Amid growing competition and price pressure, German companies are increasingly adopting a localized strategy in China, operating with greater autonomy and aligning their operations with the mindset and practices of local businesses, a survey published by the German Chamber of Commerce in China revealed. According to the Chamber’s 2024-2025 business confidence survey, about 40% of respondents reported operating more independently from their headquarters – marking a significant 12 percentage point increase from last year. The survey, conducted between September 3 and October 8, gathered responses from 546 member companies of the Chamber, which represents around 2,100 members across China, including Covestro, Mercedes-Benz Group, Siemens and SAP.
To maintain their competitive edge, more than 50% of German companies plan to increase investments in China within the next two years. Among these, 87% identified staying competitive as their primary motivation – an 8 percentage point increase from last year. “By deepening localization, German companies are addressing current market challenges and mitigating risks while positioning themselves to take advantage of the opportunities at hand,” said Clas Neumann, Chairperson of the Board of the German Chamber of Commerce in East China. When ranking business opportunities in China, the internationalization of Chinese companies stood out as the sole category experiencing growth compared to last year and the leading business opportunity.
The survey further revealed that about 55% of German firms expect Chinese competitors to become innovation leaders in their industry within five years, with 8% indicating this is already the case. By comparison, only 5% of respondents held this view last year, while 46% expected such leadership within five years. German investment in China surged by 7.5% year-on-year.
Highlighting that Chinese consumers have a strong preference to embrace innovative products, Hubert de Haan, Senior Vice President and Chief Sales and Marketing Officer for China at BSH Home Appliances Group – a German manufacturer with more than 10,000 employees in China – said his company fully embraces this market opportunity by focusing more on research and development (R&D) in China. “By adopting localization, we can better meet the growing demand of Chinese consumers for increasingly advanced home appliances, laying a stronger foundation for our future growth,” he said.
Henkel Group, a German industrial and consumer goods company, accelerated its local innovation pace in China in recent years. It has established an Asia-focused consumer goods R&D center and a South China electronics adhesive application center within the country. The German company is currently building an adhesive innovation experience center in Shanghai, along with a new manufacturing facility in Shandong province, the China Daily reports.
British companies operating in China have seen the business environment grow tougher for a fifth consecutive year, according to a survey published by the British Chamber of Commerce in China. A lack of robust stimulus packages contributed to 58% of the 311 surveyed British businesses reporting increasing difficulty to operate in China this year, citing economic headwinds and intensifying geopolitical tensions. A majority of British firms have been reporting the same difficulties since 2019, the Chamber added. Only a third of companies anticipated that revenues would increase in 2024, a decline from 45% in 2023. However, investment levels among British companies in China have remained stable, with 76% of respondents either maintaining or increasing their funding plans, the Chamber said. Meanwhile, only 8% planned on cutting investment, representing the lowest level since 2021, although a record high of 16% said they were unsure about future investments in China, the South China Morning Post adds.
