq. According to a study conducted by Bain & Company, 25% of all German Internet companies are based in Munich. Furthermore, Munich is home to the world headquarters of Allianz and M ¼nchener R ¼ck, making it one of the most important insurance locations in the world, and the second most important banking location in Germany. Leading even the greater London area, the Munich region boasts the highest venture capital density in Europe.

Regardless of its long technological heritage, Munich as a high-tech cluster only started developing in the 1990s and is thus younger than its global peers. According to Bain & Company, over 80% of the high-tech start-ups in Munich are less than five years old. Internet technologies make up the youngest sector in the region, while biotech and technology sectors are the oldest. Of Munich's high-tech companies, 50% employ 20 employees or less ^[2] (see Figure 10-1).

Figure 10-1. International age comparison of high-tech clusters.

Source: Bain & Company, 2001.