A deal on co-production is due to be finalised during the visit, with the priority being unmanned aircraft that can defend against Russian jet-powered drones.
Other agreements are expected to cover joint production of missiles with a range of more than 1,000km, which would allow Kyiv to strike targets deep inside Russia.
Germany is also due to announce a package of measures including EUR 1 billion in military aid and EUR 350 million to help repair Ukraine's energy sector.
"I travelled to Kyiv today because Ukraine needs all our support in the coming weeks," Merz said.
"If Russia is not stopped, sooner or later its war machine will turn against us."
He said Moscow was bombing residential areas and power plants, and that he would assure President Volodymyr Zelensky of continued support.
On Saturday, the Russian foreign ministry warned foreigners and diplomats against entering or staying in Kyiv.
Ten business executives are travelling with Merz, German broadcaster Deutschlandfunk reported, including from Siemens Energy, Hensoldt, Diehl Defence and Quantum Systems.
Economy Minister Katherina Reiche is also on the trip.
He is also accompanied by Economy Minister Katherina Reiche.
(ał)
Source: polskieradio24.pl, Reuters