Multinational companies have built up a strong local presence in China in the past decades. Many of them  based their success on the “Old China Story,” which was mainly driven by the so-called “Three Carriages”  – consumption, investment, and net exports, along with other driving forces such as low labor cost, lax  environmental regulations, and high capital productivity. 

However, this “Old China Story” is over. Uncertainty and unpredictability have emerged as part of the  Chinese economy, and past advantages that contributed to economic growth are disappearing. 

On the other hand, bilateral (economic) relations have proven successful, yet controversies continue to  emerge in both bilateral relationships and the global context. The bilateral relationship between Germany and China is being reassessed by the German government in all areas as part of its “China Strategy,”  mainly due to political developments in China in recent years and Germany’s “turn of the century” in  foreign policy, sparked by the Russian war of aggression against Ukraine. The assessment of China in the  triad of the cooperation partner, economic competitor, and systemic rival is now a consensus among  political stakeholders in Germany, the EU, and among German businesses. It is equally agreed upon that  human rights violations are not compatible with the values of German companies. German companies are  considered model companies in China in social responsibility and sustainable business practices. Over  one million employees of German companies in China also serve as ambassadors in society for the values  German companies represent. 

In this context, multinational companies are now discussing the best ways to mitigate risks and better  engage in the Chinese market. Combined with Roland Berger’s profound strategy consultancy expertise  in global markets and major industries, and valuable testimonials from some representative member  companies of the German Chamber of Commerce in China, we jointly published this report on the Chinese  economy and multinational companies’ China strategy, under the understanding that there is a new China story, with a changed political, economic, and social environment. 

With this report, we revealed that even though the old China story is over, the fundamentals that have  made multinational companies successful in China remain. To better engage in the Chinese market and  maintain a competitive edge, it is crucial to develop new business models and mitigate risks to better fit  the “New China Story.”  There is a famous proverb from old Chinese wisdom – “when the winds of change blow, some people  build walls, while others build windmills.” Amid the changes and challenges of our time, success will ultimately go to multinational companies that can rapidly transform their engagement models and adapt to  the new conditions of the local markets.