Multinational companies are investing in China to develop technologies for global markets, while Chinese companies are working with foreign partners to turn their innovations into overseas manufacturing and service businesses, executives and economists said. High-tech industries attracted CNY228.53 billion in foreign direct investment (FDI) in the first nine months of 2026, up 33.8% year-on-year, according to the Ministry of Commerce (MOFCOM). They accounted for 41.6% of China’s total incoming FDI, up 11.9 percentage points from a year earlier. FDI in technology commercialization rose 76.8% year-on-year, while investment in research and development (R&D) and design services increased 59.2%. Investment in electronic and telecommunications equipment manufacturing rose 41.9%.
Pan Yuanyuan, Researcher at the Chinese Academy of Social Sciences’ Institute of World Economics and Politics, said the value of FDI in China extends beyond capital injections to R&D, technology, sales networks and management expertise. Foreign-invested enterprises have become an important part of China’s innovation system, she said.
For Finnish elevator and escalator maker KONE, development work in China is already contributing to its overseas business. China is KONE’s largest single market and hosts its largest R&D center outside Finland. Predictive maintenance solutions for escalators developed in China have already reached overseas markets, said Joe Bao, Executive Vice President of KONE and President of KONE Greater China. “For us, the value of China has never been just about cost,” Bao said. “What makes it particularly valuable for KONE is the speed at which we can test, scale and bring new digital service models to local customers and even to the world.” The company opened its South China headquarters earlier this year after increasing investment in the Guangdong-Hong Kong-Macao Greater Bay Area. A cooperation agreement with Guangzhou’s Tianhe district aims to apply green and digital technologies to urban renewal, Bao said.
Other foreign companies are also extending their operations in China beyond sales, Shanghai Vice Mayor Lu Shan said at a news conference on October 16 ahead of the ninth China International Import Expo (CIIE), which will run from November 5 to 10 in Shanghai. Lu noted that market responses to new product debuts at the CIIE have bolstered foreign exhibitors’ confidence in investing in China and accelerated a growing trend of participants transitioning from “six-day exhibitors” to “long-term investors deeply rooted in China”. Some have moved from trading to manufacturing in China for global markets, while others have established research centers with wider international responsibilities, Lu said.
German drugmaker Bayer plans to move several innovative medicines from packaging in China to manufacturing finished drug formulations locally. Its Beijing plant is Bayer’s largest prescription drug packaging facility worldwide, and is undergoing digital and environmental upgrades, according to the company. Bayer’s research partnerships connect it with Chinese biotech companies and universities. Its Co.Lab incubator in Shanghai brings together 13 Chinese biotech startups, while its E-Town Open Innovation Center in Beijing supports research, clinical translation and industrial cooperation. The group has conducted more than 110 joint research projects with Tsinghua and Peking Universities over the past decade or so. “We will continue to increase investment in China and strengthen our innovation capabilities across research, production and commercialization,” said Stefan Oelrich, Member of Bayer’s Board of Management and President of its pharmaceuticals division. In industrial technology, Chinese teams are also taking on more product development work.
Swiss engineering group ABB has invested more than USD1.3 billion in China over the past decade, expanding manufacturing and research, said Dong Huijuan, Global Vice President of ABB Group. Speaking at a briefing on international investment trends in Xiamen, Fujian province, in September, Dong said about 85% of ABB’s sales revenue in China comes from locally manufactured products, systems and services. Chinese teams lead or participate in developing products ranging from electrical equipment to intelligent factory solutions, she said.
Liu Zhaohui, an official with the Shanghai Municipal Commission of Commerce, described a change in research responsibilities at the same event. “Previously, foreign-funded R&D centers mainly undertook tasks assigned by overseas headquarters. Now, more projects are being conceived and carried out by local teams in Shanghai, which are also participating more deeply in global innovation decisions,” Liu said. Some companies are applying experience gained from upgrading their Shanghai operations to factories elsewhere. They are also reinvesting profits in emerging industries, research and production upgrades, Liu said.
Zhou Mi, Senior Researcher at the Chinese Academy of International Trade and Economic Cooperation, said deeper investment in China could help foreign companies cushion external shocks from rising protectionism and geopolitical tensions. Pan estimated current returns on FDI in China range from about 9% to 10%, based on aggregate macro-economic data, the China Daily reports.
