Innovation Report
Gain valuable insights into innovation activities of German companies in China with our comprehensive Innovation Survey. Conducted among members of the German Chamber, this survey covers many aspects of innovation, including regulatory challenges and strategies deployed by German companies.
Innovation Report 2024: Acceleration Through Localization
Published on September 2, 2024
Based on a survey conducted among German Chamber members, the Innovation Report 2024 shows that German companies continue to localize research and development functions to strengthen product competitiveness and reach more customers in China. At the same time, they increasingly utilize China as an innovation hub for global markets.
Key Findings:
- Localization trend continues: 63% of respondents say they conduct research in China (+6 p.p. compared to 2022) and 69% say they do development in China (+ 4% p.p. compared to 2022), indicating a trend towards localizing R&D. Most respondents (64%) name product competitiveness as the main advantage of innovating in China, followed by access to existing or new markets (62%) and increased brand recognition (52%).
- Research going global: 29% of German companies conduct research in China for global markets, compared to 25% two years ago, indicating China’s rise as a global innovation hub.
- Trailing behind in time to market: 56% of respondents say that their weakest point compared to local competitors is time to market – only 13% think they are faster than their local competitors. 37% of German companies say their biggest advantage over local competitors is understanding customer needs, while only 20% think that Chinese companies have the upper hand.
- Cost-conscious consumers drive innovation: Price-sensitive customers have been reported as the main driver behind innovating in China (85%), followed by increasing innovation capabilities of competitors (82%) and labor cost (72%).
- Focus on the essentials: German companies prioritize product innovation (65%) over other areas of innovation such as process and service innovation (43% and 40% respectively, and they rely primarily on strategic partnerships (69%) and cross-functional innovation teams (68%) to achieve their innovation goals.
Innovation Report 2024: Excerpt on the Automotive Industry
Published on April 24, 2024
The German Chamber of Commerce in China, in collaboration with Bearing Point, has published a preview of the automotive industry section of the Innovation Report 2024. The full report is scheduled to be unveiled on July 29, 2024 in Beijing. 336 member companies of the German Chamber participated in the survey between February 19 and March 13, 2024, including 64 from the automotive industry.
Key findings:
- More research and development in China: 55% of surveyed companies in the automotive industry conduct research "in China for China," compared to 34% across all industries (+21 pp).
- Innovation through partnerships: 70% of surveyed companies in the automotive industry implement innovations by forming strategic partnerships with universities, suppliers, or customers in China.
- Cooperation with local companies is particularly important: 66% of surveyed companies in the automotive industry consider cooperation opportunities with local partners a significant advantage of local innovation work. Overall, this figure is only 37%. (+29 pp)
- Innovative products of paramount importance: 91% of respondents in the automotive industry state that product innovation is the most important success factor in the Chinese market, compared to other types of innovation such as process innovation.
- Cost pressure as an innovation driver: Price-sensitive customers and the innovative capabilities of competitors are cited as the main drivers behind their own innovation efforts.
- Lagging behind in speed: 61% of surveyed companies in the automotive industry report that their research and development teams take longer for market launches than local competitors. Across all industries, 56% of surveyed companies make this claim. (+5 pp)
Innovation Report 2022: German Innovation From China Going Global Amid a Complex Innovation Ecosystem
Published on June 26, 2022
In June 2022, the German Chamber of Commerce in China, in cooperation with BearingPoint, published the results of the German Chamber’s Innovation Survey 2022. Results show that while local competition is increasingly growing stronger, German companies in China are additionally facing a challenging regulatory environment as well as a lack of strategic networks and partners in their innovation activities. German companies are meeting these challenges by localizing their innovation activities and increasingly conducting R&D in China for the Chinese, as well as global markets.