Innovation Survey of the Greater Shanghai Region: In a Fast-Moving Market, Innovation a Growing Priority for German Manufacturing Companies

Shanghai, 24th October 2018 – German companies in the greater Shanghai area increasingly consider innovation among the top priorities for their business activities. Concurrently, human resources and an uncertain regulatory environment undermine the innovation progress. This year’s Innovation Survey was conducted between April and July 2018 by the German Chamber of Commerce in China | Shanghai in partnership with Tongji University and goetzpartners Management Consultants among 103 German manufacturing companies in the Yangtse Delta.

Innovation a growing top priority for German companies in China

In 2018, for 83% of surveyed companies - an increase of 16 percentage points compared to 2017- innovation is among the top 3 business priorities and continues to be a key driver for their business activities in China. The main motivations for engaging in innovation are to differentiate from competitors, to better meet customer needs, and to increase revenues. Results have also shown that companies are increasingly engaging in open innovation, collaborations with start-ups or competitors showing strong growth trends. However, still only 43% claim to have a well-defined innovation strategy. Also, around two thirds of respondents indicate to have a shorter time to market than their German headquarters. However, 60% think their time to market is longer than that of their Chinese competitors.

Besides human resources as top challenge, an uncertain regulatory environment hinders the innovation progress

For 61% of respondents, human resources are the largest barrier to innovation. Dissatisfaction levels are especially high when it comes to critical thinking, complex problem-solving, and creativity. Besides these HR challenges, and headquarter influence, the uncertain regulatory environment brings a number of limitations to the innovation capability of German companies in China. Almost half of respondents expect the new Cyber Security Law to have a negative impact on their ability to innovate. With regard to intellectual property, a major share of respondents is concerned about the actual enforcement of IP protection laws. Data protection concerns and limited internet access are also among the top barriers to innovation.

Manufacturing companies broaden the scope of innovation activity

To meet the demands of the local market, innovation efforts of 72% of German manufacturing companies in the greater Shanghai region mainly focus on the adaptation of existing products by engaging to a large extent in product adaptation. However, the local development of products for world markets has seen a significant increase. In 2018, 34% of respondents engage to a large extent into local-to-global innovation, showing China’s growing attractiveness as an R&D hub in spite of concerns such as technology transfer and intellectual property protection.

 

About the German Chamber of Commerce in China

The German Chamber of Commerce in China is the official member organization for German companies in China. By providing up to date market information and practical advice, the German Chamber helps its members to succeed in China. It offers a platform for the Sino-German business community and represents its members' interests towards stakeholders including government bodies and the public. The Chamber was founded in 1999 and currently has around 2,400 members in mainland China. 

 

Contact for press:

Ms. Olivia Helvadjian

Tel: +86-21-5081-2266-1637

helvadjian.olivia(at)sh.china.ahk.de

 

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Info graphic: To what extent are the following issues barriers to innovation for your Chinese entity?

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