Germany is becoming a magnet for international defence groups as Berlin's military spending boom prompts companies worldwide to establish a presence in the country. Aerospace and defence firms from Europe and beyond have set up offices in Germany over the past 12 months, including Norwegian space group Kongsberg, Finnish satellite intelligence start-up Iceye, and South Korean defence giant Hanwha Aerospace. Australia's Electro Optic Systems, which makes high-precision lasers for drone neutralisation and space warfare, plans to relocate its headquarters from Canberra to Europe.

Chief Executive Andreas Schwer stated: "All the significant future budget increases in defence will happen in Europe, because of geopolitics." Chancellor Friedrich Merz has exempted defence from borrowing rules, pledging to make the Bundeswehr the strongest conventional army in Europe. The EU's most populous country has budgeted more than €700bn for defence over the coming five years. Advisor Nils Lange noted Germany is now an interesting market not just for selling to German armed forces, but as a defence-industrial hub for the rest of Europe.

Hanwha Group's Alex Wong said the scale of opportunity required a permanent presence and hiring individuals familiar with the German market. While German officials prefer procuring from European companies to protect local industry, they are open to foreign companies being "plugged into the supply chains of established manufacturers." Rheinmetall has signed deals with international groups, including a plan to make low-cost cruise missiles with Dutch start-up Destinus and medium- and long-range air defence with South Korea's LIG Defense & Aerospace.