Berlin-Brandenburg Takes Europe’s Center Stage

Berlin-Brandenburg capital region has become a major center of bio-technology. Computer lab at Metanomics AG.

Berlin and the state of Brandenburg that surrounds it may have more in common with the Washington Metropolitan Area than you might think.

Like Washington, Germany’s new national capital has international flair, a high level of cultural sophistication, an educated workforce, myriad restaurants, museums and other attractions and a high and growing number of biotechnology and high-tech companies clustering around its periphery.

Residents of the two cities also have in common the circumstance that an unfortunate number of their fellow citizens have mixed feelings about the federal capital of their nation, and from time to time, people from other regions can get downright negative.

There is much cause for mutual affection between the two metropolises. West Berliners have not forgotten the succession of American leaders in Washington who stood by them for 50 years to defend their liberties during the Cold War. President John F. Kennedy’s famous 1961 declaration still resonates in this city: “Ich bin ein Berliner” (literally, “I am a donut,” but everyone understood that he meant “I am a Berliner”).

Of course Berlin differs in countless ways from Washington and it is the dynamic German city’s unique history and spirit that make it one of the most fascinating places to visit in the world. Berlin, much older than Washington, was first mentioned as a settlement along the Spree River in 1237. The surrounding Berlin-Brandenburg Capital Region has nearly twice the population of the Washington Metro Area — there are six million residents in Berlin-Brandenburg, 3.4 million of them in Berlin itself.

But in a way, Berlin is also a very young city; it has only recently regained its role as the federal capital of a reunified Germany, and it continues to be rebuilt. Parts of it were destroyed World War II; parts of it became run-down during fifty years of Cold War.

Meanwhile, the many young people who have come to Berlin have created an “anything goes” atmosphere. Every summer since 1992, young Berliners stage a spectacle called the “Love Parade” - a half-naked Techno-style Mardi Gras celebration. It is the sort of “over the top” festival event that reveals the free-spirited side of the city.

Somehow, it is difficult to imagine any such thing ever happening in Washington.

Berlin has a comprehensive and extremely well organized inter-modal public transportation system that allows visitors to travel to any corner of the city without need for an automobile. Yet many Berliners choose to get around on bicycles instead.

Berlin’s recent past as the flashpoint of tensions between the former Communist Bloc and the West is reflected in the unevenness of the quality and age of commercial development between East and West Berlin. The tallest Communist-era relic is the TV tower that dominates the city skyline.

Berliners remember what it was like living in a divided city and tend to have different attitudes and political orientations depending on which side of the Wall they lived on. The gap between western Germans and “Ossis” — literally “Easties,” a term with negative connotations that is never heard from the lips of eastern Germans — can emerge in many ways.

In this fall’s election for Mayor of Berlin, for example, 48% of voters residing in the eastern half of Berlin voted for the left-leaning Party of Democratic Socialism (PDS), increasingly seen as the only party that really champions eastern Germans’ interests. The PDS’s support from western Berliners was much smaller however, yielding an all-Berlin haul of 26% of the vote, just a single percentage point less than the mainstream, conservative Christian Democratic Union.

The PDS is the successor party to the former Socialist Unity Party that ruled East Germany; but although the PDS remains left-of-center, it has a largely new generation of leaders and its policies have nothing in common with the East German Communists of decades past. Still, the dramatic support for the PDS from the eastern side of Berlin reflects the frustrations that many feel after more than a decade of reunification. Many older eastern Berliners are disillusioned with societal and cultural disadvantages that come with capitalism and would like to see a better combination of the strengths of socialism and the strenghts of capitalism.

At the same time, many younger Berliners on both sides of the city’s former divide have been attracted by the PDS’s populist positions and the youth-oriented image it cultivates in its marketing campaigns. Also, as the only party that steadfastly opposes the war in Afghanistan, the PDS won many votes from the strong strain of pacifism in postwar Germany.

The overall winner of the election, however, was the more moderate Social Democratic Party led by Klaus Wowereit, the first openly gay mayor of a German city.

The issues that divide Berlin, however, are gradually fading as a post-Cold War generation emerges and the city develops into what many hope will become the future capital of an expanded Europe. Berlin’s proximity to Poland — and to Eastern Europe in general — is widely seen as a key strength and a factor that will help shape its economic future.

There is a widespread sense that, while promoters of the city may overuse the concept of its being a “gateway,” they’re probably nevertheless correct. Moreover, the city’s significance within the European Union as a commercial and political center will be greatly enhanced when the EU expands into Eastern Europe in the next few years.

Berlin was East Germany’s largest industrial center, and it still has substantial manufacturing industries, particularly in engineering, food and beverages, pharmaceuticals, textiles and electrical goods. But according to managing director Volker Hassemann of the city’s marketing company Partner für Berlin, the future direction of Berlin’s economy lies elsewhere.

“I don’t expect many more large manufacturers to locate in Berlin,” says Hassemann. “There are too many less expensive places for them to go. Berlin’s economic future is in the growth of small- and medium-sized companies, that is, for entrepreneurs, particularly those in the fields of biotechnology and high-tech and information technology.”

But other service-oriented companies, such as financial service companies, are gradually relocating to Berlin. More than 900 companies in Berlin received venture capital in 2000.

A Brandenburg company, Cargolifter AG, has built the largest Zeppelin hangar of its kind in the world to produce “flying cranes.” Cargolifter’s headquarters is located at a former Soviet airbase in Brand.

Indeed, Berlin is wide-open and filled with opportunity. The city is becoming one of Germany’s startup capitals. Attracted by generous economic incentives, inexpensive real estate, a large pool of talented and well-trained engineers and scientists, a “hip” urban lifestyle and a business-friendly regulatory policy, the city is almost like paradise for entrepreneurs. In fact, in the past five years Berlin has already become a major center for biotech and high-tech startups.

Berlin’s youth culture and creative atmosphere has attracted artists, writers and musicians from all over Europe. It has also attracted major media companies. Media giant Bertelsmann, for example, has relocated to Berlin from Western Germany and is reconstructing an old palace on Unter den Linden Boulevard as its headquarters.

Meanwhile, like the city government of Berlin, the state of Brandenburg is actively reaching out to promote job growth and is seeking new ways to assist startup companies. The state even has a subsidy program to rebuild the German film industry at its own “Hollywood” in Babelsberg-Potsdam that dates back to 1912 and the beginning of cinema.

One of the region’s biggest economic successes so far has been in biotechnology. Up until the mid-1990’s, Germany had slipped well behind the United States and other countries in biotech research and development because of its restrictive regulations and lack of risk capital.

In 1996, the federal government launched an ambitious program that accelerated the approval process and made it easier to finance new ventures. Today, according to an Ernst and Young report called Integration 2001, there are almost 350 life sciences companies in Germany generating some $786 million in sales. The Berlin-Brandenburg Capital Region is home to the largest biotech cluster in Germany, larger than Munich’s cluster, according to a study by BCG Research. More than 120 biotech companies are located there, with more than 2,500 employees.

Increasing demand in the pharmaceutical industry for new products and technology has helped establish numerous companies supplying biotechnological products and services. Additionally, late-breaking biotechnological developments continually open new application fields. Disease diagnosis through genetic testing, protein-protein and protein-DNA interaction clarification through biochip technology (“red biotechnology”), and the use of plants to produce active ingredients (“green biotechnology”) are only a few examples.

The biotechnology industry’s clustering in Berlin-Brandenburg and its accelerating growth have been spurred by a variety of factors, including the region’s enormous scientific community (there are currently 170,000 university and technical school students registered in the region), its proximity to Eastern Europe, transportation infrastructure and the relocation of the federal government to Berlin. But perhaps one of the most important attractions has been the considerable number of public and private organizations set up in Berlin with the express purpose of supporting and promoting biotechnology firms.

Biotop Berlin-Brandenburg (www.biotop.de) is a non-profit group headed by Dr. Kai Uwe Binseil. Its main aim is to support the conversion of biotechnology know-how into economic results.

The Biotechnolgy Association Berlin-Brandenburg (BBB) provides a platform for common activies for the development of small biotech companies within the region.

The Federal Ministry for Education and Research (BMBF) promotes the industry at the federal level.

Germany’s capital region has also seen significant expansion in information and communications technologies. The region offers ideal conditions: over 9,000 businesses with over 120,000 employees working in media, communications and information technology. The annual growth rate in the number of new information and communication technology firms has been a healthy eight percent for several years.

Germany is by far the largest European market for information technology. With 20 million broadband connections, Germany is the leader in broadband internet use in Europe.

Other notable examples of new companies in the Berlin-Brandenburg Capital Region include:

Cargolifter AG (www.cargolifter.com), a new company headquartered in Brand, 30 miles south of Berlin, is building a 260-meter long airship capable of carrying loads of 160 tons of materials and equipment to otherwise inaccessible construction sites.

Carl-Heinrich Von Galenz, CEO of Cargolifter AG and a former engineering professor at Univerisity of North Carolina at Chapel Hill in the United States, says the airships will be “flying cranes” capable of traveling at an average speed of 55 miles/hour. The airships would dwarf a Boeing 747 in size — in fact, a single airship would dwarf a handful of 747s. They are to be designed to pick up goods at one destination and set them down again at another destination without ever having to land.

Using an old military airbase, the company has constructed the largest self-supporting hangar in the world. The site is attracting more than 250,000 curious visitors per year.

EBay (www.ebay.com), the world’s largest online trading company has built a customer-support call center in Dreilinden, just outside Berlin. The modern office building that houses eBay’s 200 employees commands a view of the nearby former guard station that once controlled the movement of people in and out of Berlin during the Cold War. The land on which the building stands had to be cleared of land mines. Mr. Jorg Rheinholdt, managing director of eBay Germany, says he began working for eBay in 1999 after it quickly bought the small startup he had founded with five others called alando.de. Rheinholdt and his partners had considered several locations, including several cities in Germany, Switzerland and Austria. But he says they decided to locate in the Berlin-Brandenburg capital region in large part because the Brandenburg employment office, the economic development agency, local Chamber of Commerce and other agencies actively facilitated creation of an employee training program, improved bus lines to the company’s site, financial incentives and consultation.

“I also love working this close to Berlin,” he says.

Artmedia AG is part of Babelsberg Media City near Potsdam, where film production began back in 1912. There are currently 125 media firms in the area primarily involved in the producton and distribution of media content. Artmedia produces film and digital effects for evens and presentations. The company serves such companies as Microsoft and Volkswagen, international film productions and governmental customers such as the Principality of Monaco and the City of Berlin.

VIAG INTRKOM, operates the four wide-area mobile phone networks in Germany from Teltow in Brandenburg. Its 300 employees are responsible for the operation, service and maintenance of the network in the Eastern States of Germany. The company operates a call center that is continuously being expanded. “Setting up the call center for our private mobile phone customers in Teltow was a strategic decision,” says Jurgen Hebemann, director of Regional Operations East. “We are able to count on the support of a very cooperative working relationship with the future-oriented state of Brandenburg.”

Deutsche LANDTEL was established in 1999 in Potsdam to provide broadband communications services that are based on transmission of speech, data and motion pictures via a radio-relay system. The data rates achieved are several times higher than those achieved by conventional ISDN methods. This so-called “Point to Multipoint Technology” enables rapid and inexpensive communications that meet high-security standards. The company plans to employ about 1,000 people within the next five years.

TeleGut needed only six months to go from the planning phase to the opening of its TeleGut Communications Center. The call center, which is unique in Germany, processes up to 10,000 calls, e-mails, and letters a day. The company uses state-of-the-art ACD and CTI technology and shared browsing, the synchronisation of telephone and internet. “The decision factor that led to the siting of our Communications Center was the enthusiasm and the support provided by the state of Brandenburg, the regional authorities and the town of Boitzenburg,” explains Michael Hofmann, Managing Director. “We have the feeling that we are particularly welcome.”

Oracle Corporation plans to locate a sub-division of Oracle Corporation Ireland’s Internet Sales Division (ISD) in Potsdam, Brandenburg’s state capital. Oracle’s decision to invest in eastern Germany was made, quite simply, in the words of managing director Dermot O’Kelly of Oracle Corporation Ireland: “because it’s cheap and Germany is a big country for us.”—