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Germany sees more opportunities in Asia

Publication Date : 09-05-2012

 

Germany is increasingly turning to Asia to cash in on China's rise and the region's integration, which opens up a new window of opportunity for investment.

Of total capital stock of 100 billion euros (US$130 billion) as of 2009, more than a quarter is now in Asia, including 23 billion euros ($30 billion) in China, 1.4 billion euros ($1.8 billion) in Thailand and 245 million euros ($318 million) in Vietnam. Myanmar's reopening could also draw some investment, now that the European Union has suspended sanctions on the country.

"That will increase in five to 10 years as China, Asean and India are the main destinations for German companies because of the robust growth rate," Volker Treier, deputy chief executive of the Association of German Chambers of Industry and Commerce, said recently in Bangkok. The association oversees 84 chambers in 80 countries.

A survey conducted early this year also showed that while China is ranked No 1 as an investment destination, other countries in East Asia are on the radar.

More investment could pour into the machinery and equipment, automotive, electrical-engineering and chemical industries, where Germany is a strong player.

Thailand or Vietnam could be a base for re-export to China, given the increasing production cost in that country. China is the huge market that everyone wants to penetrate, which explains why it is the third major export destination of Germany, after France and the United States, which have held the top two honours for 20 years. Consuming 1 per cent of total exports a decade ago, China now accounts for 6 per cent while the "cake is also of bigger size".

"Germany benefits a lot from Chinese development … The more China is integrated with Asia, the better it is for neighbouring countries," Treier said.

One of the benefits is through training in German technology.

While refocusing is necessary, as Asia is the area of opportunities, the first wave of German investment in China was barely a decade ago. Seeing business opportunities, German manufacturers were required to set up plants there because of the local-content requirement. They have witnessed obstacles, mostly involving intellectual-property violations, and that is being taken care of on a case-by-case basis.

While manufacturers are careful not to transfer all their top secrets to plants in China to avoid copying, Chinese manufacturers cannot copy the entire manufacturing process. Germany is good at delivering high-quality products and that requires education and a work mentality that cannot be imitated, he said. That allows manufacturers to contribute one-quarter of Germany's gross domestic product, which is the highest among the key European economies France, Britain and Italy.

Germany's overseas investment is driven mainly by companies backed up by information from government agencies. German chambers are playing a big role, besides embassies and the Federal Ministry of Economics and Technology, Treier said. In Thailand, flood-management experts were brought in after last year's floods, largely on the initiative of the German-Thai Chamber of Commerce, which wants to promote German technology in that area.

In China, more than 1,500 German companies are members of the Chamber of Commerce, against about 500 in Thailand, he said. About 42,000 companies are members of the chambers located worldwide. The chambers, which finance themselves mostly through membership fees and partially from subsidies, task themselves with mainly promoting trade and taking German companies' complaints to the government.

Minister-led political trips are part of the strategy, Treier said. The German-Thai Chamber of Commerce is supporting a Thai delegation to Germany, led by Prime Minister Yingluck Shinawatra. She will be accompanied by Thai company chiefs. The chamber will also organise a trade delegation to Myanmar.

Events are hosted to promote trade, particularly for small and medium-sized enterprises. Chambers in countries like Thailand where local businesses can seek membership prosper, as partnership tends to boost bilateral trade, he said.

"Germany has never had business strategic plans," he said. Companies go where opportunities stand, while the government supports them on the information side and extends no subsidies.

 

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