Foreign firms double down on Pudong despite global uncertainty

Shanghai's Pudong New Area has signed four major foreign-invested projects, totaling 4.05 billion yuan, underscoring its growing role as a hub for multinational investment.

The projects, signed on Friday, are for the headquarters of Morimatsu, a biopharmaceutical production facility for Daiichi Sankyo, an integrated food industrial base for Yihai Kerry, and a new venture for Trafigura China.

Amid global uncertainty, Pudong is emerging as a key gateway to China's fast-evolving industries. Foreign firms are ramping up investments in sectors from electric vehicles to smart manufacturing, focusing on localization, digital transformation, and supply chain shifts – positioning themselves to innovate for China's market while also exporting from it.

Forvia Hella, the German auto electronics giant, has operated in Pudong since 1995. Its Shanghai site is now the company's largest global electronics manufacturing base, with revenue doubling over the past decade and with a sharp rise in domestic chip sourcing.

"Recent tariffs have raised short-term costs, but they're accelerating our transformation," said Bai Bingyi, executive vice president of Business Group Electronics APAC. "Five years ago, we worried about localization. Now, China's electronics sector is thriving."

The company recently launched an innovation hub in Pudong focused on smart mobility and autonomous driving.

"China is the world's largest auto market, and we're here to serve it," Bai said. "Global pressures are pushing us to localize faster – and that's an opportunity."

With 90 percent of its products tied to electrification and smart connectivity, the company's efforts align with China's policy priorities.

Louis Dreyfus, the global agribusiness giant, began diversifying its supply chains in 2018 amid rising trade tensions. It now sources from South America, Africa, and Southeast Asia.

"In today's uncertain world, businesses need anchors of certainty," said Chen Jiayuan, CEO of Louis Dreyfus North Asia. "China is the world's second-largest consumer market, and consumption is still rising – that's a clear certainty. China is also a leader in renewable energy, sustainability, and automation – trends we believe in."

The company chose Pudong as its North Asia investment headquarters in 2021 and opened a global R&D center there in 2022, which became fully operational the following year. It's now focused on sustainable innovation and strengthening its global procurement model.

"We've always been confident in China's growth," Chen said. "Pudong, especially with the free trade zone, offers policies that streamline trade and investment."

He added that initiatives like Shanghai's Three-Year Action Plan (2025–27) for bulk commodities trade will help "stabilize supply chains and mitigate risks."

Mahle, the century-old German auto parts supplier, has embraced localization as a long-term strategy. Since relocating to Pudong in 2004, its local unit – Shanghai Mahle Thermal Systems – has grown annual revenue from 200 million yuan to nearly 4 billion yuan. The company aims to increase its local supply chain coverage to 95 per cent.

"Trade frictions didn't start yesterday, we've been localizing for years," said Shen Liangyu, president of Mahle China. "Even components that still require imports may soon shift to domestic suppliers."

BASF is investing 500 million yuan to expand shock absorber production at its Pudong site, with completion expected in 2027.

"We believe in China's start-up climate and its auto industry, especially EVs," said Xu Yibin, BASF vice president and general manager of the Pudong site. "Our goal is to manufacture locally for local automakers."

With R&D, manufacturing, and sales now fully integrated in Pudong, BASF serves multiple sectors, including EVs, electronics, and consumer goods.

"The local innovation ecosystem and market scale are key reasons for our continued investment," Xu said.

Over 35 years of development, Pudong has become a prime destination for foreign capital, now hosting 28,000 foreign-invested enterprises from 175 countries and regions, including nearly 350 Global Fortune 500 projects. Pudong is also home to 484 multinational regional headquarters and 283 foreign R&D centers, accounting for 47.1 percent and 47.4 percent of the city's total respectively.