Foreign Investment Strategy Shifts to High-Growth Industries

A new report from global professional services firm KPMG reveals that multinational corporations are increasingly turning to mergers and acquisitions (M&A) in electric vehicles (EVs) and biotechnology to deepen their strategic investments in China. This trend marks a significant evolution in foreign direct investment strategy, moving beyond traditional market entry to targeted sector consolidation.

Driving Forces Behind the Strategic Pivot

The shift is driven by several key factors, according to the analysis. China's dominant position in the global EV supply chain and its rapidly advancing biotech innovation ecosystem present unique opportunities for global firms seeking competitive advantages. By acquiring established players or promising startups, companies can gain immediate access to cutting-edge technology, specialized talent, and integrated market networks that would take years to develop organically.

  • EV Sector Appeal: China represents over 60% of global EV sales and leads in battery technology, making acquisitions crucial for securing supply chain resilience and market share.
  • Biotech Innovation: Heavy government investment in life sciences has created a fertile landscape for R&D partnerships and intellectual property acquisition.
  • Regulatory Navigation: M&A provides a structured pathway through China's complex regulatory environment while mitigating greenfield investment risks.

Long-Term Strategic Implications

This M&A surge represents more than financial investment—it signifies a deeper integration of global corporations into China's innovation economy. The strategy allows foreign firms to embed themselves within critical future industries while sharing risks and rewards with local partners. KPMG notes that successful deals increasingly feature technology transfer agreements and joint development programs, creating symbiotic relationships rather than simple ownership structures.

Industry analysts suggest this trend will accelerate as China continues to prioritize technological self-sufficiency under its dual circulation policy. The report concludes that for global firms, strategic M&A in these high-stakes sectors has become less optional and more essential for maintaining competitive relevance in both the Chinese market and worldwide.