Multinational companies once measured their presence in China by the number of factories they operated and the scale of their supply chains. Today, the number of research and development (R&D) centers has emerged as a more telling indicator of how deeply foreign businesses are embedded in the Chinese market and how committed they are to long-term innovation. As of March this year, Beijing had 332 foreign-funded R&D centers, with 55 newly established this year, while Shanghai had 647 such centers, including 15 new additions this year, data from the Ministry of Commerce (MOFCOM) showed. That shift is also becoming more evident in capital flows. The actual use of foreign direct investment (FDI) in China’s high-tech industries rose 30.7% year-on-year to CNY102.73 billion in the first quarter of 2026, accounting for 41.2% of the country’s total FDI. Of this, the actual use of FDI in R&D and design services rose by 127.8% on a yearly basis.
Zhao Yang, an official with the Ministry of Commerce’s Department of Foreign Investment Administration (FIA), said China’s industrial and innovation strengths are translating into tangible advantages. Foreign-funded R&D centers are entering a phase of both quantitative expansion and qualitative upgrading, shifting from local adaptation hubs to integral nodes in multinational companies’ global innovation networks, said Zhao.
Yin Zheng, Executive Vice President of China and East Asia Operations at Schneider Electric, said that running businesses, especially in the manufacturing sector, is no longer about simply taking orders and scaling up production in China. “For many multinational corporations today, the country has evolved from a cost-efficient production base into a critical hub for innovation, market expansion and long-term strategic positioning,” Yin said. The French industrial group is currently building two new plants in Xiamen, Fujian province, and Wuxi, Jiangsu province, while upgrading its Beijing R&D center, focusing on energy management, optimization, efficiency and digitalization. Bai Ming, Researcher at the Chinese Academy of International Trade and Economic Cooperation in Beijing, said the trend reflects growing confidence among foreign investors in China’s economic resilience and its capacity for sustained innovation.
As a result, investment decisions that were once seen as optional are increasingly being elevated to strategic imperatives, particularly in high-tech and consumer goods sectors, Bai said. Sean Stein, President of the U.S.-China Business Council, said the shift is evident. “Twenty-five years ago, no one came to China to do R&D. Now, what I am seeing is that the best companies are doing some of their most important R&D in China,” said Stein. For example, U.S. cosmetics group Estée Lauder is tailoring products for Chinese consumers, not only in packaging, but also in formulations and research and development (R&D). Tapestry, the parent company of U.S. fashion brands Coach and Kate Spade, has established an R&D center in Dongguan, Guangdong province, he added. As part of its expansion in China, Estée Lauder launched two projects in Shanghai in late March – the China Fulfillment Center and the Group Open Innovation Center – to boost its R&D and intelligent supply chain operations. “China is more than one of the world’s largest beauty markets. It is a global leader in shaping consumer trends, digital innovation and the future of our industry,” said Stephane de La Faverie, the group’s president and CEO.
Similar momentum is seen in other sectors. Louis Dreyfus Company (LDC), a Rotterdam-headquartered trader and processor of agricultural commodities, has continued to expand its footprint in China, investing in four greenfield projects to strengthen processing capabilities. James Zhou, LDC’s Chief Commercial Officer, said his group has already set up a global R&D center in Shanghai and launched two production lines for specialty feed ingredients in Tianjin, aiming to translate research into commercial applications. “We are looking to expand our integrated specialty phospholipid production model, pioneered through innovation and advanced oilseed processing capabilities in China, to other LDC plants worldwide,” said Zhou. “Meanwhile, we have launched various plant-based food and feed ingredients and solutions, tailored to evolving needs in China.”
Alexander Bassler, CEO of German anchoring system manufacturer Fischer, said that the Chinese market is one of the most dynamic and forward-looking globally for the group, with the speed at which innovations emerge and are implemented at scale standing out in particular. The company also sees new growth opportunities in areas such as digitalization, smart infrastructure, sustainable construction and high-tech industries.
Kim Fausing, President and CEO of Danfoss Group, said the Danish industrial conglomerate aims to deploy more resources in China’s data center sector, drawing on its global expertise and technologies to support scalable, energy-efficient infrastructure for artificial intelligence-led digital expansion, the China Daily reports.
