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Representatives from ten out of Germany’s sixteen federal states recently gathered at a forum in Shanghai to promote their regions to Chinese investors.
The event, titled “Investing in Germany, Connecting Europe: In-Depth Analysis of Regions and Industries,” was organized by the country’s international economic promotion agency and the Shanghai Institute for European Studies.
Each state set up its own booth, showcasing brochures and project lists to highlight local strengths. Bremen focused on Bremerhaven, Germany’s second-largest port; Hessen highlighted Frankfurt’s goal to become a global data exchange hub; Bavaria emphasized its high-tech industries; and Saxony showcased its automotive industry and expanding semiconductor sector, earning it the nickname “Europe’s Silicon Valley.”
Despite their distinct industrial profiles, all regional representatives emphasized that China remains a key part of their development strategies. Bremerhaven already handles numerous shipments of Chinese new energy vehicles, while Hamburg maintains close ties with Shanghai. Berlin’s startup scene includes a notable number of Chinese companies.
According to Xu Xinyun, investment director for Germany’s economic promotion agency in China, Chinese investments in Germany are shifting. Companies are becoming more cautious about international expansion, often starting with small teams focused on sales and marketing as their initial step into the German market.
When asked about the challenges Chinese businesses face in Germany, Zhang Yizhi, chief representative for Lower Saxony’s economic development agency in China, said that obtaining approvals, particularly in the energy sector, poses a significant challenge. He gave the lengthy certification process as an example. Additionally, integrating into supply chains of major German firms, collaborating with local engineering teams, and securing bank loans without local credit data are critical issues that need attention.
Several German state representatives also mentioned the European Union’s proposed Industrial Accelerator Act. Announced earlier this month, it aims to introduce “Made in the EU” requirements for public procurement and support programs, with the goal of increasing manufacturing’s share of the EU’s GDP to 20% by 2035. The legislation will now be reviewed and negotiated by the European Parliament and the EU Council.
While this law could raise investment thresholds and costs, it is expected to boost demand for energy-efficient equipment and energy management systems, noted Wang Zhen, chief representative of Schleswig-Holstein’s economic and technological promotion center in China. Feng Xingliang, head of North Rhine-Westphalia’s International Business Office in China, also expressed concerns among Chinese companies about its potential impact.
Amid growing focus on economic security, Germany and Europe are increasingly looking to bring supply chains back onshore through local manufacturing, according to Wu Huiping, deputy director of Tongji University’s Center for German Studies. She noted that Chinese companies might need to shift from simply investing, mergers, and acquisitions to expanding greenfield projects and establishing local operations, which could face fewer restrictions.
Despite tighter regulations in Germany and Europe, Wu believes the German government still values foreign investment in green and digital sectors. Chinese expertise in smart manufacturing could support Germany’s industrial transformation and help it recover from economic slowdown. This was a key reason why German Chancellor Friedrich Merz visited Chinese smart manufacturing firms earlier this year.
German companies operating in China are no longer just transferring technology into the Chinese market; increasingly, they’re leveraging R&D and innovation there to drive their own growth. “Technology transfer is now a two-way street,” Wu explained.
Looking ahead, Wu sees potential in digital infrastructure improvements for Germany, alongside China’s competitive advantages in autonomous driving, industrial robots, and smart manufacturing—areas the German government is eager to support. In terms of energy transition, she added that Chinese firms still have opportunities to collaborate with German companies in hydrogen energy markets and to participate in Germany’s energy partnership networks.
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