On September 2, 2024, the German Chamber of Commerce in China, in partnership with BearingPoint, officially launched the 2024 Innovation Report. This is the second extensive survey and case study on innovation themes among German Chamber members in China since 2022, aimed at analyzing China's innovation ecosystem, delving into the innovation strategies of German companies in China, and providing suggestions to enhance their innovation competitiveness within the Chinese market.
In Covestro Innovation Hub, Martin Klose, Executive Director & Board Member of German Chamber of Commerce in China South and Southwest, and Tunde Laleye, Partner & China General Manager of BearingPoint, shared the key findings of the 2024 Innovation Report.
The roundtable discussion also invited representatives from participating companies, including Haibo Wang, Head of Technology & Innovation at Vitesco Technologies; Dr. André Rittermeier, Head of Group Innovation & Sustainability APAC at Covestro; and Lars Kosubek, Director of Division Cabinet Products, Asia Region, at Weidmüller, to discuss topics such as the company innovation strategies, product portfolios, the expansion of innovation partnerships, and local research and development efforts.
Key Findings from the 2024 Innovation Report
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%) and raw material costs (71%). Additionally, the demand for Growing needs of sustainable, healthy and personalized products/services has become an important driver for innovation.
Continuous Localizing Research and Development
German companies are increasing their research and development efforts in China, with 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). Research activities concentrate on “In China for China” (34%) and “In China for China and Global” (21%), which not only highlights the importance of the Chinese market to German companies, but also indicating China's growing influence in the global innovation landscape.
Increasing Competitive Edge is the largest incentive for innovation in China
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%).
Trailing behind in time to market
56% of respondents say that their weakest point compared to local competitors is time to market. In addition, less than half see their Chinese competitors stronger in utilizing local resources (40%) and using more modern and cost-effective R&D infrastructure (33%).
Recommendations for German Companies Innovating in China
German companies seeking to innovate in China should consider initiatives such as leveraging local financial incentives, strategically choosing their locations for innovation, engaging in open innovation with local entities, and accelerating their time-to-market through agile methodologies and tech scouting. They should also focus on the "In China for China" strategy, emphasizing customer engagement and local talent retention, while also prioritizing cybersecurity and intellectual property protection. In addition, business associations can provide valuable market insights and connections.
About The 2024 Innovation Report
The German Chamber's Innovation Report, created in collaboration with BearingPoint, is a comprehensive analysis of the Chinese innovation ecosystem, providing valuable insights into the latest trends and challenges facing German companies operating in China. Between February 19 and March 13, 2024, a total of 324 member companies of the German Chamber of Commerce in China responded to the innovation survey, which the Innovation Report is based on. First published in 2022, the Innovation Report aims to help German companies leverage the full potential of China's dynamic innovation landscape.
About the German Chamber of Commerce in China
The German Chamber of Commerce in China has roughly 2,100 members and serves as a powerful platform for networking and exchange between German companies and local business communities. With three regional chapters for North China, East China as well as South & Southwest China, we offer our members 350 events each year, a range of informative publications, and effective representation towards governments.
About BearingPoint
BearingPoint is an independent management and technology consultancy with European roots and a global reach. The company operates in three business units: Consulting, Products, and Capital. Consulting covers the advisory business with a clear focus on selected business areas. Products provide IP-driven digital assets and managed services for business-critical processes. Capital delivers M&A and transaction services. BearingPoint’s clients include many of the world’s leading companies and organizations. The firm has a global consulting network with more than 10,000 people and supports clients in over 70 countries, engaging with them to achieve measurable and sustainable success.