GERMANY Trends and Developments Contributed by: Rainer Wilke, Ingo Theusinger and Ralph Schilha, Noerr
German businesses must comply with new EU- wide regulations on AI, ensuring ethical use of AI in commercial applications. The so-called EU AI Act, which entered into force in 2024, intro- duces additional compliance requirements for businesses developing and providing AI-driv- en solutions. The AI Act includes a risk-based approach, meaning that high-risk applications are more regulated than low-risk applications. Companies providing and using AI must adapt their compliance and risk management systems to account for the risks of using AI. Defence industry Current geopolitical conflicts, NATO commit- ments and terrorism have been driving sales and promoting growth in Germany’s defence industries. The German defence sector is one of the largest in Europe, making it a potentially profitable investment for foreign investors. However, investors need to comply with foreign investment control regulations (see above). The defence industry is a popular target for cyber- attacks, which makes reliable crisis manage- ment essential. Ethical hacking and frequent training can familiarise employees with sector- specific crises. Transparent communication with the authorities is also essential to facilitate crisis management. Infrastructure investments Germany’s infrastructure is ageing. Investment gaps have led to a backlog of repair projects and insufficient funding for new developments such as roads, bridges, railways and public tran- sit systems. Germany’s sustainability goals pose additional challenges for infrastructure develop- ment, requiring a shift towards greener transpor- tation options, energy-efficient construction and renewable energy sources. The digital infrastruc- ture is also in need of being overhauled, leading
to attractive investment opportunities for foreign businesses and business opportunities for con- tractors. The expansion of offshore wind farms and the promotion of green hydrogen produc- tion have opened up new business opportuni- ties. Companies specialising in energy storage, smart grids and energy efficiency technologies can benefit from government incentives and increasing demand for sustainable solutions. However, businesses must navigate challenges such as grid expansion delays, high regulatory standards and long approval processes for new energy projects. Regarding critical infrastructure, investors need to comply with foreign investment control regu- lations. Foreign and terrorist (cyber-) attacks on critical infrastructure have risen in recent years. This needs to be considered when establishing a crisis management system. Frequent training of employees and transparent communication with authorities in regard to a (potential) crisis are indispensable. Companies specialising in the renewable energy sector should develop strategic partnerships and ensure compliance with Germany’s Renewable Energy Sources Act (EEG) to maximise investment potential. Research industry Germany is one of the largest research focal points in the world; however, the global R&D industry is growing, especially in sectors in which large German companies do not spe- cialise, such as software and hardware produc- tion. Companies are increasingly dependent on research abroad and international co-operation, making the German research and development industry an attractive business opportunity for investors and contractors. Research relies on confidentiality and exclusivity, making the research industry a likely target for
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