Foreign investment amplifies China's rise as a global innovation hub

Germany's century-old materials science company Henkel officially inaugurated its Adhesive Technologies Innovation Experience Center in Shanghai's Zhangjiang High-Tech Park on Sept 22. With a total investment of about 500 million yuan ($70 million) and over 500 scientists on-site, this base has become Henkel's second-largest innovation center worldwide, after its headquarters in Germany.

Henkel's move is not an isolated case. From BASF's integrated base in Zhanjiang focusing on new energy materials R&D to Tesla's upgrade of its Shanghai R&D center into a global engineering and technology hub, multinational giants are collectively transforming China from a manufacturing base to a core node of global innovation. As Anna, president of Henkel Greater China, noted, the Chinese market has evolved from being a manufacturing hub to an innovation engine. This strategic shift underscores China's transformation from a global investment hotspot into an innovation hub that multinationals must compete for.

Innovation and manufacturing strength underpin global industrial pillars

China's position as an innovation hub is underpinned by its dual strengths in innovation and manufacturing. During the 14th Five-Year Plan (2021-25) period, China's manufacturing value-added grew from 26.6 trillion yuan to 33.6 trillion yuan, an increase of 8 trillion yuan, accounting for nearly 30 percent of the global total. China's overall manufacturing scale has ranked first globally for 15 consecutive years. Among the world's 504 major industrial products, China leads in the output of most, providing critical support to global supply chains in everything from home appliances to new energy components.

Sustained increases in innovation investment are further accelerating the transition from the "world's factory" into a "global innovation lab". Over the past five years, the R&D expenditure of large-scale manufacturing enterprises has exceeded 1.6 percent of their revenue, with more than 570 Chinese industrial companies ranking among the global top 2,500 in R&D investment. By 2024, China had established 33 national-level manufacturing innovation centers, achieving breakthroughs in 672 key technologies and transforming 690 technological advancements into practical applications. The combination of a vast consumer market, complete industrial chain, and rapid market feedback mechanism has made China the fastest testing ground for new technologies and iterations.

Chinese brands breakthrough multiple fronts, reshaping industry landscapes

Today, Chinese innovation has progressed from single-point breakthroughs to full industrial chain coverage, achieving leaps in multiple fields. In high-end manufacturing, China accounts for half of the global output of industrial robots, with the localization rate of core components rising from less than 30 percent to over 60 percent, breaking long-standing foreign monopolies.

The rise of the new energy vehicle industry has set a global benchmark. In the first half of 2025, China contributed 62 percent of global NEV sales, with domestic manufacturers capturing nearly 90 percent of the market share. This advantage stems not only from market scale but also technological innovation — from BYD's blade battery to CATL's Kirin battery, Chinese companies have continuously broken new ground in core metrics such as energy density and safety of power batteries, accelerating the global adoption of NEVs, which is projected to reach 40 percent by 2030.

In the consumer sector, companies like the leading maternal and infant brand Babycare are redefining industry standards through demand-driven innovation. From precise urine indicator technology in diapers to the use of eco-friendly materials in baby products, Chinese brands are anchoring innovation in user needs, driving technological upgrades in niche segments.