NANJING: In the heart of China’s Yangtze River Delta, a city of just over 800,000 people has quietly written one of the most interesting chapters in the history of Sino-German economic cooperation.
How did Taicang, a county-level city in Jiangsu Province, come to host more than 560 German enterprises with a total investment exceeding 6 billion U.S. dollars?
Located just a 30-minute drive from Shanghai, Taicang has earned a reputation as the home of German companies in China. Thousands of German nationals live and work in the city, and German engineering is now woven into the fabric of the local economy.
German auto components manufacturer Schaeffler Group could shed light on the phenomenon. On its factory floor in Taicang, yellow robotic arms pivot with mechanical grace, placing precision bearings onto inspection lines. Trucks loaded with newly assembled auto parts roll out of the gates, bound for vehicle plants across China.
About three decades ago, Schaeffler, which is headquartered in Germany’s Bavaria, began its China journey in Taicang with a modest workshop of just 30 employees. Its growth since has been swift and far-reaching.
By the end of 2025, Schaeffler had expanded to 19,000 employees across China, operating six R&D centers and 17 factories. In Jiangsu — one of China’s manufacturing powerhouses — it has become the province’s largest German-funded manufacturer.
Its trajectory mirrors the broader story of German enterprises putting down roots in Taicang. Since the city launched formal cooperation with Germany in 1993, it has seen German firms multiply steadily. Today, their combined annual industrial output in Taicang exceeds 67 billion yuan (9.75 billion U.S. dollars).
“In the early days, many German engineers came to Taicang and provided us with hands-on guidance on manufacturing processes,” said Li Youmei, a senior executive at Schaeffler (China). When the company first arrived, China’s auto industry was still in its infancy. The apprenticeship-style transfer of expertise planted the seeds for technology localization.
Around 2005, Schaeffler established an intelligent assembly division, a mold center and a vocational training center in Taicang, marking a decisive shift.
“We were no longer simply importing technology. Rather, we began localized R&D and manufacturing,” said Lou Junfeng, head of a factory at Schaeffler’s Taicang manufacturing base. Today, more than 95 percent of the supply chain for Schaeffler’s automotive business in China is localized.
Such deep localization, Lou noted, is more than a market strategy. “It reflects trust in China’s manufacturing and research capabilities.”
That trust is also evident in the company’s green transition. Photovoltaic panels line factory rooftops, converting sunlight into renewable power. And inside workshops, digital energy systems track real-time consumption.
The Taicang base now operates on 100 percent green electricity for its production processes, achieved through solar generation and green power procurement, according to Yu Xiaomao, who works for the State Grid Taicang power supply company.
As the global auto industry accelerates its shift toward sustainability, Schaeffler has sought to enhance its competitiveness through decarbonization. “We worked with the company to design a full-cycle solution, from carbon accounting to renewable energy sourcing, helping cut emissions while upgrading operations,” Yu said.
According to Zhang Luoyin, deputy director of the Administrative Office of the China-Germany (Taicang) SME Cooperation Demonstration Zone, Taicang’s appeal extends beyond location. While its proximity to Shanghai offers logistical advantages, the city has also built an industrial ecosystem in which German enterprises play a leading role with the support of local suppliers.
More than 600 domestic firms have entered the supply chains of German companies in Taicang, while over 800 institutions collaborate with German enterprises in R&D, talent development and capital partnership, according to Zhang. Citing the auto industry as an example, he explained, “When 70 percent of a vehicle’s components can be sourced locally in Taicang, you know supply chain resilience has truly taken hold.”
Administrative efficiency has also reinforced the city’s pull. Zhang said that approval materials required for investment projects have been reduced by 40 percent, and processing times have been cut in half. More than 20 services organizations offering legal, financial or lifestyle support have established operations in the city to assist German businesses.
For Schaeffler, the Taicang base has become one of the company’s largest production hubs outside Germany. “Taicang combines efficiency with hospitality,” Li said. “Companies are willing to act as ambassadors for the city.” Schaeffler has repeatedly hosted supplier conferences in Taicang, drawing new partners to the region.
Looking ahead, Li said the next phase of the company will focus on helping its Chinese clients expand overseas, exploring a second growth curve.
She said that from “German technology” to “Made in China” — and now to “China R&D” serving the global marketplace — the partnership between Schaeffler and Taicang reflects more than just investment flows.
“It is a two-way journey, one that continues to reflect cooperation between China and Germany in an era of industrial transformation,” she added. –Agencies
