Completing the first leg of his five-day Asian tour (June 19-23), German Vice Chancellor and Minister of Economic Affairs and Climate Protection Robert Habeck was somewhat reassured to find in South Korea - "a like-minded trade ally".
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| To reduce the risks of economic partnership with China, Germany is looking for more allies in Asia. In the photo: German Vice Chancellor and Minister of Economics and Climate Protection Robert Habeck. (Source: Deutschland.de) |
With the aim of "minimizing risks" in trade relations with the Chinese economy, Germany - the leading economy in Europe is looking to promote economic relations with the fourth largest economy in Asia. During this working trip to Asia, the German Minister of Economy found a like-minded trade ally.
It is also a goal shared by Seoul - with both export-dependent economies keen to expand their network of economic allies amid concerns about trade competition, including China's increasingly assertive stance and growing protectionism in the United States.
“Our goal is to deepen cooperation in the areas of business, economic security and climate, as well as to tap into new potential,” Minister Habeck said about the mission to South Korea before departure.
The Seoul leg comes before Habeck flies to China, a key economic partner with which Germany had some 250 billion euros ($268.68 billion) in trade last year. In Asia’s No. 1 economy, the German economy minister is expected to explain to Beijing the European Union’s move to impose high tariffs on Chinese cars, which has raised concerns about a possible trade war.
Of course, Seoul cannot hope to reach the scale of the German-Chinese trade link, but the South Korean-German relationship is still progressing quite well. German direct investment in South Korea reached 15.1 billion euros in 2022.
More than 500 German companies have invested in Asia's fourth-largest economy. According to the latest Business Confidence Survey by the German Chamber of Commerce, 38% of German companies in South Korea expect sales to increase over the next two years and half of them plan to increase their investment in the country.
German-South Korean trade reached 34 billion euros ($36 billion) last year, of which German exports accounted for around $20 billion - making South Korea the third-largest non-EU export destination after China and the United States.
These exports are mainly cars and car parts, accounting for one-third of all German goods sold to South Korea. Chemicals and pharmaceuticals are other important exports.
German and South Korean companies compete in many areas, including the automotive industry. But at the same time, they cooperate in research and development on electric or hydrogen vehicles. In particular, South Korean companies are strong in semiconductors or batteries, while other inputs in their product supply chains come from German companies.
"Korean consumers are interested in owning premium products and are constantly updated with new things. Meanwhile, businesses here always identify new elements as a component in the product, and are willing to invest in the latest and leading technologies in production," said Martin Henkelmann, head of the Korean-German Chamber of Commerce.
German auto supplier Continental (CONG.DE), which began operations in South Korea in 1986, now has seven production and sales sites in the country with a total of 1,300 employees.
But China remains a key market for Continental, employing around 18,000 people and accounting for no less than 11% of the group's revenue, so South Korea will be a key part of its diversification strategy in the region.
“We have a manufacturing network in Asia that makes similar products with similar processes. So when we successfully implement diversification, the business will not be dependent on just one location,” said Martin Kueppers, CEO of Continental Korea.
Of course, German officials have also seized on the evidence that their South Korean counterparts have a shared interest in developing ties. Notably, Seoul is working to reduce its dependence on key products, with a 10-point plan for industrial supply chains announced by the end of 2023.
South Korea's geographical proximity to China means it has close trade ties with the world's second-largest economy, while the tensions with Beijing, coupled with its defence links to the US, mean its entire trade policy is a "balancing act", says analyst Katharina Viklenko at Germany Trade & Invest.
Meanwhile, for Germany, Vice Chancellor and Minister of Economics Robert Habeck affirmed that China is “an indispensable partner in addressing global challenges such as climate change”. Mr. Habeck stressed the great importance of Beijing “as a production base and innovation center, as well as a procurement and sales market”. For this reason, it is important to maintain dialogue and discuss fair and equal competition conditions.
During the second leg of his trip, Habeck is scheduled to meet with figures such as National Development and Reform Commission (NDRC) Chairman Zheng Shanjie, Commerce Minister Wang Wentao and Industry Minister Jin Zhuanglong. Business visits and a dialogue with students at Zhejiang University are also planned.
Source: https://baoquocte.vn/giam-phu-thuoc-vao-doi-tac-kinh-te-trung-quoc-dau-tau-chau-au-tim-thay-dong-minh-cung-chi-huong-o-chau-a-275770.html
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