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November 2001

In Good Company

Attention entrepreneurs: the IHK means business

Once famed only for its beer and pretzels, the Bavarian capital has, in the last 15 years, developed into a major European economic center. This enviable distinction will be retained if the Industrie- und Handelskammer (IHK) for Munich and Upper Bavaria has its way. “If Bavaria were an independent country, we would hold the ninth rank in terms of economic strength in Europe and, according to 1999 figures, be the 18th-largest export nation in the world. For such a relatively small area, this is quite extraordinary and indicates the underlying strength of the Bavarian economy,” says Dr. Reinhard Dörfler, managing director of the IHK.

Central to Munich’s dramatic transformation has been the crescent of land that starts at Haar, skirts the city border near Ismaning and Unterschleissheim, and runs northward, toward the airport, near Freising. This region has become a blue-white Silicon Valley. The influx of many IT and communications companies has had a profound impact on Munich, turning the city into the recognized focal point in Germany for such fields. According to a recent Lufthansa in-flight magazine profile on Munich, more than 260,000 people are now employed within an 18-mile radius of the city center, by more than 18,000 IT-related companies, with an annual turnover of DM 120 billion—a European record.

Munich has more going for it than just microchips: DNA, microbes and chemistry have played their part as well. The city is now regarded as a world class center for biotechnology, propelled to its position by top-notch facilities such as those at the Max Planck Institute for Biochemistry and Neurobiology in Martinsried. In all, more than 1,000 companies do business and research in this cutting-edge industry in the Munich area. The Isar city is also a leading center for media in Germany and ranks only behind Frankfurt in terms of financial importance—though the gap between the two cities is closing fast.

Such ferment is reflected in the economic figures. Since 1996, Bavaria has consistently recorded economic growth that is 0.5% to 1.5% higher than in the rest of Germany. In 2000, for example, Bavaria posted a growth rate of 4.3%, while Germany, as a whole, recorded growth of only 3.1%. Although no exact figure is available for Munich (considered part of Upper Bavaria), the growth figure for the city last year is estimated at an impressive 5%.

During recent boom years, foreigners have arrived in Munich in droves. Drawn by the chance for fortune—or at least the prospect of career development—they have sought employment in burgeoning new industries or in the service fields that have sprung up around those. In all, some 21% of the city’s residents are foreigners, though this figure rises as high as 35% in some areas, and many of these people—whether immigrants or here on temporary placement—have both benefited from and contributed greatly to Munich’s years of expansion. “From Westend fruit and vegetable shops (dominated by Turkish guest workers) to such high-tech companies as Sun Microsystems, IBM and Microsoft—all of which employ hundreds of international professionals—foreigners make an important contribution to the economic life of this city every day,” emphasizes Dörfler. “They are increasingly present as employees, managers and business leaders, and Munich needs to acknowledge the contribution they make and encourage them further.”

To this end, the IHK has undertaken an initiative to inform foreigners about the role of the IHK and to encourage them to use the organization as an asset to further develop their businesses in Munich. The IHK played a vital role in Munich’s boom years, by promoting the city nationally and internationally, and agitating for the necessary business structures, while ensuring that the views of its members were heard within the corridors of power. Its encouragement of the foreign community is a natural progression of its desire to drive Munich’s dynamic business environment.

“The IHK is not only for German companies, but for all companies that—whether owned by locals or foreigners—are members of our organization. We can be especially helpful to foreigners through our familiarity with the [German] laws. We have the connections and we have the specialists. We can advise [business leaders] and assist them in overcoming any problems they may face, such as acquiring work permits or the necessary paperwork to open a business,” says Dörfler.

The IHK is similar in purpose to a U.S. chamber of commerce, in that it articulates the interests of businesses. Yet, the IHK actually has a special legal status and functions, in part, as a quasi-extension of government in Germany. This, it can be argued, gives the organization significantly more influence. Primarily an advocate for the view of business on economic policy and legal issues, the IHK is also responsible for 50 different functions delegated by the state. These include vocational training for trade and industry, conciliation boards for settling disputes over competition and the administration of qualifying exams to such commercial and industrial professionals as taxi and bus drivers.

Apart from a firm legal standing, the strength of the IHK lies in its compulsory membership. With the exception of some craftsmen and professionals, everyone who leads a business is required to join. Local subsidiaries of international companies are not exempt. In total, some 3.2 million firms are members of the 82 IHKs throughout Germany. Annual membership fees range from DM 50 to DM 40,000, depending on the size of the company. “This enables us to speak with a stronger and more coherent voice,” says Dörfler. “It also means we know exactly the issues that concern business [leaders]. Problems with import, problems with export—are they receiving enough support when doing business in foreign countries? Are there tax or bureaucracy problems at home? All these can be issues that businesses face and, to help solve them, we can represent their interests to the politicians, to the state and federal governments and, even when it concerns EU law, to Brussels.”

As part of its initiative for foreigners, the IHK is creating a dedicated service center (scheduled to open in early 2002) to field questions from the public. The center, which is to be staffed by multilingual employees, will be a formal extension of the general information service the IHK has long provided. It will address many of the standard questions posed to the organization, giving their specialists the time to deal with more in-depth questions. The IHK welcomes foreigners and foreign companies to take a more active role within the organization. All active members, regardless of nationality, are entitled to vote in elections for the IHK and can run for positions on the various boards. “Munich has become such an international city in the last couple of years, so it is only fitting that the IHK reflects this. Certainly, we have many foreign members, [and] we want to encourage them to become more active,” explains Dörfler.

Dörfler stresses that the IHK is devoted to developing and sustaining the “right type of business climate.” “Munich is a city where people are happy to come to and live. We want to see Munich continue to develop in this direction. That’s why we urge them to take our offer of assistance seriously. Come and see us, and see how we can help you do business!”

further information:
The IHK can be contacted at (089) 511 60.
How the IHK can help you do business:
· general advice on business, business structure and tax information · database on modern business methods · professional training · assistance in finding best location for a business through use of SISBYdatabase · special advice and service for start-ups · arbitration board for extra-judicial settlement of commercial disputes · arrange contact with publicly certified and sworn experts in some 300 different sectors free information for member firms through a monthly chamber journal, circulars, brochures and instructional leaflets.

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