Strategic alliances

German industry relies on China cooperation

Despite price pressure and geopolitical tensions: German companies invest in partnerships with Chinese players - and focus on innovation instead of retreat.

Anja Ringel
Anja Ringel Managing editor and podcast host for 'Produktion'
Published
Deutsche Unternehmen verstärken ihre strategischen Kooperationen, um Know-how gezielt zu nutzen und das Geschäft in China weiterzuentwickeln.
German companies are strengthening their strategic partnerships to leverage know-how and further develop business in China.

The German Chamber of Commerce in China has released the results of the 2025/26 business climate survey. According to the survey, the economic and industry-specific sentiment has slightly improved. While challenges such as price pressure and the "Buy China" trend continue to intensify, Chinese companies are increasingly perceived as innovation leaders.

"2025 brought challenges on multiple levels - from the escalating global trade conflict to tougher competition in the Chinese market, triggered by falling prices and accelerated innovation dynamics. German companies in China had to adapt to an even more challenging market environment across all industries," says Dr. Martin Hofmann, chairman of the German Chamber of Commerce in China for North China. 

The survey shows that 56% of German companies are considering increased collaboration with Chinese partners. The goals are to use know-how as a catalyst and expand business in China. Hofmann adds: "Qualitative partnerships with Chinese companies and a third wave of localization, focusing on research and development and their industrialization speed, have become central solutions for German companies in China. This strengthens their market position and drives not only local but also global top innovations forward."

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  • Slight increase in industry outlook: For 2025, 19% of companies expect an improvement in their industry - an increase of 4 percentage points compared to the record low of 2024. No change is expected for 2026. The sentiment regarding China's overall economic development improves marginally: with an increase of 3 percentage points compared to 2024, 17% see an improvement for 2025, while the proportion of companies expecting a deterioration drops by a full 17 percentage points to 43%.
  • Price pressure now the biggest business challenge: 60% of respondents cite price pressure as the central macroeconomic challenge - a significant increase of 7.5 percentage points compared to 2024, followed by weak domestic demand in China (52%). At the same time, the "Buy China" trend is perceived as a growing regulatory challenge: 32% mention this - an increase of 3.4 percentage points compared to 2024.
  • Chinese partners become a strategic cornerstone for companies: The assessment that Chinese companies are becoming innovation leaders reaches a new high: 60% of respondents expect this in their industry. At the same time, 56% of the surveyed companies plan to deepen cooperation with Chinese partners. The main motives are scaling up the China business (57%) and adapting to the speeds in China (46%). However, 42% state that finding suitable partners is the biggest challenge.
  • Increasing engagement related to the internationalization of Chinese companies: When surveyed German companies assess emerging business opportunities, the internationalization of Chinese firms ranks first: 36% press release name it as the most important opportunity - an increase of 4.7 percentage points compared to 2024. Additionally, a remarkable two-thirds (68%) of respondents are already engaged with Chinese companies expanding abroad - mainly through the provision of products and services (44%).
  • Exchange of knowledge occurs bilaterally: 55% of companies state that the parent company in Germany transfers knowledge to the Chinese subsidiary, while 33% observe a flow of knowledge from the Chinese subsidiary to the parent company. Innovative solutions (40%) dominate the knowledge flow to headquarters in Germany, while technical expertise (63%) ranks first in the knowledge flow to subsidiaries in China.
  • Good relations between China and Germany are crucial: A remarkably high number of respondents (75%) say that relations between China and the EU/Germany affect their China business. 34% state that the relations are a good foundation for their operational business. At the same time, improving the image of China in Germany is the most relevant expectation of the German federal government (64%).

Source: German Chamber of Commerce in China

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FAQ: Strategic partnerships of German companies in China

1. Why are German companies increasingly partnering with Chinese firms?

The increased collaboration serves several goals: 56% of the companies surveyed want to scale their business in China, 46% want to adapt to the high speed of innovation locally. Chinese companies are increasingly perceived as innovation leaders - 60% even expect this in their own industry. Strategic partnerships are therefore considered key to securing market access, competitiveness, and technological relevance.

2. What role does knowledge transfer play between Germany and China?

The exchange occurs in both directions: 55% of companies report a transfer of know-how from the German parent company to the Chinese subsidiary - primarily technical knowledge (63%). Conversely, innovative solutions (40%) are increasingly flowing back from China to the German headquarters. Thus, China is not only a recipient of knowledge but also an active contributor to global innovation processes.

3. What are the biggest challenges in finding partners in China?

Despite the strategic value, implementation remains challenging: 42% of companies cite finding suitable partners as the biggest hurdle. Reasons include unclear market structures, different perceptions of quality and intellectual property protection, as well as high demands for speed and agility in development processes.

4. How do German companies benefit from the internationalization of Chinese firms?

The expansion of Chinese companies abroad opens up new business opportunities: 36% of German companies see this as the greatest potential opportunity. Already, 68% are actively involved in international projects of Chinese firms - mainly through the provision of products and services (44%). This creates new roles in global supply chains and long-term partnerships beyond the Chinese market.

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