Merz visits Asia to seek new markets for German defence firms

On his third trip to Asia since taking office, Chancellor Friedrich Merz is seeking new markets, particularly for German defence industry companies.

Alongside drone manufacturer Quantum Systems and Airbus Defence & Space, at least two defence industry firms are among the business delegation accompanying the chancellor on his visits to Singapore, Japan, and South Korea starting on Monday.

Merz is generally attempting to broaden sales markets across the region, partly because German exports to China have suffered a sharp decline.

German industry is consequently seeking alternatives at present. While the federal government now intends to open the way for new arms exports, a military exercise in Japan involving around 100 medical personnel from the Bundeswehr is drawing to a close.

Part of the scenario involves an incident causing numerous casualties on the island of Okinawa.

This is a real threat should war break out over Taiwan, located just 600 kilometres away. That distance is not particularly far for US fighter jets stationed on Okinawa.

Germany is systematically expanding its military and defence cooperation with Japan.

Alternatives to exports to China

Chancellor Friedrich Merz’s trip to Singapore, Japan, and South Korea comes at a time when German companies are making intensive efforts to find alternatives to China for their business in Asia.

Wolfgang Niedermark, an executive board member of the Federation of German Industries (BDI) and Asia expert, observed, for example: “In recent years, we may perhaps have relied too much on China, which is naturally our most important industrial partner.”

To explain the search for alternatives, Niedermark cites “geopolitical” reasons, referring to the rivalry between the West and China, alongside “industrial competition” with China.

Chinese companies are now producing many items they previously imported from Germany for a long time, including high-tech products.

As a result, German exports to China, which still stood at around 107 billion euros in 2022, have dropped sharply since then.

In 2025, they recorded a further decline of approximately 9.7%, reaching a value of just over 81 billion euros.

German exporting companies are consequently searching for alternative markets at present, and Asia stands out as a key export destination.

Asian giants also want to reduce dependence on the US

During his first trip to Asia in office in January, Merz sought to strengthen economic ties with India, including expanding exports to that country.

Japan and South Korea are also promising options. While they are the second and third largest markets for German exporters in Asia, they have so far accounted for only a quarter of the value of Germany’s exports to China. This indicates further potential exists.

Japan and South Korea, like Germany, are also attempting to diversify their economic relationships.

Confronted with fierce attacks from the Trump administration, these countries are seeking to establish profitable ties with alternative partners.

On Thursday, Merz will open the biennial German Business Asia-Pacific Conference, which is being held in Seoul this year.

The event will be led by Economy Minister Katherina Reiche and Siemens Chief Executive Roland Busch.

Busch is travelling with a business delegation of about 30 people that previously accompanied Merz to Tokyo and will accompany him to Singapore this time as well.

Singapore is regarded as the commercial and financial centre of the entire rapidly growing Association of Southeast Asian Nations (ASEAN).

German arms industry sets its sights on Asia

At least two defence industry companies are included in the business delegation accompanying Merz: drone maker Quantum Systems and Airbus Defence & Space.

Quantum Systems supplies the German Armed Forces and the Armed Forces of Ukraine, among others, and is now planning broader growth extending into Asia.

Since the German government withdrew from the French-German FCAS (Future Combat Air System) project, which aims to build a sixth-generation fighter jet, Airbus Defence and Space has been seeking an alternative and is currently considering joining the British-Italian-Japanese GCAP (Global Combat Air Programme) project.

More detailed talks with British company BAE Systems are scheduled to take place this week.

London maintains an open stance towards Germany joining GCAP because it can barely finance this exceptionally expensive project.

However, London, like Japan, is pressing for swift project implementation; the fighter aircraft is envisioned to become operational by 2035.

The German defence industry is not known for implementing its projects quickly.

Airbus also insists on playing a key role in development and production. Shares in GCAP have largely been allocated.

Talks with Japanese project partner Mitsubishi Heavy Industries are expected to take place.

German-US-Japanese exercise on Okinawa

A ten-day military exercise organised by the Japanese armed forces will also conclude on Thursday.

Alongside troops from the US, the Philippines, and New Zealand, the German Armed Forces are taking part in the exercise with around 100 soldiers from their medical unit.

The main venue for the exercise is the Japanese island of Okinawa, situated on the first island chain off the Chinese coast and home to the largest US Air Force base in the Asia-Pacific region.

Okinawa lies approximately 600 kilometres from Taiwan. If conflict breaks out over the island, US troops would probably be expected to intervene from Okinawa. A Chinese attack on the military bases there is also probable.

Exercise Keen Sword, which began last Monday, includes providing initial medical treatment in an incident involving numerous injured personnel, among other elements.

According to the scenario, the Bundeswehr will transport medical supplies and blood products to Okinawa using an Airbus A400M aircraft and subsequently fly the wounded to a suburb of Tokyo.

German medical personnel will take over further treatment of the injured there.

Through this exercise, the Bundeswehr, which is currently preparing primarily for a potential war against Russia, is simultaneously preparing to participate in a large-scale war against the People’s Republic of China.

Relationship between German and Japanese militaries to deepen

Federal Defence Minister Boris Pistorius indirectly confirmed this during his visit to Tokyo in March.

At the time, he was quoted as saying that in addition to focusing on NATO’s eastern flank and “other conflicts, such as in the Middle East,” we must “not lose sight of other regions and the challenges in those regions.”

In this context, cooperation between the German and Japanese armed forces will now become “significantly more intensive.”

As the Defence Ministry indicated at the time, German warships and fighter aircraft were most recently in Japan in 2024 for a port visit and exercises, respectively.

In return, a task force from the Japan Maritime Self-Defense Force was in the Port of Hamburg in 2024.

In 2025, Japanese F-15 fighter jets, based on a US model, visited the German Air Force.

Furthermore, as early as 2024, Germany and Japan signed a “comprehensive logistics agreement.”

In the defence industry, the ministry noted that close cooperation already exists between Airbus Defence & Space and Kawasaki Heavy Industries.

Both companies have collaborated for decades on the construction of H145 multi-role helicopters, which are also used by Bundeswehr special forces.

Pistorius stated at the time that “much more potential” still exists for this cooperation.