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22 December, 2025 – Most multinational companies (MNCs) operating in China are maintaining or increasing their investment and deepening localisation, even as they face slower short‑term revenue growth and tighter margins, according to KPMG's recently released 2025 MNC China Outlook Report.
The survey of 137 senior executives reveals that 75% of MNCs planned to maintain or increase their China investment in 2025, while only 1% report preparing to exit the market. At the same time, 83% have already localised or plan to localise key aspects of their China operations, especially manufacturing, supply chain and R&D. Yet only 52% forecast revenue growth in China for 2025, and 25% expect negative growth.
Despite this caution, multinational companies remain more optimistic about China than about the global economy. Looking ahead to the next three to five years, 64% are at least moderately confident in China's economic outlook, compared to just 42% who feel the same about global economic growth.
Michael Jiang, Head of Clients and Markets, KPMG in China, states,
Structural innovation and ongoing upgrades in the Chinese market are leading multinational companies to reassess their strategies in China. The report shows that MNCs remain confident in their long-term prospects in China. Increasingly, they are moving away from mere expansion and focusing on building sustainable profit models. Companies are investing in local innovation and digital transformation to enhance operational efficiency, optimise pricing, improve profit margins, and build strategic competitiveness in the Chinese market.
Over 90% of companies identify digital transformation as a core strategy in China
Amid intense market competition and a rapidly evolving technological landscape, digital transformation has become a key lever for MNCs to strengthen their competitiveness. The report indicates that over 90% of surveyed companies plan to (or have already begun) investing in digitalisation. Among their priorities, 52% are focused on enhancing data analytics, 46% are upgrading IT infrastructure, and 36% are actively investing in emerging technologies.
The use of artificial intelligence (AI) is also accelerating, with 58% of MNCs already using AI tools in their operations. At the same time, cybersecurity has emerged as a strategic driver for digital transformation in China. As MNCs seek to promote Chinese-developed technologies and AI capabilities globally, disparities in domestic and international cybersecurity standards are creating operational and compliance challenges. Bridging these gaps is crucial for maintaining trust and resilience. Companies must adjust governance frameworks, enhance cross-border cooperation, and integrate cybersecurity at every stage of innovation to achieve secure and sustainable growth.
Surge in mergers and acquisitions reflects confidence in investment in China
By industry, most MNCs believe that the Chinese economy will show significant recovery in the mid-to-short term, adopting a more optimistic outlook on revenue growth in China over the next three to five years.
Mark Harrison, Partner and Co-head of Multinational Clients, KPMG in China, states,
We have seen a significant increase in M&A activities among MNCs in China over the past six months, driven primarily by two key strategies. First, global MNCs are acquiring companies in high-performing sectors such as electric vehicles, medical technology, biotechnology, water technology, advanced materials, and robotics to tap into global business potential and fully utilise production capabilities. Second, in consumer-facing sectors, amid fierce local competition and challenging market dynamics, MNCs are pursuing vertical integration by acquiring distributors, agents, and OEMs to better understand and serve Chinese consumers.
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