BEIJING — Amid rising competition and price pressure, German companies in China are increasingly adopting a more localized approach, with many operating more independently from their headquarters and aligning their operations with local business practices, according to a survey released by the German Chamber of Commerce in China.
The 2024-2025 business confidence survey revealed that about 40% of respondents reported operating more autonomously, a notable 12 percentage point increase from last year. The survey, conducted between September 3 and October 8, collected responses from 546 member companies, including prominent firms like Covestro, Mercedes-Benz, Siemens, and SAP.
To stay competitive, more than 50% of German companies plan to increase investments in China within the next two years, with 87% citing competitiveness as their primary motivation — an 8 percentage point rise from last year. Clas Neumann, chairperson of the German Chamber of Commerce in East China, noted that deepening localization strategies helps companies navigate current market challenges while positioning them to seize emerging opportunities.
In terms of business opportunities, the survey identified the internationalization of Chinese companies as a key growth area. About 55% of German companies believe that Chinese competitors will become innovation leaders within five years, up significantly from 46% last year. Moreover, the high-tech manufacturing sector in China saw foreign direct investment (FDI) increase by 7.5% year-on-year.
Executives from German corporations are confident that China’s modernization efforts and the development of emerging sectors will provide significant growth opportunities. German companies like BSH Home Appliances and Henkel have embraced the trend, focusing on research and development within China to meet local consumer demands for innovative products.
Henkel, for example, has established an R&D center for consumer goods and an electronics adhesive application center in China, while BMW announced a 20 billion yuan investment to expand its production base in Shenyang.
The survey highlights that despite challenges, German companies are increasingly confident in their long-term prospects in the Chinese market.