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Why big German companies such as Audi, Bosch, Siemens and Bertelsmann are considering investing in Estonia?

In the interview with Christoph Eichhorn, ambassador of Germany to Estonia, The digital wonderland of Estonia is explored.

Christoph Eichhorn, Germany’s outgoing ambassador in Estonia, has witnessed a strong and growing interest from Germany towards Estonia in three areas: ‘The digital “wonderland of Estonia”, how to keep Europe together, and what to do about the behaviour of the Eastern neighbour – Russia. The digital experiences of Estonia especially draw a lot of attention, not least because in each and every speech on the economy, chancellor Angela Merkel talks about the need to bring digitalisation in Germany to the next level while citing Estonia as an example. We in Germany have to learn from Estonia, underlines the ambassador – this makes practical sense and – at the same time – is a strong political message in today’s Europe. We will keep the union together so long as everyone contributes.  It is probably historically quite rare that Estonians have heard from the head of a much larger country that Estonia is an example to learn from. The chancellor means it.’

This interest translates into very practical daily work of the embassy – hosting countless delegations from Germany on the federal, state and local level, from the public and private sector, as well as from media and academia. Christoph Eichhorn says, sometimes the embassy feels like an airport hub on Monday morning at 7: ‘I’m very happy about the busy traffic. This proves there is immense interest.’

Chancellor Merkel emphasized the joint efforts of Estonia and Germany to keep Europe together while visiting the Startup Centre in Tallinn in 2016, ambassador Eichhorn recalls: ‘It’s not about the size of the member states. What matters is the European spirit, the underlying attitude and mindset that each one brings to the negotiating table in Brussels, to keep the union together and move it forward. In that sense, Estonia and Germany have a very similar view – we both know to value the European Union. We must preserve and build on it.’

While showcasing the digital ‘wonderland’ to visitors from Germany, ambassador Eichhorn explains how Estonia did achieve it politically and practically: ‘Why is Estonia 20 years ahead on e-services? How best do we address the sceptical and critical questions head on: how does Estonia safeguard data privacy so that citizens trust the digital administration? Together with our friends from e-Estonia, we usually manage to convince the visitors of the benefits within 24 hours. Quite often we hear a list of reasons why all this would be much more complicated in Germany: size, federal structure, longer decision-making processes, special interests, etc. The key is to jump forward, not list challenges but rather determine your next digital goal and take concrete steps to achieve it. As a follow-up to delegation visits to Estonia, we have more and more encouraging experiences. I get many invitations to Germany to present Estonian digital achievements and discuss how e-government in Germany could be advanced based on Estonia’s experience.

Doing this together with Estonian and German IT companies and political decision-makers such as mayors – you really see practical progress. Things are moving. That’s encouraging.’

Both sides profit, explains Eichhorn: it is in the interest of Germany to help promote cooperation with digital Estonia and to make digital services work as soon as possible. ‘My main task here is to make the already excellent relationship between our countries even closer and to promote cooperation in every field. I try to help implementing Chancellor Merkel’s policy. In Estonia and in Germany. Very often together with my great colleague Mart Laanemäe, Estonia’s ambassador in Berlin. Team work, that’s what modern embassies of close friends do.’

When will we see the X-road in Germany?

Christoph Eichhorn (CE): ‘There are already a few examples in federal states and municipalities who have explored the Estonian X-road closely and are looking at this example when creating a German system. Nationwide, we still have a long way to go. There are several reasons. It’s surely not a question of technology. Germany, as one of the leading countries in IT, could of course easily develop the technical solutions. It’s a question of mindset and winning the politicians and the citizens for it. This is why all these visitors to Estonia are so important – decision makers on all levels can experience first-hand how it works. Federal or state ministers and parliamentarians, but also municipal decision makers together with local entrepreneurs. The system has to work on the ground, in cities, small towns and regions that are eager to create jobs, to bring schools online etc. The strong interest goes well beyond high political level to “where the rubber hits the road”.’

Talking about economic ties – there is no obligation for German companies to tell the embassy if they are doing business in Estonia, but I wonder what has been the development in the last few years in terms of business?

CE: ‘This interest of German companies is very tangible. Here are some observations of how it has developed over the last years. Just recently, more than 40 German companies came to the sTARTUp Day in Tartu, from young one-man startups to Edeka, a supermarket chain with more than 360 000 employees in Germany. They took a close look at digital methods for production and retail of groceries. Audi, Bosch, Siemens, Bertelsmann, all these large companies have been here at the highest board member level, to establish business contacts with Estonian companies. Daimler has joint ventures with Starship and Bolt (former Taxify – ed.). Kühne und Nagel has grown their IT operations in Tallinn from 100 to 350 jobs. Arvato, the subsidiary of Bertelsmann, one of the largest publishing houses worldwide has just moved to new, larger premises in Telliskivi. The business ties are not a one-way street. Estonian Skeleton Technologies has opened a factory in Dresden, many Estonian startups are in Berlin (Ampler bikes). Nortal has opened an office in Germany to be closer to its customers: large municipal utilities service providers.’

What is the main reason for German companies to do business in Estonia?

CE: ‘For sure, Estonia is not a location for cheap labour any longer as it used to be in the early 1990s, but rather its attraction comes from the technological added value. Estonian precision work is valued. A key factor is the cultural fit. Estonians and Germans have a similar mentality – we exchange ideas, we shake hands and this is valid. I do hear from many companies that this is a decisive factor when looking at a shortlist of locations.’

The ties go well beyond business. 

‘We have worked systematically to include universities in all the visits and talks – both TalTech as well as the University of Tartu. Visitors have always been impressed by the wide cooperation opportunities and the intersectoral mix that is possible. The embassy has initiated a conference “Industry 4.0 in Practice” together with the Estonian ICT association, now also in partnership with TalTech,’ says the ambassador.

The Germans are the third largest group of Estonian e-residents.

 

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