Almost 70 percent of world growth will stem from emerging markets in the years to come, according to Forbes. It comes as no surprise that investors are turning to Africa, Latin America and Asia to find business opportunities, and German companies are no exception. headquartered in Berlin, looks at how Germany is investing in the emerging markets.
Germany boasts good-quality products — especially in high-tech — that are much sought-after in emerging countries, where German know-how is highly regarded. While companies like Siemens have focused their investments on emerging markets, around 1.9 percent of the total stock of German investments are invested in Southeast Asia only, and this figure is expected to rise in the near future.
The middle class in these markets is growing and by 2020 Southeast Asia’s middle class is set to double to 400 million offering appealing opportunities to the German companies that are looking for new markets to tap into. The demand for high-quality products in emerging markets, and especially in Asia, is soaring rapidly. However, consumers there look for lower prices and more basic features than in Western economies, hence the need for companies to increase their research and development (R&D) budgets, which German businesses are particularly proficient in.
“We have understood from the start that we needed to do everything possible to understand the needs and specificities of all the emerging countries we operate in,” says Paul Philipp Hermann, Co-Founder and Managing Director at Lamudi. “German know-how is renowned worldwide and customers trust our products. At Lamudi, we always try to test and look for new ideas to improve our offer and make it as relevant as possible to the market, and in the end have satisfied customers. And I think this is something we Germans are especially good at: bringing new quality products that exactly match a specific need in other countries.”
Of course, investing in emerging markets comes with a risk. These countries have recently suffered from weak currencies, which have hindered investments and German exports. However, these problems should only be temporary, with these markets still presenting important growth potential. As these economies mature, German companies will benefit from their long-term investment in bringing high-quality and relevant products to the markets.