Not long ago, Shanghai hosted a global investment conference, launching a major campaign to attract businesses.
While the public’s attention is focused on first-tier cities like Shanghai, a small city has long since become a haven for foreign enterprises, particularly German ones.
Spanning just 809.93 square kilometers, this area is home to over 500 German companies and is hailed as the “Home of German Enterprises in China.” This place is Taicang, Jiangsu.
How has this small city in Jiangsu managed to attract so many German companies? And what lessons can third- and fourth-tier cities learn from its success?

Just how strong is Taicang?

Let’s first look at some data.
In 2024, Taicang had ten unicorn companies on the list.
In early spring of this year, the Mubell Green New Energy Vehicle Hub project, with a total investment of $100 million, signed an agreement to settle in Taicang. Once the project reaches full production capacity, it is expected to generate an additional output value of 1 billion yuan.
Over the past year, Taicang attracted $534 million in actual foreign investment and registered $337 million in German investment, including 39 new projects.
Perhaps most notably, this small city—covering just 809.93 square kilometers—has attracted 500 German companies to set up operations.
Here, German manufacturing enterprises account for 10% of the national total. In innovative industrial clusters such as new energy vehicle components, aerospace, and machine tools, total investment exceeds 6 billion yuan, with an annual industrial output value surpassing 60 billion yuan.
Six of Germany’s top ten machine tool manufacturers have established operations in Taicang; eight of Germany’s top 20 family-owned enterprises have invested in Taicang, and the number of “hidden champions” among German enterprises based in Taicang has reached 60.
It can be said that nearly half of Germany’s manufacturing sector has gathered in Taicang.
This has also become one of the regions in China with the highest concentration of German investment and the strongest development, with German enterprises achieving an output value per mu of 14 million yuan.

Why Taicang?

This story begins with the arrival of the first German company.
In 1993, Dr. Stamm came to China. After visiting more than a dozen cities, he was captivated by the small town of Taicang.
The cypress trees lining both banks of the Liuhe River reminded him of the Black Forest back home, and that sense of familiarity led him to decide to settle here.
Thus, Kern-Liebers, a family-owned business with a century-long history, took root in Taicang.
Since then, the company has expanded its investment 11 times. Today, with over 1,000 employees and 70,000 square meters of self-built factory space, it has become the “King of Springs” with an annual output value of 1.5 billion yuan.
Kern-Ribers is a microcosm of German companies choosing to locate in China.
Many German companies believe that manufacturing is better suited to quiet small towns, yet they also require convenient access to infrastructure—conditions that Taicang perfectly meets.
As the city along the Yangtze River and near Shanghai that is closest to the metropolis, Taicang’s downtown is only 50 kilometers from the center of Shanghai. The talent, capital, and logistics needed by enterprises all benefit from Shanghai’s influence and spillover effects.
Furthermore, the costs associated with land acquisition and construction standards for German companies are significantly lower in Taicang. German firms can create a more comfortable working environment with less capital.

With so many cities surrounding Shanghai, why do German companies specifically choose Taicang? This is likely due to the high-quality services provided by the local government.
Take the Taicang High-Tech Zone as an example. At the outset of its cooperation with Germany, it was not yet a national-level high-tech zone and could not offer tax incentives such as “two years of tax exemption followed by three years of 50% tax reduction.” However, it won over companies through service, adopting the principle of “hands-off when there is no need, but always ready to assist when needed.”
For instance, United Automotive Electronics’ top priority at the time was to begin production as soon as possible. The High-Tech Zone completed the construction of a 34,000-square-meter, high-standard factory building in just 10 months, exactly as requested.
Even at the height of the pandemic, when supply chains were disrupted, the Taicang government fully supported German companies in maintaining closed-door production. They established a “freight code” system and dispatched staff to provide point-to-point services for enterprises, guiding every truck from the highway directly into the factory.
As Taicang’s industrial environment gradually matured, one detail stands out.
In addition to German companies, dozens of foreign enterprises from the United States, Japan, South Korea, and other countries also proactively chose to establish operations there.
However, Taicang maintained a clear-headed approach. Recognizing that German enterprises’ high-tech nature and strong profitability aligned perfectly with its own development strategy, the city prioritized them in its investment promotion efforts.
As the number of German companies settled in the area gradually increased, these enterprises began to face common issues and share similar demands. Against this backdrop, the Taicang German Business Association (TRT) was established to provide a communication and exchange platform for German companies and the Taicang government.
Through this association, companies and families can directly address their concerns with the government, while policies and regulations are effectively communicated to the businesses.
To date, TRT has over 120 members, all of which are foreign-invested enterprises in Taicang, with German companies accounting for more than 95% of the total. Company representatives can also maintain close and frequent contact with senior government officials via telephone and other means.
Thanks to its natural geographical advantages and a favorable business environment, this small city has achieved the “Taicang Speed” in attracting German investment.
It took 14 years for the first 100 German companies to settle here; 6 years for the next 100; 5 years for the next 200; and less than 3 years to reach 400.
During this process, the number of “hidden champions” has also grown steadily, including Phoenix Contact—the global leader in electrical connectors; Schaeffler Group, a bearing giant; and Modivik, a world-leading manufacturer of thermoforming packaging machines.
These “hidden champions” are mostly technology-intensive enterprises that place high demands on workers’ skills and competencies.
To address the labor shortage faced by German companies, Taicang introduced Germany’s “dual system” for vocational training.
Simply put, this system allows students to study at vocational schools while completing internships at companies. This system has trained nearly 10,000 blue-collar technical workers for local German companies.

Is the Taicang model replicable?
In an era where cities across the country are competing to attract investment, where do opportunities lie for third- and fourth-tier cities?
Taicang’s approach provides a benchmark case study.
The first wave of German companies to settle in Taicang were attracted by its geographical proximity to Shanghai. However, there are many cities surrounding Shanghai, all of which have established high-standard development zones and are on an equal footing in terms of infrastructure.

With this “same-city effect” becoming increasingly pronounced, high-quality and targeted services are the key to success.
Taicang understands this well and has implemented precise, satisfaction-oriented services for the German companies that have settled there.
For example, from the initial site visit to the final establishment, the local government assigns a German-speaking staff member to liaise with the foreign-invested enterprise.
Managers of German companies can even communicate directly with the mayor and the Party secretary.
Furthermore, once a German company has established itself here, any intellectual property disputes can be resolved promptly and effectively.
Not only that, but Taicang also focuses on creating a living environment with a German flair, helping German companies feel at home here.
Ultimately, Taicang is simply doing practical work for businesses, helping German and local enterprises develop together—an approach that may be worth emulating.
Local governments can refine policies and regulations, improve administrative efficiency, and provide meticulous care for the companies that settle there.
From project negotiations to implementation and production, companies receive full government support and attentive service at every stage.
By fostering a business-friendly environment that encourages and retains companies, enterprises are not only able to enter the market but also to stay.
At the same time, Taicang places great emphasis on vocational education.
Following the German model, they have established dual-track vocational training centers. On the one hand, this provides talent support for German enterprises; on the other hand, it also boosts local employment in Taicang.
Local governments can combine the development needs of attracted enterprises with the revitalization of local science and education resources, such as cooperating with local universities to provide talent for local enterprises.
With the continuous development and shift of foreign investment, first-tier cities may no longer be the primary market; second-, third-, and even fourth-tier cities all have opportunities.
Success depends on human effort; only by focusing on the “same-city effect,” prioritizing the enhancement of urban capabilities, and delivering targeted services can cities take the initiative and stand out in the wave of investment promotion.