‘In China for China’: German firms buck trend, bring best tech and products to compete

With fewer options amid geopolitical and supply-chain disruptions, capitalising on China’s massive market sees foreign firms get creative

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Published: 12:00pm, 24 Jul 2024Updated: 9:36am, 26 Jul 2024

With China long established as the world’s factory, the United States has led a push to divert manufacturing and supply chains away from the world’s second-largest economy. In this three-part series, we look at whether the widely termed “China plus one” strategy is working for global manufacturers.

While a growing number of multinationals de-risk from China amid its changing economic landscape and persistent geological tensions with the West, a global leader in gear motors enlarges its investment in the country.

German industrial motion giant SEW-Eurodrive is facilitating a new investment plan in eastern China’s Suzhou city after starting construction in February on its third manufacturing base in the country, in the southern province of Guangdong.

“We are full of confidence in the prospects of our China business, as always,” said Zhao Gang, general manager of the German firm’s Suzhou operations.

Amid escalating trade frictions between China and the European Union, and against the backdrop of a broad decoupling trend, the family-run multinational is among a number of European firms – particularly advanced German manufacturers – that remain committed to China.

The country’s huge market size, coupled with a raft of charm offensives, have persuaded them to stay and increase their investment, but they are increasingly adopting an “in China for China” strategy to cope with fiercer competition from local companies and in the face of rising global supply-chain risks, according to executives of some of those firms.

Zhao spoke highly of China’s investment environment and said local governments were “very supportive” of foreign businesses, while growth potential in the massive market was a big reason behind his company’s optimism.

SCMP Series

Is ‘China plus one’ working?

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