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Saturday Feature
The global meeting place

          Meeting place Hanover: the crowds of trade visitors have difficulty moving from stand to stand on the opening day of the world's largest technology fair. They slowly throng their way along the aisles -- in search of the latest solutions in automation, robotics and energy technology. Every year in April the Hanover Fair presents the very latest technological developments and attracts specialists from all over the world. For decision-makers in trade and industry this event is an absolute must if they want to keep abreast of developments in their field. This year, 155,000 visitors and 5,175 exhibitors, including 2,322 from outside Germany, came to make new contacts, initiate new deals, or simply meet for a personal discussion.
Trade fairs and exhibitions top the list when it comes to business-to-business communication -- in other words, establishing and developing contacts with potential business partners. According to the Association of the German Trade Fair Industry (AUMA), 81% of surveyed businesses rely on this marketing channel. By comparision, 79% consider having an Internet website important, but only 39% would sell their products over the Internet. Does personal contact still win out in the increasingly anonymous Internet era?
Not directly. Despite all the prophecies, real and virtual marketplaces complement one another in an ideal way. Here, an in-depth talk, a drink, a handshake; there, detailed information and customer service around the clock across national boundaries and time zones. Old Economy and New Economy are merging. Germany is profiting from this development and becoming the hub of the world economy, a process also favoured by its central location. Germany is already the world's number 1 in international fairs. And electronic commerce is more popular here than in almost every other country.
Hanover, Frankfurt, Cologne, Dtisseldorf -- four of the world's five largest exhibition centres are located in Germany. Twothirds of the world's leading fairs in individual industries take place in Germany. Some 10 million visitors and more than 160,000 exhibitors a year flood to the roughly 150 international fairs and exhibitions. A fifth of the visitors come from outside Germany; in the case of exhibitors, the proportion is even more than half. They appreciate Germany as a marketplace. A fair is barely over and business continues by e-mail and on the Internet. Contacts are followed up, orders confirmed. This development is reflected in impressive figures. As a new study by the German information and telecommunications industry association Bitkom shows, e-commerce sales in Germany last year rose by 58% to 321 billion euros with 90% of this total involving transactions between businesses. Today, 30% of all the goods and services in Europe traded over the Internet are already sold in Germany. And this boom is continuing. Market researchers predict that e-commerce sales in Germany will double by 2009. Moreover, this also applies to the business-to-consumer sector, which is already achieving an impressive annual turnover of 32 billion euros, mainly with books and CDs.
Let's look at one example. Last year, Otto, the Hamburg-based mail-order firm, registered a 0.9% sales increase throughout the company as a whole. During the same period, however, the mail-order group sold 30% more goods over the Internet and became the world's second largest on-line trader, behind book giant Amazon. "E-commerce continues to be the growth engine," explains Executive Board Chairman Michael Otto.
The goods -- and that is the link between the Old and the New Economy -- naturally also have to be transported to the customer. This is where the German logistics industry is profiting. Today, it is already by tar the largest in Europe. That is confirmed by a turnover of roughly 165 billion euros and a workforce of 2.5 million employees. In Germany, the industry has risen to first place in terms of number of workers and to fourth place in terms of turnover. It utilises the country's outstanding transport infrastructure with its closely knit network of road, rail, water and air links.
Panorama Hamburg: 40 metres above the quay, on the Doppelkatzbrilcke, the ships look like toys and the trucks like models. In reality, ships of the so-called post-Panamax class, which are more than 40 metres wide and cannot pass through the Panama Canal, are almost unimaginably huge. They can carry 15 containers side-by-side, a total of 6,450 in all. Containers are the units of globalisation. And the Port of Hamburg is the crossibads. It connects the rapidly growing markets of Asia with those in Europe. Today, Hamburg already lies second in Europe, after Rotterdam, and the Hanseatic city has moved ahead of Los Angeles into eighth place in the global league table of sea ports. The port has been achieving double-digit growth rates for a number of years, last year, it expanded by 15%. The port company, Hamburger Hafen und Logistik AG (HHLA), plans to invest more than one billion euros to double its transshipment capacity.
Hub Frankfurt: almost every minute, aircraft from all over the world land at Frankfurt Airport. The arrival and departure times are the pulse of globalisation. And Frankfurt is a heart pacemaker. More than 52 million passengers take off and land in Frankfurt every year, and over 100 airlines link more than 300 destinations in 110 countries.
However, the highest growth rates are being registered in air cargo. Whereas passenger traffic grew by 6.3% in Germany last year, air cargo volumes rose by more than 9%. Frankfurt Airport is the leading logistics hub in Europe. When measured in terms of the value of goods, 40% of freight is now already handled by air. In Europe, 15% of international air freight passes through Frankfurt. One advantage of the airport is its ultramodern Perishable Centre for goods such as fresh fish, flowers and vegetables. Air cargo is a "guarantor of the success of many other industries", says Frankfurt Airport CEO Wilhelm Bender.
Incidentally, the young Frankfurt Airport subsidiary at Hahn, the former military airfield primarily used by low-cost airline Ryanair, was able to increase air freight volumes by 62% last year, thus making it Germany's fourth largest cargo airport in record time.
Focus on Leipzig: the grounds of the airport are a huge construction site. The new southern take-off and landing runway and a more than 50-hectare apron for freighter aircraft are planned to be completed by 2007. Last year, the Deutsche Post subsidiary DHL decided to relocate its European logistics hub from Brussels to Leipzig. Leipzig offered the advantage of a 24-hour operating licence and perfect infrastructure. From 2008, 50 aircraft will serve DHL customers from Leipzig.
According to the Association of German Chambers of Industry and Commerce (DIHK, see interview on page 54), Germany is profiting from open world markets and international links like almost no other country. Global trade and crossborder investment are among the most important preconditions for growth, employment and prosperity in Germany. Consider DHL: the logistics service intends to invest roughly 300 million euros in Leipzig and create 3,500 jobs. Or Frankfurt Airport: Fraport CEO Wilhelm Bender would like to build a new runway today rather than tomorrow to prevent logjams and create jobs. With more than 68,000 employees, Frankfurt Airport is already the largest workplace in Germany, even ahead of the Volkswagen town Wolfsburg; directly and indirectly, the airport expansion could create 100,000 additional jobs -- an enormous opportunity at a time of high unemployment.
Investments in transport infrastructure pay off. That was demonstrated yet again by the introduction of the truck toll on German highways at the beginning of 2005. After a difficult start, the state-of the-art system now functions perfectly and is paying nearly three billion euros a year into public coffers -- the tees for 23 billion kilometres travelled on German autobahns, including roughly one third paid by foreign trucks transiting Europe along the north-south and east-west routes through Germany.
The toll has also turned out to be an intelligent traffic control system. "Empty runs have decreased by 15%," says Federal Transport Minister Wolfgang Tietensee. "At the same time, the number of containers transported by rail rather than by road has increased by 7%. This demonstrates that the toll is contributing to making transport in Germany more environmentally friendly." The dynamic growth of the world economy and Germany's position as exporting world champion will further increase the flows of goods and strengthen traffic lanes and hubs in Germany. In its six-monthly report on the state of the world economy, the International Monetary Fund (IMF) is forecasting global growth of 4.9% this year and 4.7% next year. In the opinion of the experts, the volume of world trade will rise by 8% and 7.5% respectively in the same period. Germany will have a major part in this. Only in January, the IMF stated in its report on Germany that it will retain the largest world market share, even ahead of the USA.
Last year, for the third time in succession, Germany secured the title of world champion exporter. The value of exported goods "made in Germany" rose by 7.5% to 786.1 billion euros -- a record. The export successes were vehicles, machinery, plant and chemical products; the most important buyers France, the United States and Great Britain. Special impetus came from the Middle East. The oil-exporting countries are increasingly investing their dollars in German machinery and plant.
At home, too, the economy appears to be taking off. In April, after years of moving sideways, the Ifo business climate index, which is compiled by the Munich-based Institute for Economic Research (Ifo) and measures companies' current business position and future prospects, climbed to the highest level in 15 years. The most important German economic barometer is indicating the greatest business euphoria since the reunification boom of the early 1990s.
Professor Norbert Walter, the chief economist of the Deutsche Bank who is known for his cutting but accurate analyses, pointed to another cause of the current success. "With the football World Cup we will be having an unprecedented marketing campaign dropped on our doorstep free of charge. Millions of people from around the world will be able to gain a picture of what Germany is like and billions will study our country through the open window of television. The world will discover how beautiful the landscapes, how rich the culture and how inexpensive our country is. And the people will take this opportunity. They will buy more than we think. And they will come back to experience our beautiful cities with their rich cultural heritage more intensively on vacation."


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