Key Takeaways
- Mercedes-Benz’s collaboration with Chinese tech firm Momenta reflects a growing trend of foreign companies shifting to local R&D in China.
- Investment from multinational corporations in China is no longer just about production, but increasingly about global innovation and market strategies.
- China has emerged as a major source of patent applications in Europe, marking its significant advancement in various technology sectors.
Growing Innovation Ties Between China and Global Firms
At the recent Guangzhou International Automobile Exhibition, Ola Källenius, chairman of the Board of Management of Mercedes-Benz Group AG, emphasized the company’s strategic investment in the Chinese autonomous driving startup Momenta, which began in 2017. This partnership reflects a significant transformation in how foreign firms engage with the Chinese market, moving from a “Made in China” to a “Created in China” model.
By February 2026, German Chancellor Friedrich Merz experienced the advanced features of the new Mercedes-Benz S-Class, marking a successful application of the intelligent assisted driving system co-developed with Momenta. This collaboration has demonstrated the potential of China’s technology sector to innovate significantly alongside global brands.
Other foreign companies also illustrate this trend. Volkswagen has begun production of an EV model with XPeng, showcasing deepening ties within the automotive sector. Furthermore, pharmaceutical giants like Sanofi and Novartis are establishing R&D centers in China, with plans for substantial investments in local operations.
As international uncertainties grow, China is increasingly seen as a stable base for multinational operations. Deloitte China’s CEO Liu Minghua noted that firms are rethinking their strategies from “In China, for China” to “In China, for the world.”
Mercedes-Benz’s Källenius mentioned leveraging local innovations for global applications, highlighting that advances in China’s R&D, including the S-Class’s rear-seat entertainment system and innovative parking assist algorithms, could set global benchmarks. The diverse driving scenarios faced in China help refine these technologies, positioning them well for broader market deployment.
Additionally, companies like Siemens Energy see China as central to their innovation and manufacturing strategies, reinforcing collaborative efforts on projects focused on green manufacturing and energy transition.
The surge in foreign investment and innovation in China is further evidenced by the country’s ascent as one of the top three countries for patent applications at the European Patent Office, surpassing Japan for the first time. With a particular emphasis on technologies related to AI, digital communication, and energy transition, the Chinese market is becoming a leader in global innovation trends.
Recent data from China’s Ministry of Commerce revealed that the establishment of new foreign-invested firms surged by 14% year-on-year, with high-tech industries attracting nearly 63.21 billion yuan in foreign direct investment during the early months of 2026—illustrating the international business community’s growing commitment to China.
Källenius underlined the long-term vision of multinationals in China, reaffirming that the market is crucial for leveraging innovations that can propel both local and global business success. With rapid advancements in various sectors, China is not just a destination for sales, but a pivotal hub for global innovation.
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