German firms eye Bangladesh amid US-China tariff war
Germany is the second-biggest export market for Bangladesh, with textiles accounting for more than 90% of Bangladeshi exports to the EU nation
A German high-level business delegation visited Bangladesh this month to explore the possibility of expanding commercial relations between the two countries.
The delegation — including representatives from the German Foreign and Economic ministries, as well as officials from the nation's export credit agency and the international development agency — participated in the Bangladesh Investment Summit 2025 in Dhaka and held talks with the South Asian country's interim government.
The mission was coordinated by the German Asia-Pacific Business Association (OAV), a network that promotes German business interests across Asia.
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"Bangladesh's resilience as an emerging market is impressive," said Thomas Köning, CEO of Ospig GmbH and a member of the delegation. "The presented macroeconomic figures and input factors important for prospective investors look very promising," he added.
Almut Rössner, executive board member of OAV, said the aim of the trip was "to learn, collect information, establish contacts and engage with leading figures of the interim government in order to provide German companies and relevant authorities with an updated and accurate picture of the reform policies and investment climate in Bangladesh."
What's the state of bilateral trade ties?
Germany and Bangladesh share close economic relations, with bilateral trade amounting to €8.6 billion ($9.8 billion) in 2023.
Germany is the second-biggest export market for Bangladesh, with textiles accounting for more than 90% of Bangladeshi exports to the EU nation.
Bangladesh, meanwhile, imports machinery as well as chemical products and electrical goods from Germany.
A number of German companies are present in Bangladesh, operating manufacturing facilities, particularly in the garments and leather goods sectors.
Early entrants like Köning's company, Ospig, employ thousands of workers to produce high-quality jeans and jackets, while Picard has been manufacturing handbags and accessories since 1995.
Some German firms also operate joint ventures, like Hana System Ltd. — a collaboration between Germany's Cube, a major bicycle manufacturer, and Bangladesh's Meghna Group.
According to OAV, around 80 German companies currently maintain operations, subsidiaries, or representative offices in Bangladesh, including multinationals like BASF, Bayer, Bosch and Siemens.
Eying opportunities amid tariff tensions
The German business delegation visited Dhaka at a time when the world increasingly fears the implications of US President Donald Trump's tariff onslaught and attempt to rewire the global trading system.
Trump also hit Bangladesh with biting new tariffs of 37% on April 2. Even though the US president granted a 90-day reprieve to most US trading partners, the policy flip-flop has already hit Bangladeshi suppliers and their orders.
Bangladesh exported approximately $8.4 billion worth of goods to the United States last year, of which $7.34 billion came from the ready-made garments sector.
Overall, textile and garment production accounts for about 80% of exports from Bangladesh, and the industry has been rebuilding after it was hit hard in a student-led uprising that ended Prime Minister Sheikh Hasina's 15-year rule last year.
But as the Trump administration seeks to rewrite global economic rules and redirect trade flows, by also hiking tariffs on goods coming from China to exorbitant levels, Bangladesh eyes an opportunity to attract foreign investment leaving China.
Köning said the geopolitical shifts and steep US tariffs on China are prompting German firms to explore alternative manufacturing hubs.
"In light of the need to diversify and recent tariff disruptions, Bangladesh has the potential to be an alternative manufacturing location to China for consumer goods, household appliances, electronics and industrial components," he said.
"With a workforce of 114 million and a middle-income bracket equivalent to Malaysia's population, Bangladesh offers numerous business opportunities," he added.
Masrur Reaz, an economist and CEO of Policy Exchange Bangladesh think tank, echoed this view, describing the current situation as a pivotal moment.
"This is a once-in-a-generation opportunity for Bangladesh," he said, urging the Bangladeshi government to act swiftly to address outdated regulations, trade logistics weaknesses, and productivity improvements through skills and technology.
"If we don't capitalize on this window, others will," he warned.
Investors remain cautious
A recent World Bank report highlighted barriers to investment in the country, including electricity shortages, limited finance access and corruption.
German investors are aware of these challenges, but König noted that Bangladesh's competitiveness has significantly improved.
König said that despite the challenges, Bangladesh's success in the garment sector shows the country could achieve similar success in other industrial areas.
Nevertheless, many investors remain cautious, said OAV's Rössner, citing Bangladesh's ongoing political transition, as interim leader Muhammad Yunus — a Nobel laureate who took charge of the administration after Hasina's ouster — tries to enact democratic reforms and hold a fresh election, which he has promised to stage by June next year at the latest.
"Unlike investors from across Asia or other European countries, German companies are currently hesitant to seize opportunities in this political transition period," Rössner noted.
Reaz, the Bangladeshi economist, said it's important for Bangladesh to conclude the political transition as early as possible.
"Investors come with a long-term perspective, so they look for a stable government — one with a clear political mandate," he stressed.
