Why foreign companies are ramping up R&D investment in China

Since the beginning of this year, foreign investment in China has shown a clear trend: an increasing number of multinational corporations are expanding their research and development (R&D) spending and accelerating the establishment of R&D centers. Statistics show that by September, Shanghai was home to 631 foreign-funded R&D centers, while Beijing had 221 such centers as of January.

This photo taken on Sept. 2, 2024 shows the skyline of the central business district (CBD) at dusk in Beijing, capital of China. (Xinhua/Wang Jianhua)

Recently, German multinational Bosch Group signed an agreement with the Suzhou Industrial Park in Suzhou, east China's Jiangsu Province, to invest approximately 10 billion yuan (about $1.4 billion) over the next five years in an intelligent driving control innovation project. The initiative will focus on the R&D of full-stack intelligent assisted driving solutions and smart cockpit hardware and software.

In Jiaxing, east China's Zhejiang Province, Danish industrial giant Danfoss Group announced an additional investment of 2.7 billion yuan to build its second campus in China—an advanced, zero-carbon industrial park integrating R&D, testing, production, and exhibition functions. This marks the company's tenth capital increase in China over the past two decades.

The surge in foreign enterprises establishing or expanding R&D operations in China reflects not only their confidence in the country's investment environment but also their recognition of its vibrant innovation ecosystem.

China is not merely a massive consumer market but also one of the world's most dynamic. Many new trends and demands emerge first in China. By integrating into China's development, foreign companies can capture new opportunities amid evolving global conditions and secure greater room for growth. Take German healthcare and agribusiness giant Bayer for example. By 2023, innovations in China accounted for 15 percent of Bayer Consumer Health's global innovation portfolio, the highest share from any single market.

In many frontier technology sectors, China has become a market leader. Investing in China today is no longer simply a localization strategy—it is a forward-looking global move. For many multinational companies striving to sustain and strengthen their competitiveness, "R&D in China and serving the world" has become a natural strategic choice.

With its comprehensive industrial system and diverse application scenarios, China's role as the "world's factory" remains strong, while its position in the global innovation chain grows ever more significant. China's R&D expenditure intensity now exceeds the European Union average. The country ranks 10th in the global innovation ranking, with 24 innovation clusters listed among the world's top 100.

China's abundant talent pool and complete industrial chain provide robust support for R&D efficiency, while society-wide enthusiasm for innovation fosters a favorable environment.

From government agencies and enterprises to consumers, broad acceptance of innovation has created a virtuous cycle between technology and markets. Whether in autonomous driving, the industrial internet, healthcare, or green energy, China's market offers a full pathway—from proof of concept to commercial application—for new technologies and products.

The evolution from setting up factories to building sales and service networks, and to establishing R&D centers, represents not just a shift in production but a global reconfiguration of innovation resources—a strategic transformation geared toward the future.

China's magnetic appeal is inseparable from its high-level opening-up. From implementing national treatment for foreign enterprises in government procurement to enhancing mechanisms for protecting foreign-related intellectual property rights, China's continuous efforts to optimize its business environment have generated mutual momentum between foreign companies' growing investment and China's expanding openness.

The fourth plenary session of the 20th Central Committee of the Communist Party of China proposed advancing reform and development through greater openness and seeking to share opportunities and achieving common development with the rest of the world.

A China committed to high-level openness will be better positioned to integrate global innovation resources and work with all nations to build a more promising and inclusive future.