Why Asia holds Big Promise for Germany
From chat apps, hardware and smart parking solutions, to e-commerce and delivery services, the Asia startup ecosystem is thriving and has become a key attraction for private equity, venture capitalists and companies looking for growth and innovation.
Governments and entrepreneurs realize the potential of the Asian market and want to capitalize on the trend that has been a consequence of, among other things, the growing middle class, high penetration of smartphones, a relatively young population, and good disposable income.
Since 1997, for instance, Berlin has been hosting the annual Asia-Pacific Week as a platform to showcase different startups, businesses, cultures, technologies, and innovations.
Two years ago, a project was started by Berlin’s senate department for economics, energy and public enterprises, in collaboration with the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, to create an outbound exchange between Asia and Berlin that could help startups, entrepreneurs, government bodies and accelerators understand different market opportunities. Called StartUp AsiaBerlin (SUAB), the project is now in its third edition and includes panel discussions about entering and scaling in the Asian market, understanding tech trends emerging out of the region and meeting different shareholders.
This edition started in India and will travel to China, Singapore, Indonesia, and Malaysia till the next of this year.
“The goal of the trip is to bolster the startup exchange, facilitate international cooperation, and enable market access for German companies in this thriving startup ecosystem,” says Oleksandra Kovbasko, head of Startup Connect, at Berlin-based non-profit enpact. Enpact is the organizer of SUAB.
Kovbasko says India and China are the bigger focus points for German companies, in terms of competition and growing markets. “Although several companies are engaging with India, China is still not as well explored in terms of potential competition and growing markets, but we see this, in terms of investments, we anticipate India and China would be very important for German companies (sic),” she says.
The Market of the Future
When asked about the increasing interest in the Asian market, Kovbasko says that 40 per cent of the startup founders in Germany are from migrant backgrounds, “so it’s only natural that they think in terms of markets beyond the US”. She adds that Asia will be the consumer market of the future. “Of course, that comes with its set of challenges, like different cultures and languages. But we do see that several German companies are specifically designing products for Southeast Asia.”
Hannover-based Marius Koch, project director at CEBIT, Deutsche Messe AG, who was part of the German delegation that travelled to India last week, believes that over the years, Asia, especially China and India, has increased the efforts to support new businesses. “This means there is a lot of money available, from governmental bodies, corporates, venture capitalists and also private investors. China and India have big populations as well, which translates to huge potential market for startups, and previous years have shown that both India and China can produce new unicorns (Paytm, Didi, OLA, Snapdeal).”
Another member of the delegation, Jeff Katz, who founded HARDWARE.co accelerator in 2013 for entrepreneurs, industry professionals and makers focused on hardware products, says people are flocking to Asia for “market access and market potential”. “Most of the world’s innovation will come out of this region by 2050,” he says.
The Plus and Minus
“It’s cheaper here, more creative and a very different way of thinking,” says Kovbasko. “The only challenge is the sheer size of the country and the sheer number of potential partners you can work with.”