Germany Lags Behind

When news broke late last year that discount super market chain Penny Markt was selling genetically-modified rice, German consumers sounded the alarm.

German officials responded by saying they will use their six month presidency of the European Union to take a look at the rules concerning biotech research and development in Europe.

But while Europeans are wringing their hands over those developments, 90 percent of soybeans grown in the U.S. are now genetically modified, as is 60 percent of corn.

It’s no surprise then that Germany trails far behind the United States in bio-engineering and biotechnology. But the problem is, that in the next century, it’s industries just like biotech that will be driving the world’s economy.

So how is Germany planning to keep up?

Knowing where to invest is key

Peter Strüven, senior vice president of the Boston Consulting Group in Germany, has just finished an annual study of how Germany can thrive in the development of ‘future technologies.’

"First of all, if we look at the size of Germany, and the resources we have, we are doing enormously well," said Strüven. "In many areas we are the market leader world wide."

Strüven found that Germany doesn’t have the resources the US and Japan do, so the country simply can’t try to invest in everything. He suggests Germany will do best when it stops throwing good money at areas where there's no point competing.

The consulting firm Ernst and Young says the US biotech industry employs 200,000 workers and spent more than 15 billion euros on research and development last year alone.

Compared to that, Germany’s 2006 investment in biotech was expected to be less than 150 million euros.

And a May report from the European Association for Bio-industries in Brussels says many of Europe's 2,000 biotech companies need much more money if they’re going to be able to grow.

But Strüven said it’s better for Germany to cut its losses in a field where it isn’t booming, and to move on. Just like it did, when it stopped trying to compete with Asia in digital and consumer electronics.

"We will not gain in consumer electronics and we would not suggest to do that. We were so far behind in consumer electronics that it wasn’t worth it to compete," said Strüven. "What we are suggesting is that we focus on the existing industries where we have an advantage, like automotive or mechanical future technologies."

Germany’s innovative car business, for example, can help it lead the way in other fields such as robotics or eco-technology or larger-scale engineering.

"See, you have the first order technologies like cars and aerospace. And then you have the supporting technologies that help those main products go," said Strüven. "Those supporting technologies are the ones that foster innovation."

Getting the brightest to stay

Another problem for Germany is to keep its brightest minds from flooding to the US where better opportunities beckon. American Science Magazine recently reported that every seventh person with a doctorate in science leaves Germany for the United States.

"The job market here is tight. There are not a lot of jobs. One thought of mine was to go visit the US and work there," said Malta, a first-year student at Berlin's Technical University.

Malta and his friend Halit said they are worried that Germany is too focused on the here-and-now and say the country doesn’t invest enough in future industries like nano-technology.

Nano-technology will revolutionize the way buildings and building materials are constructed, Halit said. He added he wants to work where the best, most futuristic and most lucrative work is being done.

"The United States has more potential, in the economic view. So job prospects in the States may be better at this time," he said. "On the other hand we want to enjoy the American way of living."

Focusing on Germany's strengths

Boston Consulting Group’s Peter Strüven said that’s exactly why Germany needs to take its limited resources and focus investment on things that will help Germany keep, and attract, the smartest people.

"We will be able to stop that, if we focus more and are able to improve the conditions under which our researchers can work here," Strüven said. "If we can provide them with similar and comparable positions, they will stay. They don't want to leave because they don't like Germany."

Strüven acknowledged that Germany may not have the famed Silicon Valley of California or the sparkling new skyscrapers of Shanghai.

But he says German cities and German technology both have their own claims to fame. And investors need to focus on those.