Over 1,200 Chinese enterprises have settled in, how does Germany's strongest economic state view Chinese investment opportunities?

North Rhine-Westphalia (North Rhine), located in western Germany and the heart of Europe, borders Belgium and the Netherlands to the west, and is the most populous state in Germany. The Ruhr area, famous for its coal mining industry, is situated here. It not only contributed to Germany’s post-war “economic miracle,” but its strong industrial foundation also keeps North Rhine’s total economic output at the top among Germany’s 16 federal states.

Today, this old industrial base, which once relied on coal mining and steel production to drive economic growth, has completed its transformation from traditional heavy industry to high-end manufacturing, digital innovation, and modern service industries. It also attracts global companies, including those from China, to invest and establish operations here, becoming an important foothold for Chinese enterprises entering the European market.

Recently, Feng Xingliang, the chief representative of the North Rhine International Business Office in China, provided a set of data in an interview with Yicai. According to statistics from the North Rhine International Business Office where he works, there are currently about 1,200 Chinese-invested companies in North Rhine, and the number is even higher in official German federal statistics, approximately 1,735. “It can be said that Chinese companies’ investments in North Rhine account for about one-third of all Chinese investments in Germany. North Rhine truly is the most densely populated state for Chinese enterprises in Germany,” he said.

In the context of deepening China-Germany economic and trade cooperation and the accelerated reshaping of the global industrial landscape, what are Germany’s assessments and expectations for Chinese investment in this economically transformed strong state?

“Double Champion”

Data from the Chinese Consulate General in Düsseldorf shows that North Rhine (with Düsseldorf as its capital) is the “double champion” in Germany for trade and two-way investment with China, and also the region with the highest concentration of Chinese-invested enterprises in Germany. Currently, there are over 1,600 Chinese companies and projects in North Rhine; Chinese enterprises and institutions in the state number over 1,200.

Looking back at Chinese investments in the region, Feng Xingliang told Yicai that initially, most were state-owned steel companies, as the Ruhr area had advanced technology and experience in the steel industry chain at that time. Around 2000, he said, the number of private Chinese enterprises increased, represented by machinery manufacturers like Sany Heavy Industry, XCMG, and Zoomlion.

He also mentioned that after 2000, many Chinese ICT (Information and Communication Technology) companies emerged, such as Huawei, ZTE, and OPPO. Additionally, numerous small Chinese firms supporting manufacturing also appeared.

In terms of enterprise types, Feng Xingliang said that around 2000, about 80% of Chinese companies investing in Germany were trading companies. It was only afterward that Chinese companies began establishing factories locally in North Rhine. “Now, many Chinese companies are setting up R&D centers in North Rhine,” he especially highlighted. In recent years, many Chinese coal companies have also chosen North Rhine for their R&D centers. For example, in 2022, Shaanxi Coal Group’s European Research Institute settled in Düsseldorf. “Although coal mines in the Ruhr area have now closed, a large number of industry professionals remain, especially in areas like green industry transformation, where the region has accumulated rich experience.”

Today, as time progresses, Chinese companies investing in North Rhine are becoming more diverse, covering key industries such as energy, machinery manufacturing, automotive, and medical devices.

Why can North Rhine lead Chinese investment in Germany? Feng Xingliang believes that the state’s geographical and transportation advantages are crucial. It hosts the world’s largest inland port, Duisburg, which is also an important hub for the China-Europe Railway Express. Since its launch in 2011, freight trains depart daily from cities like Chengdu, Chongqing, Xi’an, Suzhou, and Wuhan heading to Duisburg, forming a major transportation artery for China-Europe trade.

North Rhine is also home to approximately 400 “hidden champions” in Germany, accounting for a quarter of the country’s total, covering fields like machinery, auto parts, automation, and medical equipment. Additionally, the region boasts strong consumer purchasing power, an active exhibition economy, and leading digital enterprises. Top research institutions such as RWTH Aachen University and the Fraunhofer Society further give North Rhine a unique advantage among Germany’s 16 federal states.

Feng Xingliang specifically mentioned that the “hidden champion” companies in North Rhine, with their specialized technological expertise, combined with the strong market expansion and large-scale production capabilities of Chinese enterprises, create a “1+1>2” win-win situation. This cooperation not only opens up market space for North Rhine companies but also substantially helps Chinese industries climb higher in the global value chain.

New Tracks for Risk Reduction

Regarding new avenues for Chinese companies’ development locally, Feng Xingliang highlighted the green energy sector, represented by photovoltaics and energy storage. He stated that leveraging North Rhine’s rich experience in traditional energy transformation, its R&D capabilities in low-carbon fields, and its role as a European market hub, can promote the scale advantages and rapid technological iteration of China’s new energy industry. This complements Germany’s high standards in engineering design, strict safety systems, and low-carbon technology R&D, jointly advancing Europe’s energy transition and global carbon neutrality goals.

He cited examples such as Chinese giants like Haisibo and Jinko Solar, which have deepened cooperation with local North Rhine companies in Germany, providing efficient power supply and energy storage solutions to support the smart upgrade of European power grids. In the electric vehicle industry, Germany is also accelerating its industrial transformation to meet new demands. “In this regard, China’s well-developed supply chain plays an irreplaceable role, and joint R&D of electric vehicle models is worth looking forward to.”

In logistics, Feng Xingliang said, there are also significant opportunities for China-Germany cooperation. North Rhine, as a transportation hub for Europe, has a comprehensive network of roads, railways, inland waterways, and key ports. Meanwhile, China has mature experience and industrial advantages in smart logistics technology, logistics equipment manufacturing, and cross-border e-commerce supply chains. The two sides can complement each other to reduce trade logistics costs between China and Europe and better support the interconnected development of manufacturing and consumer goods industries. He observed that Chinese logistics giants like SF Express, JD.com, and Cainiao have been actively expanding in North Rhine’s logistics and warehousing sectors.

While presenting multiple opportunities, Feng Xingliang also acknowledged the EU’s recent emphasis on “de-risking.” “In recent years, German politics have stressed de-risking, raising the security review thresholds for non-EU acquisitions of German companies. The recently proposed EU ‘Industrial Accelerator Act’ (IAA) was also born in this context.”

In early March, the EU released the IAA proposal, which introduces foreign investment review and localization requirements for zero-emission technologies, imposing stricter restrictions on batteries, electric vehicles, photovoltaics, and critical raw materials, while emphasizing ‘Made in Europe.’ Feng Xingliang believes that, in terms of attracting manufacturing back to Europe, the EU’s goal is to increase the share of “EU manufacturing” to 20%. “This may still be difficult to achieve for Europe as a whole, given the varying levels of industrial development among countries. Currently, manufacturing accounts for an average of 14.3% of Europe’s GDP, with Germany at 20-22%, and North Rhine at 28%.”

He sees that for the IAA to be fully implemented, it may take another 1-2 years and will face internal EU negotiations and challenges. This undoubtedly provides an important time window for Chinese companies to invest in Germany or Europe.

(This article is from Yicai)