In our work with European companies, we still see many treating China as an “option” — or deliberately avoiding it altogether. That is a strategic blind spot in their corporate strategy. Viewed from a business perspective, in almost every technology-driven sector — from mobility to energy, from digitalisation to AI — China is present on one of three levels: as a competitor, as a partner, or as a supplier.
We should view China not just as a geographic market or political factor. It is a system — an innovation ecosystem, a manufacturing hub, a technological powerhouse, and a geopolitical actor all at once. For companies focused on growth, innovation, and strategic autonomy, one truth applies: even if you are not active in China, China is already active in your world.
“Know your enemy and know yourself, and your victory will be painless.“
China as a competitor
Chinese companies combine scale, speed, and state support to enter new markets at record pace. Consider their dominance in solar energy (80% of global production), batteries, EVs, and hardware platforms. We see how European start- and scale-ups are increasingly confronted with Chinese competitors that are not only cheaper, but also faster, better integrated, and better financed. After Northvolt’s setbacks, for instance, CATL is expanding battery factories in Germany, Hungary, and Spain — directly challenging Europe’s ambitions to build its own clean-tech base.
The question is therefore not if you will face Chinese competition, but when — and whether your business model is built to withstand it.
China as a partner
At the same time, China offers unique opportunities for those who want to accelerate. It is the world’s largest test market for new technologies, home to a strong maker culture (notably in Shenzhen), and an ecosystem where hardware, AI, and data converge. Companies can prototype faster, scale faster, and learn from business models that may not yet be viable elsewhere. The key, however, is selective cooperation — engaging without transferring strategic technology.
Smart companies know where collaboration creates value, and where their core intellectual property must stay protected.
China as a supplier
Even without direct operations in China, your company is likely dependent on Chinese suppliers. Whether in raw materials (lithium, rare earths), components (chips, inverters, modules), or semi-finished goods, China is deeply embedded in almost every global supply chain.
This dependence is often not fully visible — and therefore more risky. Geopolitical tensions, export controls, or ESG issues (forced labour, environmental standards) can directly impact production, compliance, and reputation.
From absence to awareness
Many business leaders still say: “We don’t do business in China, so we face no risk.” It may feel unnecessary to invest in understanding China if it’s not a target market. Yet precisely because you’re not active there, you risk being absent from the developments shaping your sector.
We’ve long viewed China mainly as a supplier or customer. In reality, it is also a formidable competitor. As Sun Tzu wrote: “Know your enemy and know yourself, and your victory will be painless.” Too few companies apply that mindset proactively and give China a proper place in their corporate strategy.
Key questions for your corporate strategy
Based on these insights, we believe every corporate strategy — especially for innovative firms — should answer at least three questions:
- Where are you exposed to China (directly or indirectly)?
- How can you collaborate without becoming dependent?
- And how do you differentiate to remain relevant next to Chinese players?
Conclusion
China is not a binary choice between being present or absent. It is a dynamic landscape that demands a deliberate, nuanced strategy. Together with our clients, we peel back the layers of this question step by step — viewing China as a benchmark for speed and innovation, a risk in global supply chains, a strategic factor in market positioning, and a source of lessons for new business models.
China should have its place in your corporate strategy — not out of opportunism, but out of realism.
Picture: originating from VCG
