German Business in China – Greater Shanghai Innovation Survey 2018/19
Executive summary
Innovation – a growing priority for German manufacturing companies
in Greater Shanghai
Innovation, among the top three business priorities for more than 80% of surveyed
manufacturing companies, continues to be a key driver of business activities in China.
Surveyed manufacturing companies attach a higher priority to innovation when operating
in a volatile market environment. The main motives for engaging in innovation are to
differentiate from competitors, to better meet customer needs, and to increase revenues.
While 83% of respondents see innovation among their top three priorities, only 43% claim
to have a well-defined innovation strategy.
Manufacturing companies broaden the scope of innovation activity
Innovation efforts of German manufacturing companies in the Greater Shanghai region
mainly concern the adaptation of existing products to meet the demands of the local
market. However, the local development of products for world markets sees a significant
increase compared to the 2017 survey, showing China’s growing attractiveness as a R&D
hub. Further, manufacturing companies will increasingly focus on business model
innovation in addition to, or also instead of, product and process innovation.
Fast, but not fast enough
Around two thirds of surveyed manufacturing companies indicate to have a shorter time
to market than their German headquarters. Looking at international competitors in China,
respondents feel on par. However, 60% of surveyed manufacturing companies think they
have a longer time to market than that of their Chinese competitors, putting them at a
disadvantage for innovation success in this fast-moving economy.
Talent – a top concern for innovation and digital development
The largest barrier to innovation for surveyed manufacturing companies is human
resources. For 61% of respondents, human resources pose a significant barrier to
innovation – only 2% of respondents do not perceive human resources as a barrier.
Dissatisfaction levels are especially high for the skills critical thinking, complex problemsolving,
and creativity. Also, with regard to the digital development of their business
activities, surveyed manufacturing companies mention lack of talent as a key challenge.
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