Germany’s China playbook: if you can’t beat them, partner up

German companies are accelerating efforts to partner with Chinese rivals, conceding in fresh survey results that the local competitors appear poised to seize the lead in global innovation.

While business sentiment among surveyed German firms in China has seen a slight uptick, optimism has been tempered by fierce price competition and a nationalist “Buy China” push, according to findings from the German Chamber of Commerce’s 2025/26 Business Confidence Survey.

About 56 per cent of surveyed firms were planning to deepen engagement with Chinese partners, showing a “sharp” increase from the last time the question was included in the survey in 2021, said Martin Hofmann, chairman of the chamber’s North China chapter, at a press conference in Beijing on Tuesday, referring to when only 40 per cent of polled companies were planning to do so.

“It shows very clearly that the German companies are reaching out to their [Chinese] partners to benefit from innovation, from strategy shifts, and also from the speed of implementation,” he said, noting that strategic cooperation is the main way that companies are planning further engagement.

The annual survey polled 627 members of the German chamber in China, across sectors including machinery, automotive and business services, between September and October.

With an eye on the next five years, a record 60 per cent of companies viewed Chinese rivals as current or future innovation leaders, continuing a shift in which domestic firms are seen as setting the technological pace.