New German business wave in Asia takes shape

27th October 2004, Comments 0 comments

27 October 2004, BERLIN - Volkswagen AG's announcement this week that it has forged a new partnership deal with Malaysian carmaker Proton comes as a strong euro and Europe's weak economic performance triggers a fresh wave of German investment in Asia. Having already helped to spearhead a western European business push into Central Europe following the fall of communism 15 years ago and to seek out new investments in China during the last five years or more, German industry is now again focusing on South Ea

27 October 2004

BERLIN - Volkswagen AG's announcement this week that it has forged a new partnership deal with Malaysian carmaker Proton comes as a strong euro and Europe's weak economic performance triggers a fresh wave of German investment in Asia.

Having already helped to spearhead a western European business push into Central Europe following the fall of communism 15 years ago and to seek out new investments in China during the last five years or more, German industry is now again focusing on South East Asia with leading members of corporate Germany recently announcing a string of moves into the region.

"German companies are now broadening somewhat their concentration on China to take in other parts of Asia," said Friedolin Strack, from the Asian-Pacific committee of the Federation for German Industry.

Along with China, German industry is in particular targeting nations such as Thailand, Malaysia and Vietnam, which have been bouncing along on economic growth rates of between six and eight per cent.

In the meantime, Germany and its partners in the 12-member eurozone are still struggling to shake off a prolonged period of economic stagnation and are expected to chalk up a growth rate this year that falls short of two per cent with the euro's steady climb back up towards the critical USD 1.30 emerging as a new threat to the currency's bloc recovery.

Lured not just by Asia's solid economic growth rates, leading German companies such as carmakers BMW AG and Audi AG along with giant retailer Metro AG, chemical powerhouse BASF AG, shirtmaker van Laack and banknote printer Giesecke + Devrient, have been sizing up South East Asia by the sheer size of its market.

Not to be out done, Germany's premier football clubs have also discovered Asia as a potential market; Bavaria's 1860 Munich has just secured Chinese sponsorship for a tour and Berlin's Hertha BSC launching a website in Chinese.

As part of its new sales offensive in South East Asia, German- based Volkswagen, which is also Europe's biggest carmaker, said Tuesday it hoped the first locally assembled VW models in Malaysia would begin by the end of 2005.

"Volkswagen wants to achieve a notable market share in the countries of ASEAN in the coming years," VW chief Executive Bernd Pischetsrieder said, referring to the 10-member Association of South East Asian Nations

VW currently has only a very modest presence in South East Asia and sees the region as a key part of its strategy to boost its share of the global auto market.

Moreover, corporate Germany could soon transport to Asia the business model it now follows in China and to an increasing extent in India where German companies have been investing and producing in China and India for the Chinese and Indian market.

The renewed interest in Asia also comes ahead of a regular conference on German business in Asia organised by the federation, which is to be held next month in the Thai capital Bangkok.

About 700 top German industry leaders are slated to attend the conference, which is staged every two years and is held in Asia as a way of emphasising German business interest in deepening ties with the region and strengthening Germany's hand as the world's biggest exporter.

Chancellor Gerhard Schroeder this month returned from an extensive trip through Asia taking in India, Vietnam, Pakistan and Afghanistan.

Accompanied by 22 key German corporate chiefs, Schroeder wound up his trip by calling on German business to seize the considerable growth opportunities in countries such as India and to refocus their Asian corporate strategies so as not to be fixed solely on China and Japan.

"We must recognise that Asia is more than China," he said with Germany also meeting stiff competition in Asia and China from US companies as well as its European partners including France and Britain.

But China has not been forgotten in the push to broaden German corporate focus in Asia with more than 1,500 German firms currently doing business in China, and Germany having emerged as China's biggest European trading partner.

Indeed in recent weeks, German tyre maker Continental AG began preparing the ground to form a joint venture with Qindao Doublestar Tire Industrial and DaimlerChrysler unveiled plans to begin truck and commercial vehicle production in China.

Germany's biggest construction group Hochtief is reportedly on the lookout for a partner in China, Metro said it was planning to open 40 new stores in China over the next five years and VW, which is already the biggest foreign carmaker in China, has said it plans to open three new factories in China as part of an expansion drive to double production in the country.

DPA

Subject: German news

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