Increasing importance of the Asia-Pacific region for the German industry

Asian economies represent increasingly important trading partners and sales markets for German industry. Numerous German production sites are located in many countries. Furthermore, research and development for new products and technologies is carried out jointly. Free trade agreements with the region must ensure that this trend continues.

The interdependence of German industry with Asia intensified over the course of the past years. Today, China is Germany’s most important trading partner in Asia. Both countries exchanged goods worth almost 163 billion Euro in 2015. Germany and India, for example, traded goods worth 17.3 billion Euro, and Germany and the ASEAN countries traded goods worth 57.4 billion Euro. These trade currents illustrate that the economic interdependence between Germany and the countries of the Asia-Pacific region are differently distinct. If one compares these figures however, with data from the previous ten to twenty years one parallel becomes obvious: The bilateral trade with many countries in the Asia-Pacific region increased rapidly during this period.

Direct investments in Asia increase continuously

Investment flows from Germany and with them the number of company representations and production sites of German companies in Asia rose sharply: In China, for example, German direct investments almost increased tenfold from 2000 to 2013 and amounted to approximately 47 billion Euro in 2013. In India the direct investments quintupled in the same time period. Regarding all of Asia, German direct investments reached a value of more than 92 billion Euro.

Asia as an attractive consumer market

The markets of the Asia-Pacific region also become more and more attractive for the sale of products as a middle-class arises which is keen to consume. Therefore, an increasing number of German companies move their research and development centers to Asia in order to develop products for the Asian market locally. These products enjoy an excellent reputation. Due to increasing incomes, the willingness to spend more on high quality and sustainable products rises. This becomes apparent on numerous markets in the region.

Positive trend should not be taken for granted

In light of the growing importance of Asia for German industry, the Federation of German Industries (BDI) engages directly and through the Asia-Pacific Committee of German Business (APA) in enhancing framework conditions in Asia and in strengthening bilateral relationships. The fact that Germany and the EU remain relevant in Asia with their excellent products and know-how is not a matter of course. In February 2016, various Pacific Rim countries signed the Trans-Pacific Partnership Agreement (TPP), expressing their interest in more mutual trade. The EU has to keep pace with its own agreements. Therefore, the BDI supports the EU’s efforts to substantiate bilateral economic relations through free trade and investment agreements.

The concluded free trade agreements of the EU with Korea, Singapore and Vietnam are a good start. However, the negotiations with India need to build momentum.