CONTRIBUTION Sustainable synergy: Korea, Germany to drive economic growth, innovation
Korean-German Chamber of Commerce and Industry President and CEO Martin Henkelmann
German Vice Chancellor and Minister for Economic Affairs and Climate Protection Robert Habeck will visit Korea, Thursday, underscoring the deepening bilateral ties between two economic powerhouses.
A foreign direct investment stock of 15 billion euros ($16 billion) and the 2023 trade volume of almost 34 billion euros demonstrate the flourishing economic relations between the two nations.
As we celebrated the 140th anniversary of Korean-German diplomatic relations last year, high-level visits by German President Frank-Walter Steinmeier in 2022, Foreign Minister Annalena Baerbock and Chancellor Olaf Scholz in 2023 have strengthened the political partnership.
During the last summit, the two leaders laid the groundwork to expand the strong trade and investment relationship to cutting-edge industries, such as in hydrogen, semiconductors, clean energy, and to strengthen their supply chain cooperation.
The upcoming visit of Minister Habeck will serve as a golden opportunity to solidify economic and business collaboration and set a bold agenda for the future.
German Vice Chancellor and Minister for Economic Affairs and Climate Protection Robert Habeck attends a cabinet meeting at the Chancellery in Berlin, Germany, June 12. Reuters-Yonhap
Global value chains: opportunities and challenges
Global value chains (GVCs) are expected to be one of the key economic topics during the visit, reflecting the shared recognition of their critical importance to both Korea's and Germany’s export-driven economies.
As we live in an era defined by unprecedented connectivity and interdependence and unparalleled uncertainties, strengthening and diversifying GVCs is vital for sustaining growth, fostering innovation, and enhancing competitiveness.
However, the pursuit of robust GVCs is a challenging task with complexities stemming from geopolitical tensions, obstacles to global maritime transport and high interest rates.
So how do we achieve growth for Korea and Germany in such challenging times?
Innovation and collaboration are key. German and Korean companies, specialized in diverse industries, can leverage complementary capabilities and drive innovation.
Germany has become the world’s third-largest economy with a GDP of $4.59 trillion and has been leading industrial development with its precision in sectors such as engineering, automotive, chemical, and pharmaceuticals. German industry has also excelled in creating industrial networks and mobilizing the innovative powers of small and medium enterprises.
Meanwhile, Korea is renowned for its expertise in electronics, battery and automotive manufacturing and Korean exports rose strongly in the past months following a jump in chip shipments.
President Yoon Suk Yeol shakes hands with German Chancellor Olaf Scholz at the presidential office in Seoul in this May 2023 file photo. Yonhap
Cooperation in future technologies
Korea and Germany are at the forefront of innovation in areas such as artificial intelligence, renewable energy, autonomous driving, and advanced manufacturing. Joining forces and pooling expertise from Korean and German businesses will accelerate technological advancements and unlock new growth opportunities in emerging industries.
Notably, like Korea, Germany will boost the development of AI by 2025. Specifically, it will promote 50 ongoing measures focused on research, skills, and infrastructure development and complement them with 20 additional AI initiatives.
Recently, the Korean-German Chamber of Commerce and Industry (KGCCI) hosted German experts who visited Seoul to explore, and learn about Korea’s AI strategy and they were amazed by the versatility and transformative potential of AI in various sectors reflecting diverse applications and collaboration across industries.
Beyond AI, cooperation in renewable energy and sustainable development holds promise for addressing pressing global challenges.
Both countries share a common vision to reduce greenhouse gases and build a future that embraces clean energy solutions.
Germany’s commitment to climate action, exemplified by its Climate Action Plan 2050, its achievements in energy transition and the rich experiences of German businesses open ample opportunities for collaboration.
Korea has made strides in renewable energy adoption and has set ambitious goals for carbon neutrality by 2050. By leveraging our collective strengths and resources, we can develop innovative solutions that contribute to building a more sustainable future for all.
Our partnership and cooperation are built on common interests, trust and a successful free trade agreement (FTA) between Korea and the European Union (EU).
However, some of the agreement’s rules have grown old or are not interpreted consistently between the two sides. Furthermore, new business models and developments have evolved and therefore are not covered.
By updating the current framework to an EU-Korea FTA 2.0, more synergies will be created, and greater innovation can be leveraged.
As the governments and businesses of Korea and Germany enhance their collaboration, there is immense potential to drive economic growth, foster innovation and address global challenges.
This ministerial visit is primed to strengthen bilateral economic partnership and forge new pathways toward a brighter and greener future.
The writer is the president and CEO of the KGCCI.