Development of Economic Relations between Germany and Taiwan
The Asia-Pacific region has become increasingly important to the German economy over the last years. Whether in emerging countries or with established trade partners, many German companies cannot and do not wish to pass up on these markets. It is therefore not surprising that the long-standing economic relations between Germany and Taiwan have undergone positive development within this dynamic context.
Back in 1981, the Association of German Chambers of Industry and Commerce (DIHK) opened the German trade office in Taipei as the delegation of the German economy in order to represent its interests in Taiwan, promote economic relations between Taiwan and Germany and act as a local contact on economic matters. Since then, economic relations between the two countries
have expanded: Bilateral trade volume has increased by nearly tenfold during the last 30 years, 250 German companies have established themselves in Taiwan and around 200 Taiwanese companies have established themselves in Germany.
Today Taiwan plays a prominent role within the Asian region as an importer of German goods. With a bilateral trade volume of over € 13 billion in 2012, Taiwan was Germany’s fifth biggest business partner in Asia. While textiles were exported to Europe to a large extent during the 80s, things have changed significantly over time. Taiwan’s hightech industry has undergone drastic development, making the country today one of the key global producers of electronics and computer components. Thanks to strong innovation and exceptional research and development potential, “Made in Taiwan” has become a sign of quality in the electron industry.
At the same time, the “Made in Germany” seal is and remains highly valued in Taiwan. German products rank tenth among all
imports. And, with a share of 2.9 per cent of all imports to Taiwan in 2012, Germany was by far its biggest supplier from the European Union. German exports are valued at € 6.3 billion and consist mainly of machinery (26 per cent), chemical products (25 per cent), automobiles and parts (18 per cent), chemicals (14 per cent) and electrical engineering (6 percent). On the other side, Taiwan supplies goods to Germany at a total value of almost € 6.8 billion.
From the German perspective, Taiwan ranked 35th in terms of imports. With an economy particularly dependent on exports, Taiwan was significantly affected by the debt crisis in Europe and by weaker demand in the US, Japan and China over the past year. This was manifested by a lower GDP growth in Taiwan of only 1.25 per cent. The German imports from and exports to Taiwan actually decreased by more than 17 percent respectively. On the other hand, a positive surprise was the high level of German investment in Taiwan, which more than doubled compared to the previous year 2012. Experts predict another increase in GDP by 3 to 4 per cent in 2013. German exports to Taiwan this year have a strong potential to bounce back and could increase by 10 to 12 per cent.
The mid-term outlook for German shipments to Taiwan is also positive. Experts have predicted good business perspectives with and within Taiwan, particularly in the German premium sectors such as automotive, engineering and chemical. Given how trade has developed in the past and the potential of both economies, it is clear that Taiwan and Germany will remain connected through a close and fruitful trade relationship in the future.
by Benjamin Leipold
This article was also published in Diplomatic Magazine (May 2013)