People visit the exhibition area of Digital Technology during the Fourth China International Supply Chain Expo (CISCE) in Beijing, capital of China, June 23, 2026. [Photo/Xinhua]
Throughout June, I traveled from Beijing to Urumqi in Xinjiang Uygur autonomous region to cover major trade events, including the fourth China International Supply Chain Expo and the ninth China-Eurasia Expo. I found myself asking executives from multinational companies the same question: Has anything fundamentally changed about investing in China?
Their answers were rarely identical, but they almost always pointed in the same direction.
The more executives I interviewed, the more I noticed an interesting pattern. Tariffs were mentioned. Geopolitics came up. Supply-chain diversification was part of almost every conversation. Yet none of those topics became the center of the discussion. What they wanted to talk about instead was China’s manufacturing ecosystem — and why it remains remarkably difficult to replicate.
That contrast made me rethink a common assumption. China’s competitive advantage today is no longer defined primarily by low-cost manufacturing. It increasingly lies in something much harder to replicate: system-level certainty — the ability to innovate, manufacture and deliver efficiently within an integrated industrial ecosystem.
A French executive described China’s manufacturing ecosystem as “the place where problems get solved overnight.” It was the clearest explanation I heard for why companies continue investing here despite growing external uncertainties.
During factory visits and interviews, I noticed executives talked less about saving money than about saving time. In advanced manufacturing, speed itself has become a competitive advantage. Design changes quickly reach suppliers, tooling is modified within hours and production resumes with minimal disruption. Engineers, suppliers and customers often operate within the same industrial cluster, solving problems face to face rather than across continents.
That ecosystem delivers what every business values most: certainty. Products move from prototype to mass production faster, supply disruptions are resolved more efficiently and production scales without rebuilding supplier networks, thanks to dense industrial clusters in regions such as the Yangtze River Delta region and the Guangdong-Hong Kong-Macao Greater Bay Area.
Whether interviewing CEOs from ABB, Danfoss, Decathlon, Maersk or Schneider Electric, I kept hearing different versions of the same conclusion. Many multinational companies are diversifying parts of their production networks, but few believe another location can match China’s combination of supplier density, engineering capability, logistics efficiency, manufacturing scale and infrastructure.
Increasingly, they describe China not only as one of their largest markets, but also as an innovation hub and strategic manufacturing base.
Chinese manufacturers are also competing less on costs than on innovation. Across industries from electric vehicles and industrial equipment to medical devices and consumer electronics, companies are investing more heavily in research and development, developing proprietary technologies and moving further up the value chain.
Conversations with executives have also shifted from labor costs toward innovation, engineering capability and commercialization speed. The focus is becoming less about where products are assembled and more about where ideas can be brought to market most efficiently.
None of this suggests China’s industrial upgrading is complete. High-end semiconductor design software, certain advanced medical technologies and stronger global brand recognition still require sustained investment and technological breakthroughs.
Perhaps the biggest misconception I encounter is the belief that China’s manufacturing competitiveness depends primarily on subsidies or inexpensive labor. Yet executives making big-ticket investment decisions rarely emphasize either. Instead, they point to reliable suppliers, experienced engineers, integrated industrial clusters, resilient logistics and confidence that production will continue even when uncertainty grows elsewhere.
Those capabilities cannot be replicated simply by relocating a factory in India, Vietnam and Mexico, or imposing another tariff. They are the result of decades of industrial accumulation, continuous innovation and close collaboration across entire supply chains.
As global businesses navigate geopolitical tensions and supply-chain restructuring, the conversation is becoming less about whether China remains the world’s factory. It is increasingly about how China is evolving into a source of innovation, industrial collaboration and system-level certainty.
Tanks to chinadaily.com.cn
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