China becomes innovation hub for German companies: business advocate

German companies in China have carried out localized strategies while increasing efforts in expanding research and development in the country to stay competitive, said a German trade association leader following the release of a recent report.

Released by AHK Greater China, the Chinese version of the 2024 Innovation Report indicates a growing trend among German companies in China to localize their research and development efforts.

Among the 324 surveyed German enterprises, 63 percent of the respondents are currently engaged in research activities in China, marking an increase of 6 percentage points compared to 2022. At the same time, 69 percent of the surveyed companies are conducting development work in China.

While attending the Xceleration Days (X-Days) 2024 in Beijing, Martin Klose, executive director of the German Chamber of Commerce in China – South and Southwest China, said targeted measures implemented by German enterprises in China aim to accelerate innovation and enhance their market competitiveness in the country.

“Their Chinese competitors are getting so strong that the German companies need to focus to understand and utilize also the unique Chinese ecosystem for innovation and they decide to work together with universities, with all the other players here in the Chinese innovation ecosystem to stay competitive,” Klose said in an interview with China Global Television Network (CGTN).

The AHK report also found that 29 percent of the surveyed companies are conducting research and development aimed at global markets in China, an increase of 4 percentage points compared to two years ago.

The aggregate investment of German companies in China made up 10.3 percent of their overall overseas investment in 2023, the highest level since 2014.

Klose highlighted that several multinational German companies expressed their willingness to further explore the China market during the X-Days event.

X-Days 2024, a three-day gathering for Chinese and German enterprises, was held from Wednesday to Friday in the Chinese capital.