HWF Hamburg Business Development Corporation - Stefan Matz

While traditionally a hub for logistics and transports, diversifying Hamburg's economy has been critical to modernising the city and transforming it into the industrial powerhouse it is today. The HWF Hamburg Business Development Corporation's Stefan Matz looks at how the growth of new business clusters and closer relations with international partners like China have been crucial to this renovation.

Christened Germany's "Gateway to the World", and home to the third-largest port in Europe and 15th worldwide by throughput, Hamburg's position as a hive of logistical and transport activity is long established. While it's a reputation that's in no immediate danger, recognition of the risks that plague single-industry cities has seen regional authorities strive to diversify its economic activity since the early 1990s. Now, Germany's second-biggest city plays host to a varied portfolio of business clusters, including publishing, aircraft manufacturing, life sciences and IT.

"Everyone speaks about clusters today, it's a bit of a buzzword, but when we started, nobody really understood how to shape one and what it meant," says Stefan Matz, director international business at the HWF Hamburg Business Development Corporation. "We were able to establish a very strong printing press and publishing industry though - something we've had for decades - and now we're developing our up-and-coming IT scene."

For all companies wanting to expand, restructure or relocate to the Hamburg metropolitan region, the HWF Hamburg Business Development Corporation acts as a partner and representative of their business interests. It has proved critical to developing the various industry clusters that have boosted the city's economy.

"The goal was to make a cluster of core companies while also attracting the service companies that complement them like banks, lawyers with specialist knowledge, and marketing businesses," says Matz. "These projects were initially financed from the city, but more and more it's shifted to memberships, sponsorships and various participations. The good thing is that these clusters are located in our building, under our administration umbrella, so we're in close communication with them."

Up in the air

Civil aviation is another cluster that has experienced tremendous growth in the region, with Hamburg behind only Seattle, US, and Toulouse, France. A raft of key players have now based operations there; Lufthansa Technik currently provides maintenance for all major global airlines; Airbus is producing its A320 as well as performing the final assembly for A380; and there's a plethora of suppliers manufacturing everything from engines to onboard IT systems. It's a testament to how successfully clusters can be grown in cities.

As well as the city's economy, its physical landscape is also undergoing a radical transformation. Its famous port was well equipped to service the needs of ships when they were much smaller, but as cargo ships have grown ever bigger, dwarfing their predecessors in size, expanding the harbour and making more room for these ships to dock, load and unload has been crucial to safeguarding the city's industry.

"Hamburg was significantly damaged in the Second World War, and while most of it was rebuilt, we now have a substantial redevelopment project underway," says Matz. "HafenCity Hamburg, which means harbour city - is the biggest of its kind in Europe at 157ha, enlarging the inner urban area by 40%. The plan is to convert the area to combine living, green areas, the business environment, excellent architecture and a new opera house. It's almost 50% completed and we expect it will be finished in its
entirety over the next ten to 15 years."

Port of call

Transforming the urban landscape has safeguarded the city's role as one of Europe's most efficient and best-connected ports. It makes sense for the international business community to take advantage of its regional links and locate operations there. More than 500 Chinese and 100 Japanese companies are now based in Hamburg, while more than 100 US firms, including General Electric and Google, are operating in the region. It is Europe's number-one port in terms of Asian cargo, while China remains its strongest partner, with its three million containers a year imported or exported representing a third of the dock's total capacity.

"If you look back at recent history, Hamburg was able to establish a network in China, particularly with Shanghai," says Matz. "We certainly benefitted from being there early during the 1980s, as the various state-run trading companies used Hamburg to establish small branch offices in the city. That continued to happen, and we established offices in Shanghai and Hong Kong; we're now in the process of setting up bases in the northern part of China. We're constantly travelling to the different regions in China to promote Hamburg, and do that together with the chamber of commerce and other partners - inbound and outbound."

For Chinese companies, the appeal of locating bases in Hamburg stretches further than just the metropolitan region. With its prime location a short distance away from other major German and European cities such as Berlin and Copenhagen, they're able to access the global market, as much as the local one. It's led to a surge in activity from Chinese investors, especially from the private sector.

"The approach of Chinese companies and business people into expansions has become so much more professional over the past decade," says Matz. "When they think about establishing somewhere, they think about how they can serve the European markets, not just the local one. We've seen a lot of mergers and takeovers of companies in Germany, many of which aren't based here, but when there's a strategic approach to making a German and European headquarters, then Hamburg has a fantastic chance of securing it."

International cooperation

As a mark of how strong relations are, the Hamburg Summit: China meets Europe has become something of a regular feature. In October, more than 600 participants and 250 journalists descended upon the city to discuss the state of the Sino-European economic relations and work towards better business cohesion. Even China's Prime Minister Li Keqiang visited Hamburg on this occation.

"We found the event was so oversubscribed this year that we had to reject many applications for participation," says Matz. "It's highly attended by many in business and politics. This year we left with a clear commitment from the chairman of ICBC, a leading Chinese bank, to open their branch in Hamburg; we're also in touch with other corporations to encourage them to bring their products and services to the city and interlinking regions."

Hamburg is so much more than just its robust and diverse economy though. With its affordable living costs (estimated at 40% of London's), bountiful greenery, close proximity to other major European cities and bustling nightlife scene, it's easy to see why people, as much as business, are making it their city of choice, relocating there and contributing to its higher-than-average gross national product per capita.

"We have a nice balance between living costs and life quality," says Matz. "We have a lot of water and a lot of open spaces. We're in close proximity to other German places like Berlin, while the three-hour ride to Copenhagen will be much less once the tunnel under the Baltic Sea is finished. In total, we have approximately five million living in the wider area, and I think it's important that you have the diversity that comes with this size and economical performance from this metropolitan region, besides being just another urban metropolis."

As a city, Matz feels it is well equipped to cope with the challenges and demands of the future too. As the continental leader in the wind technology sector, Hamburg can expect to see a lot of activity in renewable-energy production, management and innovation, as the global drive for sustainability continues to gather momentum, while its IT, maritime and life-science clusters are also expected to sustain their impressive growth.

"We live in an era where if people have the skills and the desire, they can pick where they may want to go, start looking for jobs there, and decide if it is a place where they can live and grow," says Matz. "Hamburg is still a bit of a hidden champion at times, but it's one of Europe's leading economical spots and offers a very high quality of living for its residents."

As businesses and skilled workers, domestic and international, continue to set up shop in the port city, it seems unlikely Hamburg will stay hidden for much longer.

The HWF Hamburg Business Development Corporation’s Stefan Matz.
HafenCity Hamburg: harbour city.