In a move to deepen ties with South Korea, Germany’s economy minister embarked on a trip to Asia, emphasizing the need to de-risk trade exposure to China. Both nations share a common goal of expanding their network of commercial allies amidst growing trade concerns. This mission aims to boost cooperation in business, economic security, and climate-related initiatives while exploring new potential avenues for collaboration.
Germany’s direct investment in South Korea reached 15.1 billion euros in 2022, highlighting the strong economic ties between the two countries. The recent Business Confidence Survey conducted by the Chamber of Commerce revealed that German companies in Korea are optimistic about future sales growth, with many planning to increase their investments in the country. Trade between Germany and South Korea amounted to 34 billion euros last year, with German exports accounting for a significant portion of this figure.
German exports to South Korea primarily consist of cars, automotive parts, chemical, and pharmaceutical products. The automotive sector plays a crucial role in driving German exports to South Korea, with vehicles and automotive parts making up a substantial portion of goods sold. Despite competing in several sectors, German and Korean companies also engage in joint research and development activities, particularly in areas such as e-mobility and hydrogen technology.
German automotive supplier Continental has been operating in South Korea since 1986, with multiple locations and a significant workforce in the country. While China remains a vital market for Continental, South Korea serves as a key component of its diversification strategy in the region. By establishing a network of production facilities across Asia, Continental aims to mitigate risks associated with depending on a single location for manufacturing operations.
South Korea’s geographic proximity to China has led to close trade relations between the two countries. However, Seoul’s defense alignment with the United States has also created tensions with Beijing, necessitating a delicate balancing act in its trade policy. South Korea’s efforts to reduce dependencies on critical products and enhance industrial supply chains reflect a strategic approach to navigating geopolitical challenges while fostering economic growth.
Enhancing economic cooperation between Germany and South Korea presents significant opportunities for both countries to strengthen their trade relations, expand market access, and drive innovation in key industries. By leveraging their respective strengths and fostering collaborative partnerships, Germany and South Korea can navigate the complexities of the global economy and create sustainable growth opportunities for businesses in both nations.