**Shanghai:** Leading foreign enterprises including BASF, Mahle, Louis Dreyfus, Forvia Hella, and Burckhardt Compression are intensifying localisation and investment in China through expanding factories, optimising supply chains, and boosting R&D to navigate global economic shifts and tap into China’s growing market.
Several leading foreign enterprises are intensifying their investment and localisation efforts in China in response to shifts in the global economic landscape and increased uncertainties, according to Yicai Global’s report on 17 April.
German chemical giant BASF is expanding its presence in China’s rapidly growing new energy vehicle sector, which has been buoyed by the country’s vast automobile market. BASF Vice President Xu Yibin told Yicai that China’s enormous market size and potential make it an attractive destination for investment in this field. On 14 April, BASF announced plans to invest around EUR60 million (approximately USD67.9 million) to construct a second factory in Shanghai’s Pudong New Area. This facility will increase capacity for automotive noise, vibration, and harshness reduction components, with operations expected to commence in 2027.
Addressing concerns related to the US “reciprocal tariff” policy, Xu explained that the majority of products manufactured by BASF in Pudong rely on the domestic supply chain, with only limited imports. The company is taking steps to further optimise its local supply chain layout to mitigate potential impacts.
Mahle, a German automotive parts supplier, has achieved a localisation rate of 90 per cent in China. However, Shen Liangyu, the company’s China president, told Yicai that some components still need to be imported due to patent restrictions. Shen highlighted that local customers are proactively promoting procurement from domestic suppliers. “There are ready-made supplier chains available domestically, and we can make the switch, but we need to conduct verification first,” he said. He described the current environment as a valuable opportunity to “turn a crisis into a chance.”
Louis Dreyfus, a global commodities firm, launched its global research and development centre in Pudong in 2023. Chen Jiayuan, CEO of Louis Dreyfus North Asia and general manager of its North Asia Grains and Oilseeds Platform, told Yicai that the centre’s mission is to promote innovations developed in China to international markets for the benefit of consumers worldwide. Chen emphasised the importance for businesses to formulate long-term development plans amidst the complexity and uncertainty of today’s world. He pointed to the significant growth potential of the Chinese market and the country’s progress in energy transition, green sustainability, intelligent development, and digital transformation as key factors providing certainty.
Forvia Hella, an international automotive supplier, is accelerating its localisation efforts, particularly in chip procurement and applications in China. Bai Binyi, executive vice president of Forvia Hella’s electronics division in China, noted that these initiatives began last year and will be vigorously advanced to expedite the localisation process.
Swiss reciprocating compressor manufacturer Burckhardt Compression derives nearly 40 per cent of its sales from China. Li Simin, president of the company’s Chinese business, indicated that over the next two to three years, Burckhardt plans to focus on developing ultra-high-pressure compressors within China and intends to promote their production and manufacturing locally.
These developments reflect a broader trend of foreign companies reinforcing their local commitments in China amid a dynamic global environment. The localisation strategies encompass production capacity expansion, supply chain optimisation, and research and development initiatives across sectors including automotive, chemicals, and industrial machinery.
Source: Noah Wire Services
