Australia and Germany have a warm and diverse bilateral relationship. The two countries enjoy a close and strategic partnership with shared values and a commitment to the rules-based international order, including in the Indo-Pacific.
Key Australian exports to Germany include soil seeds and nuts, metal ore and pharmaceutical products, as well as professional and technical services, including telecom and ICT.
Germany is also one of Australia’s top ten sources of foreign direct investment (FDI), according to the Australian Bureau of Statistics. Germany invests primarily in automotive, manufacturing, ICT, pharmaceuticals, and finance.
Australia’s goods and services trade with Germany in 2021
• Exports: A$4,487.8 million
• Imports: A$18,378 million
• Total merchandise trade (exports + imports): $A26,508.6 million
• Investment in Germany: A$77,412 million
• Investment from Germany: A$49,965 million
“The Enhanced Strategic Partnership signed in 2021 lifted the bilateral relationship to a new level and committed Australia and Germany to broader strategic alignment and joint support for the multilateral system and its institutions,” says Anna Fedeles, Austrade’s Consul General and Trade & Investment Commission.
“The two countries also cooperate closely on new initiatives to accelerate the development of a hydrogen industry through the Australia-Germany Hydrogen Accord signed in 2021.”
Where are the biggest opportunities for Australian exporters?
Germany has a decentralised economy. Its financial heart is Frankfurt, and Munich and Stuttgart are home to high-tech automotive industries. Southern Germany is well-known for ICT, biotechnology and MedTech, and Düsseldorf and Hamburg are locations for telecommunications and media hubs. Munich and Hamburg have strong aviation and aerospace industries, and Berlin is a leading global start-up location.
“Many of these strengths and sectors overlap with the Australian Government’s priority industry sectors,” Ms Fedeles continues. “Exports are driven by highly innovative small and medium-sized enterprises (SMEs). These constitute 99.6 per cent of all companies, and they employ almost 60 per cent of all employees in Germany.
“Many of these SMEs, referred to in Germany as ‘the mittelstand’, are world market leaders in their respective niche segments. Together with international companies like Bayer, BASF, Daimler, Volkswagen, and Siemens, they make up Germany’s manufacturing industrial base.
“There are major opportunities for Australian companies to plug into Germany’s advanced tech sector, collaborate with Germany on a clean energy future, partner with Germany on space projects and research initiatives, and export some of Australia’s unique, premium food and drink products to Germany.”
Emerging opportunities
High Tech Strategy 2025
“Germany’s industry has a history of advanced manufacturing and innovation, particularly in sectors such as automotive, aviation, defence, digital/ICT, life sciences and agribusiness,” says Ms Fedeles. “Germany is a global leader in Industry 4.0, which is the increased use of automation and data exchange. The ‘Internet of Things’ is the key enabling technology of Industry 4.0, as outlined in Germany’s High Tech Strategy 2025.
“Both traditional SMEs and start-ups are crucial drivers of innovation. Innovative German and international tech companies are partnering with Germany’s SMEs to spearhead major tech advancements. Emerging technologies that plug into Germany’s already advanced tech platforms are sought after – these include quantum, cyber security, AI, and MedTech solutions.
“German multinationals such as BMW, Bosch, insurance giant Allianz, and Deutsche Telekom invest heavily in emerging technologies, usually via their accelerator and incubator programs.
“Tech companies that are successful in the German market are those that demonstrate the sustainability of their business model. They tend to focus on product development and client acquisition and introduce solutions that can be adopted across multiple industries. “
The hydrogen opportunity
German companies and research institutes are world leaders in developing green hydrogen production, processing, and storage technology on which any future hydrogen industry will depend. According to research conducted by Germany’s Fraunhofer Institute for the country to reach its energy transition goals, it will require as much as 800 terawatt-hours of hydrogen by 2050.
“Australia’s long history of energy export means that there is also an opportunity for Australia’s innovative tech companies to partner with German companies,” says Ms Fedeles. “Australia is a front-runner in commercialising innovative hydrogen technologies, including catalysts, hydrogen processing and storage solutions, and hydrogen fuel cell technology.”
The Australia-Germany Hydrogen Accord is a forward-leaning initiative to deepen collaboration between the two countries on climate change action and emissions reduction. The accord plays to both countries’ strengths based on Australia’s hydrogen production potential and Germany’s expected strong future demand.
Three initiatives are pursued under the accord:
- HyGate Initiative: The Hydrogen Innovation and Technology Incubator
- Collaboration in Australian Hydrogen Hubs: selected regions where hydrogen users and exporters are co-located to reduce costs and share information
- Facilitating trade of hydrogen between Australia and Germany
New Space
The European Space Agency (ESA) is Europe’s gateway to space. Its mission is to shape the development of Europe’s space capability and ensure that space investment benefits the citizens of Europe and the world. Germany is a member state and a major contributor to ESA.
Ms Fedeles continues: “The German Federal Government views space as important for the future of the German industry. Many space technologies, such as earth observation, data and communications, positioning systems, navigation and timing, and AI-driven solutions, make vital downstream contributions to mobility, agtech, and logistics.
“Germany has a growing ‘New Space’ sector that is agile, responsive and has a greater appetite for risk. The focus is on sales from smaller projects generated by private industry needs, such as small and microsatellites for earth observation, environmental and climate research, and high-speed data connectivity.
“This is where Australian space companies will find opportunities. The sector has a strong interest in partnering with international New Space companies on these projects and research initiatives. There are significant opportunities for Australian exporters to work with Germany in access to space (launch), earth observation, space situational awareness and debris monitoring, communication technologies and services.”
Europe’s food and beverage leader
Germany is Europe’s largest food producer and the third-largest exporter and importer of agricultural and food products worldwide.
Germany’s population of 83 million spends around €300 billion (A$465 billion) on food and beverages each year; this includes €71.5 billion (A$110 billion) on out-of-home consumption. Germany is a sophisticated and competitive market with over 170,000 food products on offer.
“German consumers are very receptive to new culinary trends,” says Ms Fedeles. “Major trends include functional foods that offer health benefits, free-from, and plant-based foods such as meat replacements and milk alternatives.
Sustainability is another big trend. German consumers care about where the food they consume is sourced from and whether products are manufactured, packaged, and transported in environmentally friendly ways. These are now considered key growth drivers.
“The Australian Government is also helping Australian agribusinesses expand and diversify their export markets through the Agribusiness Expansion Initiative.
“Major Australian companies such as wine importer Negociants International and premium soft drink producer Bundaberg have been successful in Germany. Negociants works with traditional German wine importer A. Segnitz and Bundaberg supplies through German distributor Karlsberg Brauerei, one of the largest breweries in Germany.
“Similarly, Australia’s Marquis Macadamias has appointed Germany’s Bösch Boden Spies as one of their premium macadamia nuts distributors.”
Challenges facing exporters when entering the German market
The German market is mature, sophisticated, and highly competitive. German consumers and retailers are also price-sensitive, particularly regarding food products. Companies wishing to enter the market must take their time to research the market thoroughly and develop a strong, unique selling point (USP). Companies should also obtain professional advice where appropriate.
“Rules, structures, and procedures are cornerstones of German society, explains Ms Fedeles. “While broadly similar to Australian business practices, the German approach emphasises order, hierarchy and formality. Meetings should be scheduled well in advance, and punctuality is vital.
“German firms tend to be risk averse, so it is essential that companies can demonstrate the sustainability of their business model when they meet with potential German business partners. As a result, the pace of business can be somewhat slower than in Australia, but once successful; companies can build long-lasting, profitable partnerships with German firms.”
Austrade contact information
Anna Fedeles, Consul General and Trade & Investment Commissioner Frankfurt, Austrade
Email: info@austrade.gov.au, Contact: 13 28 78
To learn more about how Australia can help your business, visit austrade.gov.au
