Foreign firms bet big on China's innovation drive under 15th Five-Year Plan

Robots perform at the 2026 CCTV Spring Festival Gala. (Photo/cctv.com)

As China rapidly emerges as a global innovation hub, "looking to the East" for scientific and technological innovation has become a growing trend worldwide.

During this year's "two sessions," the annual meetings of China's top legislature and political advisory body, China sent positive signals on sci-tech innovation, industrial upgrading, and the improvement of its business environment. Foreign companies operating in China are optimistic about strengthening their innovation capabilities in the country and finding new growth drivers.

This year's government work report called for advancing the "AI Plus" initiative for the third consecutive year and, for the first time, set the goal of building a new AI-driven economic model. AI is increasingly seen as both a key variable and a powerful new engine for high-quality economic growth.

From kung fu humanoid robots captivating audiences at the CCTV Spring Festival Gala to heated overseas discussion about ByteDance's text-to-video tool Seedance 2.0, widely hailed as a potential disruptor of Hollywood, AI is being integrated into everyday life at an accelerating pace. The nationwide enthusiasm vividly demonstrates that AI has become a core driver of new quality productive forces.

Both the consumer and industrial sides of the Chinese market are racing toward intelligent transformation, said Alan Wang, chair of Intel China.

Digital intelligence is moving beyond technological breakthroughs, penetrating deeper into industries and translating into tangible productivity, Wang noted.

He added that this wave of transformation is not only driving demand for computing power but also reshaping computing architectures, presenting Intel with new opportunities.

China's unique advantages, including an open innovation ecosystem, diverse application scenarios, and a massive market, are creating vast growth potential. The shift from the world's factory to an innovation engine is now widely recognized among multinational companies. Research and development spending by multinationals in China grew 86.5 percent between 2013 and 2023.

"China is not just an important market — it is a vital innovation workshop for developing the core technological capabilities we will need in the future," said Liu Yunfeng, executive vice president of Volkswagen Group China responsible for corporate & JV affairs.

In January 2024, Volkswagen Group China Technology Company became fully operational, housing Volkswagen's largest integrated R&D center outside Germany. By leveraging efficient R&D processes and deep integration with the local industrial ecosystem, the center has reduced product development cycles by roughly 30 percent compared with traditional workflows and lowered costs by around 40 percent.

Against the backdrop of China's 15th Five-Year Plan, which calls for fostering new quality productive forces at a faster pace and enhancing innovation capacity across the board, Volkswagen is more committed than ever to strengthening its innovation and R&D capabilities in China, Liu said.

"By deeply integrating into China's innovation ecosystem, we are continually strengthening our technological competitiveness," he added.

Last September, the adhesive technologies experience center of German industrial and consumer goods group Henkel began operations at the Zhangjiang Hi-Tech Park in Shanghai. With a total investment of approximately 500 million yuan ($72.6 million), the facility is Henkel's second-largest innovation center globally, after its headquarters in Dusseldorf, Germany.

Anna An, president of Henkel Greater China, said the growing trend of foreign companies increasing R&D investment in China reflects the positive results of the country's ongoing efforts to improve its business environment and advance high-standard opening up.

This trend is building into stronger collective momentum for innovation, giving rise to a vibrant and open ecosystem in China, she said, adding that for Henkel, this represents not only a vote of confidence but also a rare and valuable opportunity.