As the Saudi infrastructure developments offer massive investment opportunities for German companies, the Delegation of German Industry and Commerce for Saudi Arabia has been working hard to strengthen economic cooperation between the two countries.
Saudi Arabia now occupies the first position in terms of economic partnership with Germany, says Andreas Hergenröther, delegate of German Industry and Commerce of Saudi Arabia and Yemen.
“The expected value of Saudi-German commercial deals in 2013 is around 10 billion euros,” Hergenröther told Diana Al-Jassem of Arab News in an exclusive interview.
He indicated that the euro crisis has not affected the economic cooperation between the two countries.

The value of commercial deals between Saudi Arabia and Germany has remained consistent for five years. Besides, reports confirm that the value of bilateral commercial deals jumped by 47 percent in 2012. What is the reason for this increase?
It is true that in 2012 the German exports to Saudi Arabia increased during the first 11 months by 71 percent and Saudi exports to Germany increased by about 27.5 percent. The total volume of Saudi exports to Germany is less than the German exports to Saudi Arabia, which mostly includes hydro chemical products and petrochemicals. The reason for this increase is that the market is becoming more attractive. We also saw the global input of Saudi Arabia rising by nine percent during 2012. Figures indicated that Saudi Arabia is becoming more important for German business. We are working on two directions to promote both German and Saudi products by organizing meetings and exhibitions. Saudi businessmen are able to showcase their potential and German contribution through such events.

Despite the unstable political climate in the Middle East, Germany has shown its interest in the Middle East market. Which countries in the Middle East or GCC are attracting the attention of German companies?
The GCC market is more attractive for Germany and our figures confirm that. Returning to our figures, there is a notable decrease in the rate of commercial deals between Germany and Middle East markets due to the unstable political situation. We have two countries in the MENA, which are on the same level. These countries are Saudi Arabia and the UAE. In 2012, Saudi Arabia became the most important market for the German economy while Emirates ranked second. The reason for the progress of Saudi Arabia is that there are many projects and population is growing. The UAE is a hub, but Saudi Arabia currently runs many more projects. Political stability in Saudi Arabia, Emirates and Qatar has contributed to the increase in the amount of commercial deals with Germany.

Exports from Saudi Arabia to Germany reached around 1.4 billion euro in the first 11 months of 2012. A recent announcement confirmed that Saudi Arabia has become the first trading partner for Germany in the Middle East. What are the reasons that helped the Saudi market to occupy this position and how could you describe the possibility of cooperation in the areas of energy and mega projects?
Saudi Arabia has a stable development of increasing exports where it is the gigantic market. Also, implementing so many mega projects as well as growing population have led Saudi Arabia to be our first partner in economy and trade. In 2013, our trade value will be almost 10 billion euro. I believe this will be the first time to achieve such a figure because there are so many projects that we are currently realizing in Saudi Arabia. Furthermore, the highest ever budget indicates that many projects will be taking place in the year 2013. We know that Germany will be more involved in several projects as partner and supplier for the Saudi economy. We also have set up several German companies in Saudi Arabia especially in the Eastern Province, which relates to all sectors. These projects are not only in the traditional fields of machinery and engineering, but German companies will contribute as service providers. For example, we have German companies that help in boosting Saudization like DHL, which has accomplished 70 percent of Saudization. DHL and IKEA won the Prince Naif award for the highest level of Saudization in foreign companies. From the logistics point of view, we have a lot of successful stories and we have confidence in the German and Saudi economies and we are sure that the investment will increase a year later.

Could you tell us in detail about the expected amount of deals in the year 2013 and what are the major ones?
Number one German exports to Saudi Arabia are still machinery and industry equipment, which are considered the biggest part, followed by cars and spare parts, chemical products, food products, IT solutions, steel, and natural products. However, figures confirm that the most important part is machinery estimated at 21 percent, 15 percent for cars and spare parts, 14 percent chemical products and 7.5 percent for food. Saudi Arabia in general is a very attractive market for many products of several industries. German institutions are also very interested and engaged in training Saudis aimed at boosting international cooperation. Germany set up technical training colleges in Riyadh and Yanbu. We are also discussing the idea of setting up a German institute for logistics in the Eastern province. In terms of education, I think it will be really good to send more Saudi students to Germany in order to study and help them to find jobs in German companies. We also would like more German companies to contribute in Saudi Arabia and cooperate with Saudi universities. There is already cooperation in medical colleges, researches and other fields.

How do Saudi trade laws facilitate both import and export strategies between the two countries?
We don’t see any particular obstacles in trade. Saudi Arabia is really advanced to facilitate trade. In some cases, they are very sensitive in terms of importing food and medications. This happens everywhere, where the Food and Drug authority takes time to allow certain products to enter the Saudi market. I think such strict regulations can be seen worldwide and even in Germany.

What, in your opinion, are the German products mostly in demand in Saudi Arabia? Could you give names of the most prominent Saudi companies that cooperate with German companies?
The most important products are commercial vehicles, machinery, petrochemical products, pharmaceuticals and cars.

What are the developments and changes in the German market that Saudi companies should be aware of? And what is your role in terms of providing the advice for Saudi firms?
We offer several services for Saudi companies depending on the objectives that these firms have. We analyze the profile of the Saudi company and the business that they are interested in to identify partners from the German side and bring them together. We assist talks between two sides through advices, translation, and export promotion. For example, we promote Saudi dates in Germany and a delegation from Saudi Arabia visited Germany to promote the sale of dates, especially when it’s not well known in Europe. As Germany is the biggest market in Europe, we bring Saudi and German partners together to find solutions and provide assistance for both of them.

We recently heard about the efforts to encourage Saudi companies to participate in the German market aiming to raise Saudi exports. Tell us more about these efforts, and the communication methods that facilitate cooperation?
We are not only here to promote German exports. Our philosophy is to deal in a sustainable way and have strong partners. We have a lot of investment training to develop relations and boost cooperation for 30 or 50 years. I think this is the reason why the German economy is so successful. We also work in Germany to promote our Saudi partners. For example, one of my colleagues visited Saudi Arabia to meet 16 businessmen to discuss further cooperation. We also had a Saudi participation at the fruit logistic trade fair in Berlin to promote the food sector in Germany.

Which Saudi sector attracts German companies?
There are a lot of sectors that attract German companies. Besides the petrochemical sector, German companies are very interested in the areas of health care, infrastructure and construction.

Earlier in 2012, you spoke about the commission’s efforts to support Saudi SMEs. Tell us about these efforts, and what is the rate of SEMs’ representation in German expos?
Developing SMEs is very important, as it is the backbone of any economy. We always discuss this topic with Saudi businessmen. We had an event in Riyadh last year to support the SMEs in Saudi Arabia. In Germany, the rate of SMEs is estimated at around 98.5 percent. We are very interested to support young enterprisers. It is a big challenge to introduce a mechanism that promotes the development of SMEs.

Could the euro crisis affect the commercial cooperation between Germany and Saudi Arabia?
From the business side, figures show that the euro crisis did not affect the bilateral commercial cooperation. We didn’t see any cancelation for further projects. The euro crisis had an impact on the German economy but not like other European countries that include France, Spain and Italy. Germany is still doing very well where the rate of export is growing.

What is your evaluation of the German-Arab economic relations?
It is logical that exports to countries that were affected by the Arab Spring decreased since 2011. For example, our exports to Syria, Yemen, Libya, Tunisia and Bahrain decreased due to the political situation. Lebanon and Jordan also were affected by the unstable political situation in Syria. In contrast, our exports to Egypt had decreased too, but they are still quite big. For Iraq we have many mega projects, where the market is becoming more and more attractive. The Kuwait market is also increasing but very slow. In Tunisia, Morocco and Algeria the increase is only about 1.5 percent for the exports. We further have big projects in Algeria, and exports to Morocco are increasing as well. For Saudi Arabia and the UAE, the export and cooperation opportunities are growing rapidly.

Source : Arabnews 18 -Feb-2013