Germany has an export-oriented economic structure similar to that of Korea, and is active in investing in eco-friendly industries. The government’s aggressive investment support program has led to an increase in attracting investment from environmental sectors such as electric vehicles and renewable energy, and in recent years, trade volume with Asian countries has been increasing. German Trade & Invest(GTAI) is a foreign trade and internal investment agency of the Federal Republic of Germany, advising foreign companies seeking to expand their business activities in the German market. Future Eco met with the CEO of GTAI and heard about environmental-related cooperation between Korea and Germany.
What do you think is necessary for the Korean economy to make a second leap?
South Korea has experienced unbelievable success in the past decades, going from being one of the world’s poorest countries to a high-tech economy with very high levels of exports. The basic strategy of most local firms was “fast following,” optimizing existing products and selling them at a competitive price. But other countries, above all China, are catching up and are able to offer similar products at even cheaper prices. South Korean companies have gone from the pursuers to the ones being pursued. This means that the country will have to take the next step and become a “first mover,” p ositioning i tself at t he forefront of innovation, leading the way in introducing new applications to the world market and opening up a technological gap with the competition. It’s already succeeded in doing this in several areas such as memor y chips and OL ED applications. To provide a broader basis for this new approach, existing facilities have to be modernized, and massive investments made in research and development.
In addition, South Korea should expand its international cooperation and reorient itself toward new growth segments to counteract declines in profit margins in its old core industries like automotives, steel and shipbuilding.
What is likely to be Korea’s future growth engine?
That’s a major question and will determine the course of the South Korean economy. In the past, South Korean companies have successfully picked “winning horses” like smart phones and memory chips. But here, too, reorientation is needed, as these sectors look to be cooling off. Some interesting areas are electric and autonomous vehicles, the Internet of Things, Smart Cities and AI. In these segments, South Korea can exploit its strengths in ICT and can reasonably expect to be among the market leaders. Also of interest are the renewable energy sector since renewables will provide a growing percentage of electricity in the years to come.
What are the local business opportunities and challenges for Korean companies related to energy conversion in Germany?
For the transition to non-nuclear, sustainable energy sources to work, the energy supply will have to be reliable, affordable and CO2-neutral. It will also have to preserve the competitiveness of Germany as a business and industrial location.
The challenges we currently face - from the integration of renewable energies and the coupling of the electricity, heat and transportation sectors to the digitalization of the energy sector - present new possibilities for Korean companies to do business. It can be challenging for foreign companies to gain access to German consumers. A branch in Germany can help and also offer access to the European common market.
What are the areas of coopera tion or growth potential bet ween Korea and Germany regarding the environment?
Air quality in South Korea, in par ticular Seoul, has greatly deteriorated in recent years, and fine dust levels are becoming critical.
The South Korean government is tackling the problem and plans to invest hugely in the expansion of renewable energy sources. 80 billion US dollars are set to be pumped into the sector by 2030. German companies have a tremendous amount of useful knowledge because our country committed early on to the “Energiewende” - the transition to non-nuclear, sustainable energy sources. So we see a wide range of promising opportunities for cooperation in this area. There are also possibilities for bilateral collaboration in the modernization of construction machinery motors and the development of electric vehicles.
With growing interest in eco-friendliness, the issue of companies' ethical responsibility is underlining. Due to the nature of companies that put profits first, thorough verification of them is needed to win consumers' trust. What about the German companies' awareness and readiness for this? And if there is anything else that the Germany Trade & Invest is working on in this regard, what is it?
CSR and sustainability reporting is not at the moment part of the range of services Germany Trade & Invest offers to foreign companies to help them set up shop in Germany. But the German Ministr y of Labor and Social Affairs provides comprehensive CSR information, and it’s available in English. In addition, this year, the ministry has awarded the German government’s fourth CSR Prize for economic, social and ecological responsibility.
Moreover, the German Ministry of Economic Affairs and Energy provides information about possible incentives and certification procedures concerning sustainability in German businesses. A recently published dossier covered the role of German start-ups within Germany’s dynamic start-up scene.
I know that there is an ecofriendly approach to narrowing the economic gap between East and West Germany. Please introduce it.
One example of how eco-friendly policies and attempts to close the gap between the German east and west is the economic support package that is part of Germany’s phase-out of coal-based energy.
Three of four regions targeted arein the east. That’s just one example of how ecology and economic stimulus in the east are connected.
What advice would you like to give to Korean companies wishing to enter the German environmental field?
Current political initiatives in the energy and environmental sectors such as the “climate package” and the phase-out of coal-based power offer an attractive opportunity to enter the German market. To expand successfully to Germany, it helps to be networked with strategic partners, for example, from the vast research and development landscape and to set up a business presence in Germany to ensure the greatest possible proximity to partners and potential customers.
What is the Germany Trade & Invest's recent focus?
GTAI’s self-defined priorities in 2019 were energy, the digital economy and open markets.
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