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Germany and East Asia – resilient partners in growing trade

Business Opportunities | March 22, 2023

The numbers tell a remarkable story.  In 2021, German exported €207.9 billion of goods to East Asia, breaking the €200 billion mark for the first time, and imports from the region hit €260 billion – increases of 9.7% and 17% respectively.  2022 appears set to beat that performance, based on Q1-Q2 data released by Germany’s Federal Statistical Office. German exports were already worth €111.7 billion during the first six months of this year.

Considering the profound challenges that the global economy, and international trade in particular, have endured in the last few years, these figures speak of real resilience.  Germany’s trade with some other regions may have grown quicker during the first half of 2022 it’s true, but trade with those regions had also suffered far more during the peak pandemic years of 2020 and 2021: their fast growth this year is effectively “making up lost ground”.  Trade with the Asia-Pacific region, on the other hand, was far more constant – “an anchor of stability”, to use the words of the Federal Statistical Office.

Though Germany’s largest market is Europe, accounting for 65% of exports, East Aisa accounts for about 16% and is the next most important bloc, led, in value terms, by China, South Korea and Japan.

Where is the growth?

Whereas Germany’s exports to China grew by just 2.9% in Q1-Q2, export growth to the large target markets of Indonesia, Hong Kong and Malaysia, was particularly strong.

The greatest growth this year is in the area of medicines (up 42.2%) – much of this is attributable to pharmaceuticals, and to vaccines in particular.  Exports of chemical products and electronics also grew well, by 21.5%.  Together these sectors accounted for €61.9 billion of exports in 2021.  Exports of cars, car parts and machines are still worth more in total (€85.8 billion), and continue to grow, but not at the same high rate as the aforementioned sectors, at least in the first half of this year; cars and parts grew at 8.7%, machines at 1.5%.

Supply from “China + 1”?

Though German businesses are among those seeking to diversify their supply chains, so that they are not so reliant on China (sometimes by putting new factories in ASEAN countries as part of a so-called “China + 1” strategy), progress in this regard has been slow, and is not enough to affect the overall balance.  In fact, rather than China becoming less dominant among Asia-Pacific suppliers to Germany, if anything the opposite seems to be happening.  In the last two years, the proportion of Asia-Pacific goods coming to Germany from China actually increased: from 53% in 2020, to 55% in 2021, to a 57% in 2022 Q1-Q2.

The need for commitment

That Germany has such a resilient trade relationship with the East Asia; that it does not suffer from a huge imbalance; that new opportunities are coming to the fore, allowing for dynamic growth; that German brands have been respected and trusted over many years: these are reasons for German businesses to feel confident about investing in this region.   But real commitment is necessary – not least to push through and make supply chain diversification a reality. 

German producers also face increasingly stiff competition, and need to match or even outdo local challengers, not only in terms of design and technology, but also after-sales service, the quick supply of parts, upgrades, maintenance and more, in order to keep their place in this valuable and growing market.

About Melchers

Melchers GmbH & Co. KG is a global company with a wide range of services and with trading know-how in diverse areas of business. Established in 1806, and with more than 150 years of experience in East Asia, Melchers is trusted by many international brands and producers to be their “feet on the ground” in this region’s diverse markets, drawing on deep local networks and knowledge, and combining them with dynamic business services and trade infrastructure, to create powerful synergies that deliver results for your business.

We help you to develop and expand markets.

Our network of more than 50 subsidiaries in Germany and abroad makes us a powerful, dependable partner. Our experienced experts are there to support you at local level, ensuring the successful implementation of your

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References

https://www.gtai.de/de/trade/asien-uebergreifend/wirtschaftsumfeld/deutscher-handel-mit-asien-pazifik-zeigt-sich-krisenresistent-873136#toc-anchor–5

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