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How can German companies remain competitive in a world where innovation cycles are becoming shorter, supply chains are shifting, and Asia is emerging as the centre of global industrial growth?
This question was at the centre of a recent roundtable organised by the Innovation Circle International (ICI). Executives and experts with extensive experience across Europe and Asia discussed how the global business environment is changing and what this means for German industry.
While the discussion covered many topics, one conclusion stood out: the rules of competition have changed. Companies that continue to rely on yesterday’s strengths without adapting to today’s realities will find it increasingly difficult to compete.
Germany’s Traditional Strengths Are Still Important
Germany has built its industrial success on engineering excellence, precision, quality, and long-term customer relationships. These strengths remain highly valued around the world.
However, they are no longer sufficient on their own.
Today’s competition is no longer based only on who can develop the best technology. Increasingly, it is about who can commercialise new ideas faster, respond more quickly to changing customer needs, and continuously improve products and business models.
This represents an important shift.
The competitive advantage is moving from technical excellence alone towards the ability to combine technology, speed, execution, and market understanding.
China’s Rise Offers Important Lessons
One of the most interesting discussions during the roundtable focused on China’s transformation over the past two decades.
China is no longer simply the world’s manufacturing centre.
Today, Chinese companies compete in advanced manufacturing, industrial automation, electric vehicles, batteries, biotechnology, software, and artificial intelligence. More importantly, they have become remarkably successful at bringing innovation to market.
As one participant observed, China’s advantage is no longer only scale.
Its advantage is speed.
Many companies have shortened the time between developing an idea and launching a commercial product. This enables them to respond rapidly to customer demand and continuously improve their offerings.
This raises an important question for German companies.
How can they preserve their reputation for quality while becoming faster and more agile?
Innovation Is About Creating Business Value
The discussion also challenged a common misunderstanding.
Innovation is often associated only with research and development or technological breakthroughs.
In reality, successful innovation begins much earlier and ends much later.
Research creates knowledge.
Innovation creates customer value.
Between these two stages lies commercialisation: transforming ideas into products and services that customers are willing to buy.
This requires much more than engineering.
It requires customer understanding, efficient supply chains, suitable business models, strong partnerships, and the ability to execute quickly.
For many Mittelstand companies, this means asking a different question.
Instead of asking only, “Can we build it?”, companies increasingly need to ask, “Can we successfully bring it to market?”
Why Ecosystems Matter
Another important topic was China’s approach to building innovation ecosystems.
One example is the Little Giants Programme, which supports thousands of highly specialised small and medium-sized enterprises with the ambition of becoming future global technology leaders.
The programme demonstrates an important principle.
Governments do not create innovation directly.
They create the conditions that allow innovation to happen.
China has invested heavily in research, manufacturing capabilities, financing, talent development, and commercialisation. Many supported companies will fail. That is expected.
The objective is to ensure that enough companies succeed in strengthening long-term industrial competitiveness.
Whether this approach can or should be replicated elsewhere is open for discussion.
However, it offers valuable lessons for policymakers and business leaders alike.
Why Local Presence Matters
Another recurring theme throughout the discussion was proximity to customers.
Companies that operate close to their customers generally understand market needs better. They respond faster to changes, adapt products more effectively, and identify new business opportunities earlier.
This is particularly relevant in Southeast Asia.
The development of the Johor-Singapore Special Economic Zone (JS-SEZ) creates new possibilities for companies looking to strengthen their regional presence.
Singapore contributes its strengths in finance, innovation, international business, and talent.
Johor contributes manufacturing capacity, industrial land, and a rapidly expanding production ecosystem.
Together, both regions offer an attractive platform for companies seeking to diversify supply chains, establish regional headquarters, or expand manufacturing activities across Southeast Asia.
For many German Mittelstand companies, this could become an important second pillar for future growth.
Competitiveness Depends on More Than Individual Companies
The discussion also highlighted that competitiveness extends beyond individual business strategy.
Even the best companies depend on an environment that encourages investment, innovation, and entrepreneurship.
Access to financing, competitive energy costs, efficient regulation, modern infrastructure, and effective industrial policy all influence a company’s ability to compete internationally.
Equally important is collaboration.
No company can navigate today’s rapidly changing business environment alone.
Successful innovation increasingly depends on partnerships between companies, universities, governments, investors, and research institutions.
Strong ecosystems create stronger companies.
Continuing the Discussion in Singapore
The conversations during the ICI roundtable demonstrated that global competition is entering a new phase.
For German companies, remaining competitive will require more than protecting existing strengths.
It will require learning continuously, building international partnerships, and understanding how innovation ecosystems are evolving across Asia.
These discussions will continue during Ihr Zweites Standbein in Asien, a programme that brings together business leaders, policymakers, and industry experts to discuss how German companies can strengthen their competitiveness while building stronger connections across Asia.
Whether your objective is to better understand Asia’s innovation landscape, explore new business opportunities, or develop a long-term regional strategy, the programme offers an opportunity to learn from those who are already shaping these developments.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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