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Global firms use EV, biotech M&A to expand China investment: KPMG
A KPMG survey found that most multinational corporations operating in China have maintained or increased investment in 2025, with only 1% preparing to exit the market.
KPMG said MNCs have increased M&A activity in sectors such as EVs, medical technology, biotechnology, water technology, advanced materials, and robotics.
The report surveyed 137 senior executives from global firms between June and September.
About 20% of respondents said they may reduce investment, while the remainder were undecided.
Companies looking to expand in China cited greenfield investment, mergers and acquisitions, or joint ventures as their main strategies.
Roughly 60% of firms said they have shifted their focus from growth to profitability in China, and 83% have localized operations such as manufacturing, supply chain, and R&D.
MNCs showed higher confidence in China’s economic prospects than in the global economy, with 64% expressing moderate or greater confidence in China over the next three to five years.
🔗 Source: South China Morning Post
🧠 Food for thought
Implications, context, and why it matters.
Official Foreign Direct Investment (FDI) data diverges from executive optimism surveys
- KPMG’s survey signals confidence but official figures tell a different story. FDI use fell 13.2% year over year in the first five months of 2025 to $49.96 billion. It also dropped 10.9% in January to April to $44.72 billion 12.
- One reason is how companies invest. 83% of surveyed multinational corporations (MNCs) run localized operations that favor onshore execution (doing more within China) and upgrades to existing plants (KPMG survey).
- Momentum sits in a few niches. E-commerce services rose 146%, aerospace equipment manufacturing 74.9%, and chemical pharmaceuticals 59.2% 1. Broad interest stays soft.
- Firms now prize profitability over expansion (KPMG survey). Many improve what they already run instead of opening new sites, even as new enterprise registrations rose 12.1% and capital inflows fell 2.
Localization and profitability shifts drive demand for operational efficiency tools
- 60% of firms now put profitability first (KPMG survey). Localization is rising. MNCs look for smart manufacturing and automation. They also want energy-saving tech and compliant cloud-plus-data setups that cut costs while meeting rules.
- Enterprise software makers and industrial automation firms can focus on high-tech fields that drew $26.5 billion in FDI in the first 10 months of 2025 3. So can cloud infrastructure vendors and business-to-business (B2B) providers. E-commerce services and aerospace equipment lead. Chemical pharmaceuticals and medical instruments also attract funds 1.
- European firms remain active in financial services, high-end manufacturing, and biotech 32. Only 17% rank China as a top investment destination 32. Vendors that help with rules and localized operations can win business.
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