LONG seen as a gateway to Europe for Singapore companies, Germany is now attracting a new wave of entrants drawn by the two countries’ similar growth sectors.
Singapore startups can find opportunities in Germany’s medtech, climate tech, Industry 4.0, smart cities, logistics, fintech and insurtech industries, said Linda Nguyen Schindler, director of the Artificial Intelligence Competence Centre (Asia) at startup ecosystem platform Start2 Group.
Germany’s medtech market, coupled with the access it gives to Europe, is why Singapore startup TeleMedC headed there in 2021. Said founder and chief executive officer Para Segaram: “If somebody can crack the German market, they pretty much got the whole of Europe under the belt. That’s the way the whole European system works.”
Germany is Europe’s biggest economy. It is also Singapore’s largest goods trading partner in Europe and a growing destination for direct investment from the Republic, which reached S$6.6 billion in 2022, surpassing pre-Covid figures.
Germany’s strength in manufacturing – which forms about 20 per cent of the economy – mirrors Singapore’s, said Enterprise Singapore (EnterpriseSG) director for Europe Alan Yeo.
Opportunities for Singapore also arise from Germany’s focus on the tech and digital economy, and its shift towards the Indo-Pacific with a “China plus one” strategy.
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Accelerator programmes have helped Singapore startups head there. These include Start2 Group’s programme under EnterpriseSG’s Global Innovation Alliance, which has supported over 60 startups to access Munich and Berlin.
Old players, new opportunities
Even long-established entrants see new opportunities in Germany.
Germany was the first European market that Temasek-owned precision manufacturing and technologies group Accuron Technologies entered, when its subsidiary Singapore Aerospace Manufacturing acquired an original equipment manufacturer in 2001.
Today, this German facility has 250 staff and produces parts for aerospace clients, including giants such as Airbus and Boeing.
“Germany was our entry point into Europe,” said group CEO Tan Kai Hoe. Its central location gives good access to the rest of the region.
“(Subsequent acquisitions in Europe) were facilitated or triggered by our success in our initial excursions into Germany.” Accuron is now present across Europe, including in Austria, France and the UK.
Germany was a clear first choice, said Tan. “Since we are looking at engineering, industrial solutions, technology solutions, it is quite natural to look at Germany because of the industrial base.”
The country is also known for its skilled, educated and trained workforce, and has a similar work culture to Singapore, he said. “Germans, in my view, tend to be hardworking, tend to mean what they say and say what they mean, tend to be more direct.”
Germany is also famous for technological innovation and has a stable economic environment, making it suitable for a long-term investment.
Now, Germany remains a market of interest as Accuron looks for new ventures in areas such as clean tech and Internet-of-Things technologies.
Starting small
Accuron took a mergers and acquisitions strategy as a “faster way to get immediate access to markets, skill sets and technologies”, especially given the high barriers to entry in the highly specialised aerospace industry.
But smaller companies have also found success going in themselves. These include D-SIMLAB, a Agency for Science, Technology and Research spin-off that provides forecasting solutions for the semiconductor industry.
“We are the crystal ball provider,” said its CEO Gan Boon Ping. Producing a wafer can take anywhere from 30 days to 18 months, and many things can go wrong in the manufacturing process, he said. With D-SIMLAB’s “digital twin” technologies, clients can predict and thus prevent such errors.
Even before gaining clients in Singapore, D-SIMLAB’s first semiconductor partner was in Germany. In 2013, it secured funding from the state government of Saxony to provide their solutions to Infineon.
“When you are a young and new company… Asia is not the best place,” said Gan. “In Germany – Europe in general – they are more open and willing to try new tech, new approaches.”
After several years of working with Infineon, D-SIMLAB secured customers in other German wafer fabricators Osram and Bosch, as well as in Singapore, Austria, the US, the UK, Japan, Malaysia and Taiwan. It also set up a Chinese office this year.
“If you have a customer in Germany, it carries weight,” said Gan. “Because they are well known to be very picky and very demanding.”
With the reputation it has built in Germany, D-SIMLAB hopes to eventually expand into the Netherlands and France. Supported by EnterpriseSG, it is developing an artificial intelligence (AI) project in the Netherlands, which it hopes to incorporate into its product if successful.
Over a decade later, Germany remains a land of opportunity, said Gan. Intel and TSMC have announced plans for facilities there, and D-SIMLAB’s established networks and presence can give it a leg up in pursuing those clients, he added.
Market for medtech
Medtech is another area where Germany and Singapore have a shared edge.
Start2 Group’s Nguyen Schindler noted that Germany has the world’s third-largest medtech market, projected to reach almost US$40 billion in 2024.
TeleMedC’s AI solution detects and monitors diseases such as diabetes and glaucoma by scanning the eye.
With an ageing population and 8.5 million diabetic patients, as well as many with glaucoma, Germany seemed like the right place to start, said Segaram.
TeleMedC tapped EnterpriseSG’s GIA programme not for business-model support, but its networks – which eventually led to TeleMedC receiving a two-year research grant to develop a cataract screening solution with the local university hospital in Hamburg.
This gave it an entry point to introduce its main product into the market, Segaram said. TeleMedC is rolling out its technology in 20 Hamburg optical shops, and is in talks with ophthalmology clinics in Frankfurt.
It is now eyeing a public listing on the US’ Nasdaq to fund its expansion.
Beyond Germany, EnterpriseSG’s Yeo identified four European sectors that are promising for Singapore companies – innovation and technology; green economy; lifestyle and consumer; and trade and logistics.
In 2023, the agency supported 220 companies with setting up offices, marketing and business matching in Europe, as well as facilitating projects and discussions and securing leads. This was up from 190 in 2022 and 150 in pre-Covid 2019.
On average, the number of Singapore tech companies that participated in EnterpriseSG’s GIA accelerator programmes in Europe grew at a compound annual growth rate of about 43 per cent between 2020 and 2022, higher than the overall rate for the period.
