Interview: German "hidden champions" seek investment, cooperation in China

According to a senior representative of a German forum, many successful small- and medium-sized enterprises (SMEs) in Germany, known as “hidden champions,” are eager to invest and expand their business in China. These companies have achieved a leading position in niche markets globally, with over 1,300 hidden champions in Germany alone, representing approximately half of the world’s total.

German SMEs are inspired by the success of German multinationals in penetrating the Chinese market and are interested in following their lead, as stated by Yang Ming, chief representative in China of the Summit of World Market Leaders. The appeal of the Chinese market lies not only in its size but also in the opportunities presented by regional initiatives like the China-ASEAN Free Trade Area, which opens doors to a wider market in other Asian countries.

The Summit of World Market Leaders, established in 2011, serves as a platform for leading German businesses, including hidden champions, to convene annually. Yang, a senior member of the organizing committee, gathers feedback and requirements from participants on conducting business in China.

An organizational survey reveals a strong willingness among German SMEs in the manufacturing, commercial, and trade sectors to venture into the Chinese market. However, as Yang points out, their needs remain unmet, with some companies facing obstacles in advancing their investment plans due to a lack of follow-up discussions after initial meetings with potential partners in China.

Research by the German Institute for Economic Research indicates that China remains a preferred investment destination for German firms. In 2023, the total direct investment from German companies in China reached a peak of 11.9 billion euros (12.89 billion U.S. dollars), accounting for 10.3 percent of their global overseas investment – the highest level since 2014.

To cater to the requirements of German SMEs, organizers will design customized strategies to offer “one-stop” services that streamline the investment process in China, according to Yang. By combining China’s innovative strength with Germany’s robust industrial foundation, both nations can achieve reciprocal advantages and coordinated growth.