"German businesses are demonstrating strategic focus: workforce reductions have stabilized, investments in talent development are intensifying, and foreign expertise continues to serve as a reliable pillar - particularly for SMEs", says Dr. Clas Neumann, Chairperson of the Board of the German Chamber of Commerce in East China. He adds: "The moderate salary growth expectations reflect both renewed market realism and labor market stabilization."
Key findings:
- Lower salary growth expected in 2026: German companies operating in China expect an average salary growth of 3.19% for 2026, which is 0.62 percentage points lower than the projected 3.81% for 2025.
- Decline in effective salaries continues: In 2025, the average salary growth among German companies operating in China reached 3.24%, which was 0.57 percentage points below expectations. The automotive industry, for example, anticipated a salary increase of 3.94%, but the effective increase materialized at 2.82% in 2025. Generally, 2025 marks the third year in which the average effective salary increase was lower than the average expected one.
- However, fewer job cuts anticipated in 2025: After nearly 30% of companies reduced headcount in 2024, only 21% project an employment decrease in 2025. Notably, 24% foresee workforce growth in 2025, a remarkable 10 percentage points rise from last year.
- Share of foreign employees still stable: The percentage of German companies in China employing foreigners held steady at 65.1% in 2025, slightly up from 65.0% in 2024. While the share of small businesses employing foreign talent rose from 43.6% in 2024 to 51.7% in 2025, a gap still exists compared to large enterprises, where 79.7% engage foreign talent.
About the Labor Market & Salary Report 2025/26
The 18th edition of the Labor Market & Salary Report is based on an online survey conducted between April 17 and May 31, 2025. Overall, it received responses from 475 member companies of the German Chamber of Commerce in China.
To download the full version of the report, please go to the Member Download Area in the Member Directory.