There is a $50bn corridor of trade between Germany and MENAT that has only strengthened in recent years. The country’s historic relationship with Turkey remains strong, while countries like the UAE and Egypt entice new investments.
Despite the global economic slowdown, one region is still heavily investing in growth and development, offering new market share to smart corporates looking outside their borders.
Germany has a healthy 3 per cent global trade with MENAT, compared to the 9% of business it does with the US, China at 7 per cent and the UK at 6 per cent, but there is plenty of room for expansion. Throughout the region, countries are looking to diversify and build on their developing economies, making them increasingly open to foreign investment.
It’s not just funding that MENAT is looking for either. As the region booms, it’s seeking partners with expertise in areas where Germany excels. Sectors like professional services, energy, infrastructure, commercial real estate, education and healthcare are all expanding, with many opportunities for savvy German corporates.
In this buzzing region of potential partners, a few countries stand out. The UAE is a regional hub and half of the HSBC’s new corporate clients in the region are based here. The country has been the site of very large contracts with international companies and is also a fertile ground for homegrown talent. Both trends are exemplified in the recent acquisition of Zomato, a UAE food delivery business, by Delivery Hero1.
Germany has a long history with Turkey – it’s one of the biggest single country sources of foreign direct investment and has significant cultural ties through the three million Turkish nationals living and working in Germany. Despite the political challenges right now, Turkey reports that FDI inflow was $13.2 billion in 2018, up 14% year-on-year, indicating little decrease in investor appetite2.
There is also increasing interest in the huge consumer base of Egypt. The economy has stabilized after fully floating the Egyptian pound in late 2016 and companies are now looking at how to capture market share and establish secure supply chains through the country. Global security technology group G+D recently announced a major contract to produce bank notes for the Central Bank of Egypt3 and Dr Oetker has taken over Egyptian bakery business Tag El Melouk4.
HSBC is already providing support to German companies looking at opportunities in the region. HSBC Bank Middle East Limited is headquartered in Dubai – a hub that serves many corporates looking to access the region, wherever they do business in MENAT. But corporate clients can enjoy a structure that will mirror their operations in the region. For example, if clients are based in the UAE with subsidiaries in other countries, HSBC will offer a UAE-based relationship manager who will coordinate across the region, instead of a fragmented array of RMs who would take time to collaborate.
HSBC can provide direct funding for projects or the guarantees that form such a large part of the commercial environment in MENAT. The bank will also offer guidance on working capital, supply chains and liquidity structures as well as help with financing in the long term. Expert teams on the ground can help companies to understand where the geographic, sectoral and economic space exists for German corporates to expand into.
As trade along the Germany-MENAT corridor increases, HSBC is there to support the journey and ensure that businesses on both sides thrive.
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