Germany and Belgium have long held an important trading relationship, says Margit Kunz of AHK Debelux, the German chamber of commerce in Belgium and Luxembourg. She outlines some of the key industrial investments and trends for German companies within Belux and why Belgium should be better known as an investment destination for future-oriented industries, beyond its status as the home to several EU institutions.
Belgium offers a skilled labourforce, with a high educational level, who are mostly multilingual. In a similar way to other countries of smaller size, its people are nimble and open-minded
Belgium and Germany share close political, cultural, and economic ties, with Belgium standing as Germany’s ninth-largest trading partner, while Germany is the top destination for Belgium’s export sector. Can you begin by outlining the significance of the relationship between Belgium and Germany, and the main aims of AHK Debelux’s operations?
As you mentioned, the two countries are important trading partners. Germany is the biggest export market for Belgium. Belgium is also a very important market for Germany. Interestingly, Belgium had an export surplus in 2022. A major part of that is the export of chemical products and pharmaceuticals, which grew particularly strongly during COVID-19. Another significant part is the distribution of natural gas from the hub in Belgium to Germany. There were certain days last year when Belgium ranked as the number one supplier to Germany. The total trade volume between the two countries was 124,3 billion Euros in 2022.
There are also other industries involved. One-third of all goods handled within the Port of Antwerp-Bruges are going to Germany for example. Europe’s largest chemical cluster is in Antwerp, which is home to German chemical giants such as BASF, Evonik, Bayer and many others. The countries are long-term business partners, with a profound relationship.
Would you say the chemical industry is the most important industry for German companies in Belgium?
In terms of trade numbers, yes! 28.5 percent of exports from Belgium to Germany were chemical products, and 17.7 percent were mineral products. However, automotive (6.5 percent transport equipment) and machine parts (9.6 percent) are also significant industries in Belgium. On the import side of German goods into Belgium, the numbers are comparable: 24 percent chemical products, 22 percent mineral products, 11.8 percent machinery and electrical equipment, and 10.7 percent transport equipment.
Which of AHK’s services are German firms most in need of in the Belgian market?
Demand is distributed among several services that we offer. Our offices in Brussels and Cologne directly support our clients in cross-border business. We have many inquiries, especially in HR-related activities, such as our payroll services. In Brussels, we also provide many German companies with TVA-related services, e. g. declarations and registrations.
Business relations between Germany, Belgium and Luxembourg are strong and well-established. Nevertheless, business opportunities evolve constantly, and we organize business delegation trips to all three countries. This supports small and medium-sized companies in their first steps in a new market. Next to that, we have an expert on EPR (Extended Producer Responsibility) and we represent three trade fair organisations: Trade Fair Berlin, Hamburg Messe und Congress, and Stuttgart Messe. For these, we provide space for specific shows and support Belgian and Luxembourg customers to exhibit at those fairs.
For our 670 members, all three markets are important. That’s the reason why we organize conferences and webinars. There are many current topics where we add value to our members by bringing in experts, offering discussion groups or other interesting information that should help firms in their daily business, or even just widen their horizons.
How large is the AHK Debelux team?
Across the two locations, we have around 20 people. Three of them work in Cologne; the remaining team works from our headquarters in Brussels. We are part of a global network of 153 offices in 90 countries. So, if German companies venture abroad, the global AHK chamber network is there to support them. The AHK Debelux by the way is the oldest chamber of commerce in this network. German entrepreneurs founded the first German-Belgian traders’ society in 1894.
Belgium is a relatively small country but how would you assess its competitiveness as an investment destination?
German companies have been here for decades, which points to Belgium’s attractiveness as an investment destination. Specifically, Belgium has its Port of Antwerp-Bruges and the chemical cluster around it as a trading and logistics hub. The chemical cluster of Antwerp is the second largest worldwide. Aside from that, Belgium diversifies and invests in new technologies, such as in pharmaceuticals and healthcare, where the country is well positioned. This is attractive for German players as well.
Belgium offers a skilled labourforce, with a high educational level, who are mostly multilingual. In a similar way to other countries of smaller size, its people are nimble and open-minded.
Recently, Wallonia announced investments into space technology to produce specific parts of rocket sockets. For me, this is interesting as Belgium – from an outside perspective – is not often perceived as a business location in this field. This demonstrates very well that continuous effort is made to provide a diversified industry base in various areas. Another example is hydrogen. Belgium has positioned itself as a trading hub for Europe in this important area.
Similarly interesting is, that the healthcare industry is predominantly a clustered ecosystem. Multinational corporations would work with startups, and universities are often involved in projects and research as well. For research-intensive industries, this is a smart way to move forward. In a recent ranking of the Word Economic Forum, Belgium was ranked in 5th place for innovation within Europe.
More than 99 percent of all German firms are SMEs, accounting for over 50 percent of economic output and 60 percent of jobs. What are the specific challenges around promoting the interests of smaller companies in Belgium?
Not only for the smaller ones but also for the larger ones, one of the main challenges is the diversity and fragmentation of the Belgium system. There are different languages, regions, and occasionally also varying legal requirements. As a company, you need to assess where you best fit in. This is where we as AHK Debelux come in as a partner; we provide this assessment for companies, because we cover the entire country, and are therefore neutral.
Moreover, we look into all regions, whether it is Flanders or Wallonia, the Region of Brussels or East Belgium (German-speaking community) and identify business opportunities. This assessment is extremely important when venturing into a new market, especially if a country has regions with different strengths.
In which sectors do German companies have the biggest impact in Belgium today?
Certainly, the chemical and automotive industries are significant here, as are pharmaceuticals and health tech and life science. Belgium was a key country in the partnership between BioNTech and Pfizer on vaccines during COVID-19, with major parts of the production process being conducted in Belgium.
On a smaller scale, due to the proximity of the two neighbouring countries, there are many services in applied crafts. For instance, construction for both, private homes and industrial buildings share significant market opportunities for the German “Handwerk”. In terms of the labour market, a sizeable number of Belgians work in Germany or Luxembourg. The proximity of the countries offers many possibilities for all sides.
It is difficult to say which sub-sector has the biggest impact. In Germany, for example, there are many mechanical engineering and machine tool companies that consider Belgium to be an important market as well. And they would deliver their products to different industries.
What are some of the most significant recent investments from German pharmaceutical or biotech companies into Belgium?
Companies like Bayer, Merck and Boehringer Ingelheim continuously invest in Belgium. Although there have not been any recent announcements regarding specific large-scale new investments in additional manufacturing facilities. Most of these companies are already well established. As a result, one focus currently lies on expanding their production or making it greener, which also entails major investments.
Where are German interests most likely to add value in the pharmaceutical and biotech sector?
In 2022, a total of 1207 patent applications were filed in Belgium, and 1081 were confirmed. In the same year, 57 medical patents were filed. Hence, there is a large base for innovative businesses with R&D-heavy products and services that could be of interest. The numerous health tech clusters are testimony to the innovation drive which is interesting to companies as well. Additionally, German manufacturers of quality tools and machinery which serve the healthcare sector can also add value. As previously mentioned, Belgium is also a very international country with a high impact of international corporations and organizations.
After 18 years in Singapore, you have taken on this new role in AHK Debelux. What would you like to achieve in your time here?
It is a new territory after living in Asia for a significant period. I have lived in Brussels before, for a short time after my studies, and I think this is a very interesting place to be. It is directly in the centre of the European market and a direct neighbour to Germany. As AHK Debelux also covers Luxembourg, I would like to explore future business opportunities for companies in all three countries. The aim of the AHK Debelux will be to raise awareness of Belgium as a marketplace for German companies, and also, to cooperate with Luxembourg entities for the benefit of companies operating in all three countries. Moreover, we aim to promote several exciting topics that originate in Belgium, such as hydrogen distribution within Europe, innovation in certain industries and the existing close trade relations with Germany.
Do you have any closing statements that you would like to send to our international audience of healthcare and life sciences executives?
One should put Belgium on the map. Especially with regard to the current trends in nearshoring and supply chain diversification – for your business in healthcare, chemicals, logistics, and automotive industries. These markets are also significant in Germany. Belgium is not as well-known as it should be to the international business community. The country is predominantly associated with EU institutions. However, I remain optimistic that in the future, the marketplace in Belgium will gain traction due to several significant developments in future-oriented industries.