German R&D

Not As Innovative As They Look

“25th Hour” project: Audi is researching the use of time in
Tooting their own horn on innovation: An Audi experiment in automated driving underway at the Fraunhofer Institute in Stuttgart. Source: Audi

When it comes to fostering a culture of innovation, German automakers are happy to toot their own horn. In 2016 alone, Volkswagen, the world’s largest automaker by volume, registered a whopping 6,465 patents. That’s 18 registrations every day. Daimler, in its entire 131 year history, has filed to protect over 110,000 unique inventions. Over the past year, there were 2,000 registrations filed.

These numbers may impress, but a closer look suggests that the quantity doesn’t necessarily translate into quality. Any and every new development can be patented but that doesn’t mean it’s going to be the next iPhone and make for multi-million dollar profits.

Switzerland’s leading economic research organization, BAK Basel, has tallied up the number of “world class” innovations patented – that is, those innovations with tangible practical or major economic value – and has found that Germany isn’t quite as innovative as it looks. The results of BAK Basel’s assessment have been made available exclusively to Handelsblatt.

The best example of a German company successfully innovating in the area of new hybrid or electric motors isn't an automaker at all: It's auto parts supplier Bosch.

The most innovative company worldwide is the South Korean conglomerate Samsung, with more than 20,000 of what BAK Basel defines as world class patents. The European company with the most of these is the German auto parts supplier, Bosch, though Siemens registers more every year.

In the hybrid and electric motor sector, German automakers trail behind Japan’s Toyota, which has 921 new and existing world class patents, as well as US auto giant, General Motors, and other Japanese car makers Nissan, Honda and Hitachi.

Some of BAK Basel ‘s most striking findings concerned the IT sector. German companies may have registered the most patents in Europe in this area but their share of world class patents only added up to a meager 5 percent. In contrast, American and Korean companies’ shares were well over 10 percent.

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Another trend identified by BAK Basel was that companies are increasingly trying their luck in other sectors.

“This is especially true for IT firms,” said Kai Gramke, a project manager at BAK Basel. “They’re looking for concrete applications for their new technologies.”

In fact the best example of a German company successfully innovating in the area of new hybrid or electric motors isn’t an automaker at all: It’s the auto parts supplier Bosch, followed by its competitor, the Friedrichshafen-based ZF.

Another prime example of a business’ competence spilling over into another industry is Google with its aspirations in the field of autonomous driving. In this sector, two companies lead the pack. The first is Alphabet, Google’s parent company. The second is the American machine builder, I-Robot, best known for its smart vacuum cleaners, Roomba and Scooba.

The latter originally acquired its know-how from the armaments industry, where it designed and manufactured bomb-defusing robots.

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Other companies on the cutting edge of autonomous driving technologies include the American network specialist Qualcomm, China’s DJI, which specializes in the development of unmanned aerial vehicles for photography, and the Israeli electronics manufacturer, Friendly Robotics. Hardly known in Germany, none of these three companies falls neatly into any one particular category.

The titans of America’s IT industry – Apple, Microsoft and Alphabet – aren’t only forerunners in terms of patents. They are also the most innovative in futuristic industries such as artificial intelligence, fintech and smart cities. At the same time, IT giants are making a huge push into the health care sector with their biotech devices and wearable sensors and computers.

Samsung, the holder of the most world class patents, generates a majority of its revenue through the development and sale of smartphones, flat screen TVs and memory chips. But it has other hugely profitable subsidiaries in machinery and shipbuilding, heavy engineering, financial services, clothing, hotel management and security. There is virtually no industry in which Samsung is not somehow involved.

In Germany, Bosch, the most innovative European company, not only dominates the automotive sector with gasoline injection pumps and optical sensors for windshields. Innovations such as refrigerators with separate cooling zones, or washing machines that automatically know how much detergent to use, also make it a leading developer of automation for the smart homes of the future.

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Of the 50 countries that invest 95 percent of the world’s time and energy in research and development, the US enjoys a healthy lead with some 50,000 world class patents. The number two and number three spots go to Japan with 14,000, and Germany with 9,000. This is not only due to the Americans’ prowess in the IT sector, but their high-achieving research in all sectors. Even Europe as a whole, with 29,000 world-class patents, doesn’t come close.

According to BAK Basel, the region most conducive to innovation is, perhaps unsurprisingly, Silicon Valley in San Francisco. This is followed by the Japanese municipalities of Tokyo and Kanagawa and then the German metropolis Frankfurt.

Frankfurt is the place to be in Germany for research in the pharmaceutical, medical technology and energy sectors. But it has also made considerable progress in areas like quantum physics, the production of graphene, an allotrope of carbon used in nanotubes, and future technologies such as smart energy grids, unmanned vehicles and drones and 3D printing.

Yet despite all that, BAK Basel’s research shows that Germany still can’t hold a candle to the US when it comes to patenting the best, most world-changing innovations. Then again, maybe that’s not so bad: Neither can Japan.

 

Ulf Sommer reports for Handelsblatt on companies and financial markets. The English version of this story was adapted for Handelsblatt Global. To contact the author: sommer@handelsblatt.com

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