Changzhou’s Sino-German Park becomes Magnet for German ‘Hidden champions’
The Sino-German (changzhou) Innovation Industrial Park in Jintan District is rapidly emerging as a prime destination for German companies seeking to expand their global footprint. With a strategic focus on fostering innovation and long-term partnerships,the park has successfully attracted 76 german-speaking enterprises,representing a cumulative investment exceeding 2.3 billion euros. This surge in investment underscores the park’s growing appeal as a hub for German “hidden champions”-small and medium-sized enterprises that quietly dominate niche markets with specialized expertise.
But what makes this industrial park such a magnet for German businesses? Let’s delve into the key factors driving this triumphant Sino-German collaboration.
the Allure of the ‘Five New Industries’
The industrial park’s focus on “five new industries” aligns perfectly with the strategic interests of many German firms.These industries, encompassing new energy, new infrastructure, new materials, new medicine, and new intelligent equipment, represent high-growth sectors with significant potential for innovation and collaboration. In 2024, these sectors generated a staggering 212.91 billion yuan in industrial output, accounting for over 93% of the total industrial output within the district.
Consider Pier Magnetic, a German family-owned enterprise specializing in security automation, it chose Jintan District as the location for its sole production base outside of Europe. Zhao Chunyu, factory manager, emphasized that Jintan’s competitive advantages in location, industry, and business environment were instrumental in their decision.Initially, the factory had only eight employees; now it boasts eight production lines and roughly 50 employees.
Long-Term Vision Wins Trust
The Jintan District’s approach to attracting foreign investment has evolved over time, shifting from a broad net to a targeted focus on German enterprises.Recognizing the shared industrial DNA between Jintan’s innovative SMEs and Germany’s “hidden champions,” the district adopted a patient, long-term approach to building relationships and fostering trust.
Instead of pushing for speedy deals, the investment promotion team prioritizes understanding the specific needs and concerns of German companies. this approach, characterized by meticulous planning and unwavering commitment, has proven highly effective in securing long-term investments. As an example, Isabelenguit, headquartered in Germany, was first contacted in 2015, and after years of discussions finally broke ground in June 2024.
Building a Robust Ecosystem
The Sino-German (Changzhou) Innovation industrial Park goes beyond simply attracting investment; it actively cultivates a supportive ecosystem for german companies to thrive. This includes providing dedicated service teams to assist with regulatory compliance, facilitating supply chain connections, and establishing talent pipelines.
The implementation of Germany’s “dual system” education model, through collaborations between vocational schools and the German Handicraft Guild, ensures a steady supply of skilled workers. The Sino-German (Changzhou) High-skilled Talent Training Center further enhances this effort, adapting the German vocational education model to meet local needs.
Pro Tip: Consider how your company can leverage similar long-term partnership strategies to build lasting relationships with international partners.
Expanding Horizons: New Investments & R&D
The success of the Sino-German (changzhou) Innovation Industrial Park is evident in the increasing number of German companies expanding their operations and investing in advanced R&D facilities. Lao Shibaoshi Electromagnetic Technology (Jiangsu) Co., Ltd., as an example, invested an additional 65 million euros to construct a new project after initially establishing its first chinese facility in the park.
Wang Zinan, CEO of Lao Shibaoshi, shared that the company aims to localize over 80% of its supply chain within China in the next four years and will implement the most advanced automotive full-active suspension system project in China, with the R&D center based in Jintan.
Did You Know? China remained Germany’s most significant trading partner in 2023, with trade volume reaching €253.1 billion (source: Reuters, Feb 2024).
Key Statistics at a Glance
| Metric | value |
|---|---|
| Number of German-speaking enterprises | 76 |
| Total Investment | Over €2.3 billion |
| Output from “Five New Industries” (2024) | 212.91 billion yuan |
| German firms in Jintan’s new energy supply chain | Over 30 |
Xu Yawei, deputy secretary of the Jintan District Party Committee, affirmed the park’s commitment to becoming the premier choice for German-speaking enterprises seeking to expand in China. The goal is to attract both “hidden champions” and industry leaders, fostering a dynamic ecosystem of innovation and collaboration.
Looking Ahead
With plans to attract 85 more German-speaking enterprises this year, the Sino-German (Changzhou) Innovation Industrial Park is poised for continued growth and success. By deepening Sino-German innovative cooperation, the park aims to promote “German Intelligent Manufacturing” in China and facilitate “China Intelligent Manufacturing” going global, setting a new standard for Sino-German economic and trade cooperation.
What are your thoughts on the Sino-German partnership model? How can other regions replicate this success?
Context & Evergreen Insights
The success of the Sino-German (Changzhou) Innovation Industrial Park offers valuable lessons for other regions seeking to attract foreign investment. The key takeaways include:
- Strategic Alignment: Focusing on industries that align with the strengths and priorities of target countries.
- Long-Term Partnership: Prioritizing relationship-building and understanding investor needs over short-term gains.
- Ecosystem Development: Creating a supportive environment with access to skilled labour, supply chain networks, and regulatory assistance.
Moreover, the park’s emphasis on vocational training and talent development highlights the importance of investing in human capital to support advanced manufacturing and innovation. As global supply chains continue to evolve, regions that can offer a combination of strategic advantages and a skilled workforce will be best positioned to attract foreign investment and drive economic growth.
In December 2023,the China Council for the Promotion of International Trade (CCPIT) and the German Association for Small and Medium-sized Businesses (BVMW) signed a cooperation agreement to strengthen the ties between the two countries’ SMEs,thus creating even more opportunity for Sino-German cooperation.
Frequently Asked Questions
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What is a ‘hidden champion’ company?
A ‘hidden champion’ is a small to medium-sized enterprise that is a leader in its specific niche market, often unknown to the general public.
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Why are German companies investing in the sino-German (Changzhou) Innovation Industrial Park?
The park’s focus on new industries aligns with the development direction of many German companies, and the favorable business environment is attractive.
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What are the ‘five new industries’ being developed in Jintan District?
the ‘five new industries’ are new energy, new infrastructure, new materials, new medicine, and new intelligent equipment.
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How many German-speaking enterprises have been established in the Sino-German (Changzhou) Innovation Industrial Park?
Currently, 76 German-speaking enterprises have been established in the park.
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What is the ‘dual system’ education model being implemented in Jintan?
The ‘dual system’ education model, based on the German model, combines vocational school education with practical training in companies to cultivate skilled talents.
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What is the investment in Sino-German ties?
The total investment in Sino-German Innovation industrial Park by german-speaking enterprises is more than 2.3 billion euros.
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How can the characteristics of German Hidden Champions be effectively replicated in other national business contexts?
Germany’s Hidden Champions: The Secret to Mittelstand Success
What are Germany’s Hidden champions?
The term “Hidden Champions” (Hidden Champions in German) refers to small and medium-sized enterprises (SMEs), frequently enough family-owned, that hold leading global positions in highly specialized niche markets. These aren’t household names like BMW or Siemens; instead,they are the Mittelstand – the backbone of the German economy – quietly dominating their respective fields. They exemplify German engineering and a long-term, strategic approach to business. Understanding the German economic model is key to understanding their success.
The Characteristics of a German Hidden champion
Several key characteristics define these prosperous companies. They aren’t focused on broad market share, but on market leadership within a specific segment. Here’s a breakdown:
- Market Leadership: Typically #1 or #2 globally in their niche.
- Specialization: Focus on a narrow product range or service.
- Innovation: High investment in research and advancement (R&D).
- Long-Term Orientation: Prioritize sustainable growth over short-term profits.
- Family Ownership: Often family-owned, fostering a long-term outlook.
- Decentralization: Empowered employees and flat organizational structures.
Why Do They Thrive? The Key Success Factors
The thriving nature of Germany’s Hidden Champions isn’t accidental. It’s a result of a unique combination of factors deeply embedded in the country’s business culture and economic structure. Competitive advantage is built on more then just price.
1. The Power of Specialization & Niche Markets
Instead of trying to compete head-to-head with larger corporations in mass markets, Hidden Champions identify and dominate highly specialized niches. This allows them to build deep expertise,develop superior products,and command premium pricing. This strategy minimizes market competition and maximizes profitability.Consider companies specializing in industrial adhesives, precision tooling, or specialized sensors – areas where broad consumer recognition isn’t necessary, but technical excellence is paramount.
2. Strong Vocational Training & Skilled workforce
Germany’s renowned dual education system – combining theoretical learning with practical apprenticeships – produces a highly skilled and adaptable workforce. This focus on vocational training ensures a consistent supply of qualified employees, crucial for maintaining high-quality manufacturing and innovation. This is a meaningful advantage in industries requiring specialized skills. The German workforce is known for its reliability and precision.
3. Close Collaboration with Research Institutions
Hidden Champions actively collaborate with universities and research institutions like the Fraunhofer Institutes. This access to cutting-edge research and development fuels innovation and allows them to stay ahead of the curve. These partnerships are often funded through public-private initiatives, fostering a strong innovation ecosystem.
4. Patient Capital & Long-Term Investment
Unlike companies pressured by quarterly earnings reports,many Hidden Champions benefit from patient capital,often provided by family ownership or regional banks. This allows them to invest in long-term projects, such as R&D and employee training, without the pressure of immediate returns. This long-term view is critical for sustained sustainable growth.
Examples of German Hidden Champions
While many remain relatively unknown to the general public, here are a few examples:
| Company | Industry | Key Strength |
|---|---|---|
| Schoenherr | Precision Machining | High-precision components for aerospace & medical industries |
| Weber-Hydraulik | Hydraulic Cylinders | Custom hydraulic solutions for mobile machinery |
| Krones | Packaging Technology | Filling and packaging machinery for the beverage industry |
| Sonnen | Solar Technology | Battery storage systems for residential and commercial use |
Benefits of the Hidden Champion Model
The Hidden Champion model offers several benefits, not just for the companies themselves, but for the German economy as a whole:
- Economic stability: Resilient to economic downturns due to specialized markets.
- Job Creation: Provides stable, high-skilled employment opportunities.
- Innovation Driver: Contributes significantly to technological advancements.
- Export Strength: Boosts Germany’s export performance.
- Regional Development: Often located in smaller towns and rural areas, supporting local economies.
Practical Tips for Emulating the Hidden Champion Strategy
While replicating the entire German system is challenging, businesses can adopt key principles:
- Focus on a Niche: Identify a specific, underserved market segment.
- Invest in R&D: Prioritize innovation and product development.
- Build a Skilled Workforce: Invest in employee training and development.
- Cultivate Long-Term Relationships: Focus on building strong relationships with customers, suppliers, and research institutions.
- Embrace a Long-Term Vision: Prioritize sustainable growth over short-term profits.
Further research into Mittelstand 4.0 and the impact of digital change on these companies is also recommended. Resources like the Germany Trade & Invest website provide valuable insights.
