If you think that Hamburg is just a hub for northern Germany’s traditional activities of logistics, the maritime industry and home of the big German media flagships like DIE ZEIT or DER SPIEGEL, then think again. It certainly is a world-renowned cluster for these sectors, but these days it is so much more than that too. Julia Lemagnen discusses the surprisingly varied business community in Hamburg with Stefan Matz, Director International Business, Hamburg Business Development Corporation (HWF).
“People are astonished when they come here to visit and see what a wide variety of industries we have, on the one hand, and that Hamburg is a nice place to live and work, with green space and a good quality of life, on the other hand,” says Mr Matz.
Hamburg does of course boast the world’s third largest cluster in the aviation sector (civil aviation engineering and maintenance), and is one of Germany’s media hotspots. So much in the region depends on the logistics – Hamburg is Europe’s third largest sea port and has a river port which comes inland to the city. The historically important industries of ship maintenance and repair, alongside maritime component suppliers, are still vital to the Hamburg region too. It is home to the European HQs of the 7 largest ship owning companies from Japan, Korea, Taiwan and China. But today there are also high tech businesses growing up around and within the traditional sectors. Take a look at the special focus on 3D printing in the airline industry. Hamburg is one of Germany’s four main media hubs (the other are Berlin, Cologne and Munich) and it is at the leading edge in the development of high tech 3D printing for aviation applications. “You can 3D print a spare part in the location where it’s needed, anywhere in the world,” Mr Matz explains. This is a fantastic USP for Hamburg in this sector, enabling companies to save on component inventory and respond more quickly at the point of need.
Similar pockets of high tech work are springing up in the media industry in Hamburg too. The region is seeing strong growth in the gaming industry, and has a growing digital industry generally, including telecoms and internet. Automotive and food companies are also present, and there is a focus on renewable energy, particularly wind, with many international players such as Asian companies opening offices for marketing, research and logistics in the Hamburg area. The region also produces state-of-the-art laser technology for materials inspection and analysis.
You might not associate Hamburg with the life science sector, yet there is a burgeoning R&D culture here and links with universities are growing. Hamburg has activities in both consumer-facing medical products such as home-use blood pressure testing kits and in industrial medical equipment and biotech. Twenty-five years ago, Japanese corporation Olympus bought Hamburg-based endoscope manufacturer OWI and Hamburg continues to be the company’s European headquarters, with 2,500 people. In some ways, it is more helpful to think of Hamburg as the southernmost part of the Nordic and Baltic Sea region, as its development and skills have so much in common with Scandinavia, and it is only 300km from Copenhagen.
Hamburg has the obvious benefits of specialist skills, involvement at different levels of the value chain in the one location, and easy access to both the European mainland and the Nordic and Baltic Sea region to the north. But it also attracts people for its lifestyle, as Mr Matz points out: “A very high percentage of students who come to Hamburg to study end up staying and living here. Hamburg people are very proud of their city and its cultural heritage. They have an interest in the fine arts, and this year we have just opened a spectacular new concert venue, the Elbphilharmonie in the port district of HafenCity, part of a huge urban development project in the city.”
Tourism is increasing in Hamburg. Seven or eight years ago, hardly any cruise ships visited Hamburg. This year, 190 cruise ships will berth in the port, and many tourists will extend their stopover to visit the city’s shopping and cultural amenities. Stefan Matz sees a huge potential in extending the value chain of this and other sectors: “We’re thinking of the whole value chain, upstream and downstream, with research, manufacturing and logistics, and we can do this in multiple sectors such as renewable energy, maritime and aviation in particular.”
I asked Mr Matz about Hamburg region’s strategic priorities, and China is high on their list: “We have been targeting China for over 30 years and it is of high importance to us. We have an intensive cooperation with Shanghai, although we try to cover China nationwide. It is a big country, but the industry is in the provincial capitals. Twenty Chinese companies set up in Hamburg each year currently, and there are 150 in the pipeline at any one time. Our focus is more on small startups and medium-sized companies, however we also deal with large conglomerates such as the huge steel companies.” In fact, Germany is China’s most important trading partner in the EU, with nearly 50% of Chinese-German trade being handled via Hamburg*. Over 900 Hamburg-based companies are active in China and most have offices there. The Hamburg Chamber of Commerce in China supports companies particularly in Shanghai and Beijing, promoting Hamburg for both business and tourism jointly. Other regions of Germany also do well in China, for instance the automotive industry in Munich and the finance sector in Frankfurt have strong ties with China. Promotional activities play a key role, such as the very successful Hamburg Summit ‘China Meets Europe’** which has been running since 2004.
Mr Matz sees the UK as a promising prospect for the future too. “Hamburg is the most ‘British’ city in Germany and the mentality is close to the UK mentality. We have always had close ties with Britain. Companies such as the Asian blue chips, who might naturally think of London, might want to go somewhere with the same currency as the rest of Europe and might be more open to thinking about Germany. Maybe Brexit will shift the balance in the long run. However, we want Britain to be as strong and as integrated with Europe as possible. We feel a more dynamic UK is better for the rest of Europe,” he says. Of course, in Britain we have not forgotten our historic connection with Hamburg via The Beatles!
I wondered if and how Hamburg would be approaching opportunities in India in the future. They have an office in Mumbai, but what is the potential for them there? “India’s potential is on a much smaller scale than China. The country is at a different development stage. India is interesting and we have about 40-50 Indian companies in Hamburg,” Mr Matz says. And what of North America? “We have 100 companies from the US in Hamburg. We are restructuring to focus more on the US, as we already have some big names including Johnson & Johnson, GE, Google, Facebook and Exxon Mobil,” he continues.
What is it about Hamburg region’s proposition that allows them to compete? Stefan Matz feels it is the overall package that is attractive about Hamburg, combining soft factors such as lifestyle with good market potential, land availability and transport connections. “The daily cost of living is 50% cheaper than in London,” he claims, “and softer things like international English-speaking schools, good public transport and cycle routes, an airport very close to the city, and safety and security are important factors. Cities are changing and life quality and sustainability are becoming more important. Younger people don’t feel they need their own car, for example.” Hamburg Business Development Corporation offers creative types of financial assistance too. They pay the first six months’ rent for small companies starting up, and offer legal and tax advice in the investor’s own language free of charge, to help new investors have a smooth arrival to the region.
The Hamburg team have adopted another innovative approach to promoting their city around the world. They have a programme of ‘honorary ambassadors’ working to promote Hamburg in many fields of business and culture. The ‘International HamburgAmbassadors of the Free and Hanseatic City of Hamburg’ programme*** has 36 ambassadors living abroad who are closely connected with the city and who promote Hamburg through events and activities on a voluntary basis. There are currently six in the USA, and most European countries have one, including London. They are from different backgrounds, but often from the world of business/economics and are in touch with companies who might be looking to develop internationally. Some are strong in the cultural world, or in sport. The candidates are selected by a body including investment promotion and Chamber of Commerce staff, and this international network of Hamburg provides a valuable contribution to the region.
Hamburg is building on its past industrial success with new ways of making the city and surrounding region competitive and attractive. The strategy is working and modern and innovative sectors and approaches are arriving on the Baltic coast of Germany.
* “Corporate Investment Opportunities in the Nordics and Baltic Sea Region 2016” study, MCJ Lemagnen Associates Ltd, 2016, www.locationessentials.com
Hamburg Business Development Corporation – HWF
HWF acts as a service partner and main contact for any company wanting to expand, restructure or relocate in the Greater Hamburg Region. It sees its role as a pilot who guides business interests through the “jungle” of public authorities and institutions. HWF is acting independently, confidentially, free of charge and opens paths for international business in Hamburg. It informs about the Region’s economy and provides links to sources of information, public authorities and institutions. HWF’s international business section supports international business regarding extensive locational and investment information, support in setting up business in Hamburg, assistance in procuring residence and work permits. Under its roof the Hamburg cluster initiatives for logistics, aviation, life sciences, media/IT, renewable energies and maritime industry are located.
Since 2004 Stefan Matz has worked with strong engagement as HWF Director International Business, promoting Hamburg as worldwide business hub. The international department realizes not only the acquisition of international companies but also supports international companies already located in Hamburg in their plans to expand and develop. Stefan Matz was born in 1963 in Hamburg. He started his career in 1984 as Project Manager in the international import and export of machinery and in 1988 he overtook the direction of the branch office of “Norddeutsche Überseegesellschaft” in Hong Kong and Bangkok with responsibility for South-East Asia. He continued working as Export Marketing Manager for JK Ergoline GmbH in Bad Honnef/Rhein, in charge of the development of the international distribution channels. In 1995 he started to work for HWF as Area Manager for China, Japan and USA until 2004.
Julia Lemagnen has worked in international business for 25 years in both business-to-business and business-to-consumer market research. She previously worked as Market Intelligence Manager at logistics specialist Unipart Group, and as part of a UK-based brand research agency she handled marketing and research assignments for clients such as Microsoft and 3M. She is experienced in a wide range of industries and research methods and has been working in the field of economic development and foreign direct investment since 2002. Julia co-founded MCJ Lemagnen Associates in 2010.