KGCCI's Henkelmann says Korea important part of Germany's de-risking agenda

Industry

KGCCI's Henkelmann says Korea important part of Germany's de-risking agenda

Published: 25 Aug. 2024, 07:00

SARAH CHEA
chea.sarah@joongang.co.kr

Dr. Martin Henkelmann, president and CEO of the Korean-German Chamber of Commerce and Industry (KGCCI) speaks during an interview with the Korea JoongAng Daily at the chamber's headquarters in Jongno District, central Seoul, on Aug. 14. [PARK SANG-MOON]

[INTERVIEW]

The intensified trade tit-for-tat between the European Union (EU) and China inevitably forces European countries, particularly those like export-oriented Germany, to take a de-risking strategy to diversify their manufacturing locations and sourcing partners.

In a squeezed position in the even more hardening U.S.-China war, Korea emerges as a good alternative manufacturing site to China, says Dr. Martin Henkelmann, president and CEO of the Korean-German Chamber of Commerce and Industry (KGCCI).

Korea's “democratic legal system and highly developed and mature market make it an attractive and strategic entry for German companies,” Henkelmann said during a recent interview with the Korea JoongAng Daily.

“Korea and Germany are both industrial powerhouses with strong manufacturing sectors, and this synergy brings German companies to tap into Korea’s advanced manufacturing capabilities, making it easier to adapt.”

Germany is already the largest European trade partner of Korea, with its trading volume hitting a record high of 34 billion euros ($38 billion) last year, backed by the large shipment of vehicles, auto parts and machinery.

The KGCCI is the second-largest foreign chamber in Korea, representing more than 500 member companies including Siemens, Henkel and automakers Mercedes-Benz and BMW.

The Korea JoongAng Daily sat down with Henkelmann to discuss the association’s role in relations between Korea and Germany and what Korea should improve to deepen cooperation between the two countries.

Having worked as a lawyer in Germany for more than four years, Henkelmann led the German-Tunisian Chamber of Industry and Commerce from 2014 to 2018. He then moved to the German-Philippine Chamber of Commerce and Industry where he served for another four years.

Since May 2021, Henkelmann has been heading the KGCCI as president and CEO.

Below is an edited excerpt from an interview with Henkelmann at KGCCI’s headquarters in Jongno District, central Seoul, on Aug. 14.

Dr. Martin Henkelmann, president and CEO of the Korean-German Chamber of Commerce and Industry (KGCCI) poses for a photo during an interview with the Korea JoongAng Daily at the chamber's headquarters in Jongno District, central Seoul, on Aug. 14. [PARK SANG-MOON]

Q. Germany stands as Korea’s largest European partner. What favorable business factors in Korea accelerate their moves?

A. Korea has a relatively stable government and democratic legal system, so investment here is protected. Companies don’t have much problem with copyrights or intellectual property.

Korea and Germany are both industrial powerhouses with strong manufacturing sectors, and this synergy brings German companies to tap into Korea’s advanced manufacturing capabilities, making it easier to adapt and produce products for the Korean market as well as for third-country markets.

Also, Korea is a highly developed and mature market, with Korean companies being global leaders in various industries. These companies seek the latest technologies and cutting-edge solutions, which German firms can provide.

Korean consumers also have strong purchasing power and a high appreciation for quality, which aligns well with the premium reputation of German products. Conversely, German consumers also value Korean products. Success in the Korean market often signals potential success in other East and Southeast Asian markets. This makes Korea an attractive and strategic entry for German companies. With its significant purchasing power, Korea offers a strategic platform to broaden its influence and achieve regional expansion.

There are some views that the EU-China trade tension offers chances for Korea to strengthen its alliances with European countries. What’s your perspective?

I think the tension is rather a problem for countries that are export-oriented like Germany and Korea. In the general risk existing in the tension, of course, German companies now want to diversify their manufacturing locations and sourcing plans. Diversify doesn't [mean] that they will pull out investment from China, but when they make an additional investment, they want to have a second- or third-leg kind of production plan. And there, we see Korea has a chance.

But it’s important to consider broader implications. The core mission of the World Trade Organization is to reduce tariffs and foster fair competition among companies and countries. Such competition is important for the global economy, benefiting both businesses and consumers alike. German companies, much like Korean businesses, have a strong interest in free markets, fair competition and a rule-based global economic environment. However, increased global trade tensions generally do not benefit our industries, regardless of the specifics of the tariffs in question, and without commenting [on] if some of the tariffs lately imposed are justified or not.

Despite these challenges, Germany and Korea, as value partners with complementary industries, share a mutual interest in promoting global free markets. This shared commitment is driving German companies to consider Korea more closely as they look to diversify their manufacturing locations and sourcing partners. In this context, Korea is becoming an increasingly attractive destination for German investment and collaboration.

In what areas Korea and Germany can deepen cooperation?

I would like to mention the energy cooperation between the two countries, which is already quite intense. We see more and more global companies that have committed themselves to reducing carbon footprints. However, Korea’s lack of availability of clean energy and the non-flexible certificate trading system offer difficulties to German companies who'd like to enter the market.

KGCCI plays an important role in the Korean-German Energy Partnership [KGEP], which also supports German companies entering the Korean market in the energy sector via the German Energy Solutions Initiative Program, which is financially supported by the German Federal Ministry for Economic Affairs and Climate Action.

German companies, having embarked on their energy transition business earlier than Korea and accumulated substantial experiences, are well-positioned to collaborate with Korean companies while Korean firms, with their advanced technological capabilities and a deep understanding of the Korean market, offer valuable insights. This synergy promises to greatly contribute to advancing the sustainable energy transitions in both countries.

Furthermore, both Korean and German companies and their respective governments are exploring innovative ways to produce, transport and utilize more hydrogen. Many solutions are still under development. By pooling knowledge and experience, we can accelerate to find solutions and implement them more swiftly and cost-efficiently.

Looking ahead, I anticipate fruitful collaborations on joint research in hydrogen technology and in implementing offshore wind energy production. We can cooperate in the development of joint energy projects in third countries and strengthen climate change education for future generations. These efforts will not only strengthen our bilateral cooperation but also contribute significantly to global sustainability goals.

More specifically, what energy-related programs or projects does KGCCI offer in Korea?

As the official secretariat of the KGEP in Korea, KGCCI supports the activities of the German government, specifically the German Federal Ministry for Economic Affairs and Climate Action, in collaboration with the German think tank adelphi.

We open the Korean-German Energy Day Conference every year, alternating between taking place in Korea and Germany, which is attended by over 100 energy sector experts. We share our knowledge of the energy field to improve each other’s policies or rules to find cooperation opportunities. The 6th Korean-German Energy Day was held on March 21 this year, in Berlin, under the theme “Sustainable Supply Chains for the Energy Transition,” attended by tens of officials from Korea's Ministry of Trade, Industry and Energy.

KGCCI also regularly hosts bilateral workshops and webinars tailored to each group's specific themes. These can take the form of closed sessions, where government officials from both countries engage in in-depth and candid discussions on policy, or open sessions where interested market players from both countries share insights on market conditions, technological developments and experiences. Recently, a workshop on energy efficiency was held.

Under the KGEP, Korean expert delegations are also organized to visit Germany to various fields of clean energy such as wind farms. These trips are focused on timely topics of mutual interest to both countries. Through these trips, Korean experts have the opportunity to directly observe and experience the policy developments, market conditions and technological advancements in Germany related to the chosen topics.

Robert Habeck, Germany's Minister for Economic Affairs and Vice Chancellor, pledged to strengthen cooperation with Korea in the digital transformation and AI sectors during his latest visit to Korea earlier in the year. Can you elaborate on this?

Germany’s digital strategy focuses on promoting investment in new and emerging technologies such as AI, quantum technologies and robotics in order to strengthen Germany's position as a technology hub. Habeck’s discussion to strengthen cooperation with Korea in digital transformation and AI sectors reflects this strategic priority.

In the field of advanced technology, there is already lots of cooperation between Korea and Germany. German companies are important suppliers for the Korean semiconductor industry. As another example, our bilateral cooperation in the field of Industry 4.0 is a success story, showcasing the potential for further collaboration.

A key global initiative for digital transformation is Manufacturing-X, which aims to create an open, decentralized, and collaborative data space for Industry 4.0. Germany aims to further deepen bilateral cooperation with Korea in the digital sector, focusing on future-oriented solutions such as the 5G, 6G, AI and data spaces.

Germany seeks to contribute to even better networking between tech companies, startups and research institutions in both countries. By fostering these connections, we can accelerate innovation and ensure that both Germany and Korea remain at the forefront of the global digital transformation.

Additionally, in order to contribute strongly to international trade and export machinery and electronics, Korean and German companies have the same interest that international standards in digitization are widely applied and agreed on in a fair and transparent way.

What's KGCCI’s major focus for the rest of 2024 and the future?

As our major focus is reflected in the upcoming events and initiatives that align with our commitment to fostering innovation, sustainability and collaboration between Korean and German companies.

We are organizing about 10 business delegations until the end of the year to enable Korean and German businesses to meet and collaborate. Numerous events related to energy and environment such as the Korean-German Climate & Environment Conference, the Forum on Offshore Wind and the Hydrogen Conference are on our agenda as well. When it comes to startups and innovation, we will be hosting the KGCCI Innovation Awards, celebrating their 10th edition in November.

KGCCI is not just about businesses. Therefore, our Women in koRea Mentorship program, empowering young women to grow professionally, has lots of significant events lined up. Additionally, on Aug. 31, we will host a “Guide Walkers” joint CSR event at Olympic Park in Seoul, where over 450 participants from KGCCI, member companies and partners will serve as guide walkers for individuals with visual impairments at the 10th Harmony Marathon.

All these activities underscore KGCCI's dedication and comprehensive approach to deepening the economic partnership between Korea and Germany.

BY SARAH CHEA [chea.sarah@joongang.co.kr]