BERLIN – The Asia-Pacific region has emerged as a key destination for German investors, who are looking for opportunities to diversify their portfolios, tap into new markets, and contribute to sustainable development. In 2022, German investors deployed a record amount of capital in Asia-Pacific, especially in sectors such as renewable energy, digital transformation, and health care.

According to Bain & Company’s Asia-Pacific Private Equity Report 2022, German investors participated in 15% of the total deal value in Asia-Pacific in 2022, up from 10% in 2021. The report also noted that German investors were among the most active in cross-border deals, leveraging their global networks and expertise to partner with local players.

One of the main drivers of German interest in Asia-Pacific is the region’s resilience and growth potential amid the global pandemic and geopolitical uncertainties. Asia-Pacific was the first region to recover from the Covid-19 crisis and is expected to account for more than half of the global GDP growth by 2024. The region also offers a large and diverse consumer base, a vibrant innovation ecosystem, and a strong commitment to green and digital transitions.

Another factor that attracts German investors to Asia-Pacific is the alignment of their strategic priorities and values with those of the region. Germany has been a pioneer and leader in promoting green and sustainable development, both domestically and internationally. In May 2022, Germany and India signed a joint declaration of intent on green and sustainable development partnership (GSDP), under which Germany pledged to support India with at least 10 billion euros by 2030 for projects related to renewable energy, climate resilient urban development, and sustainable use of natural resources. Similarly, Germany has been collaborating with other Asian countries such as China, Japan, and South Korea on various initiatives related to clean energy, circular economy, and biodiversity conservation.

Moreover, Germany has been a vocal advocate of a rules-based international order and a free and open Indo-Pacific. In September 2020, Germany released its policy guidelines for the Indo-Pacific region, which outlined its vision and objectives for enhancing its engagement and cooperation with the region on issues such as security, trade, connectivity, human rights, and multilateralism. In February 2023, German Chancellor Olaf Scholz visited India for his first bilateral visit since he assumed office in December 2021. The visit aimed to significantly expand overall cooperation in areas of trade, defense, clean energy, and climate change. The visit has been an opportunity to also discuss the progress of the India-EU free trade agreement talks, which have been stalled since 2013.

The outlook for German investment in Asia-Pacific remains positive, as both sides seek to deepen their economic ties and strategic partnership in the post-pandemic era. However, there are also some challenges and risks that need to be addressed, such as regulatory uncertainties, cultural differences, environmental and social standards, and geopolitical tensions. German investors need to adopt a long-term perspective and a nuanced approach when investing in Asia-Pacific, taking into account the diversity and complexity of the region. They also need to build trust and rapport with their local partners, stakeholders, and customers, and demonstrate their value proposition and differentiation. By doing so, German investors can not only reap the benefits of investing in Asia-Pacific, but also contribute to the region’s prosperity and stability.