Foresight 2026 Roland Berger China Annual Trends Report

By Denis Depoux

As part of our long-standing tradition, we are delighted to introduce our latest annual flagship report "Foresight 2026: Roland Berger China Annual Trends Report" (hereafter referred to as "Report") at the beginning of 2026. Based on our long-term observations and extensive research conducted by our experts across various sectors, this report provides trend analysis and in-depth insights into key industries, such as Automotive, Civil Economics, Consumer Goods and Retail, Health, Energy, Industrial Products and Services, and Technology. Additionally, this year's report delves into several major hot topics, including China's potential unleashed in a new world order, artificial intelligence, Chinese companies' international expansion, transaction and investor services, new quality productive forces, and sustainability, aiming to stimulate thought and provide valuable insights to industry stakeholders.

AI in Asia – Quo Vadis?

The landscape of artificial intelligence (AI) in Asia is rapidly evolving, with 2025 marking a turning point due to the rise of Chinese language models. While Asia has been somewhat quieter in the AI arena over the past few years, significant advancements are now emerging. Beyond China, most Asian economies are technology takers, and very pragmatically adopting relevant use cases, with an over-emphasis on digital marketing applications. While there has been a massive increase in interest in AI, especially Generative AI (GenAI), it is only starting to make its way into the industry. The next wave of transformation is the integration of AI into core operations such as R&D, manufacturing, and supply chain management.

The 'Go Global' Journey of Chinese Companies: From Scale Expansion to High-Quality Globalisation

• High-quality globalisation requires companies to elevate their operational and managerial capabilities to a new level.
• Building a truly "global company" demands focus on six key elements for success:
  1) Full leverage of strategic endowments and advantages; 2) Optimised utilisation of global advantageous resources; 3) Localisation of products and services; 4) Industry-leading and globally consistent management and rule systems; 5) Customised management and control models across regions; 6) Agile decision-making capabilities to swiftly respond to frontline market demands

The trend of globalisation has deeply penetrated China’s core industrial sectors: the electronics and electrical industry has established a comprehensive global network; the automotive sector’s export scale has risen to the largest in the world; China’s unique retail formats are rapidly expanding into emerging markets such as Southeast Asia; and domestic beauty brands have successfully entered Paris and other leading international hubs. The year 2026, marking the launch of the "15th Five-Year Plan," is neither the starting point nor the end of Chinese companies’ "Go Global" journey. Rather, it represents a critical juncture at which various industries as a whole are shifting from large-scale overseas expansion to high-quality globalisation.

Top companies have taken the lead in completing strategic upgrades, shifting from the traditional model of "In China, For Global" to a "Born Global" native approach with an inherently global ambition and planning. The evolution path of Chinese companies’ global competitiveness is clear: They are moving beyond the initial stages of exporting capacity, products and services, towards a breakthrough leap into the higher form of brand globalisation. Their core objective is transforming from simply "going abroad" to firmly "taking root" in overseas markets.

Turning the Corner: Value Reconfiguration Fuels China's Next M&A Leap

• Domestic M&A and Consolidation Regain Momentum Amid Industrial Upgrading
• Adjustments to MNCs' China Operations Create Carve‑Out Opportunities
• Chinese Companies' Accelerated Overseas Expansion Drives New Investment and Capital Partnerships

In 2025, China's investment and M&A market experienced a rapid recovery and underwent a profound structural transformation. In the first half of the year, the total value of M&A transactions exceeded US 170 billion, marking a year-on-year surge of 45 percent and demonstrating a positive market response. This growth reflects not only a rebound in volume, but also the increasing dominance of strategic M&A underpinned by deep industrial logic. Strategic transactions initiated by real economy companies in partnership with long-term capital became increasingly prominent. These deals focus on technology integration, industry chain security and market leadership, accounting for a significantly higher proportion than previous years.

Similarly, the exit side also witnessed a pivotal shift. Hong Kong's IPO market experienced a banner year, while the A-share market showed steady improvement. Together, they provided smooth exit channels for earlier investments and helped restore confidence in the "investment – exit – reinvestment" cycle.

Notably, private equity funds saw a marked increase in both the number of IPO exits and the level of returns, signalling a substantial improvement in capital liquidity. This year, the market presented a clear transition from broad scale-oriented expansion to a development path focusing on quality enhancement and structural optimisation, with industrial upgrading at its core.

Looking ahead to 2026, as China's economy gradually recovers, asset valuation adjustment will continue, momentum in Hong Kong IPOs is expected to remain strong, while positive market sentiment is set to persist. We have also identified four key investment and M&A themes worth sustained attention in the year ahead.

Change Management Cultivates New Quality Productive Forces: The Winning Strategy for Navigating Business Cycles

• Companies Pursue Transformation Through New Quality Productive Forces, Few Succeed
• Scientific Transformation Approach Key to Overcoming Complexity and Driving Effective Change
• Danaher Business System Emerges as Global Paradigm for Sustained Growth and Change Management
• Change Management Office at Core of Transformation, Backed by Organisation, Mechanism and Talent

Recently, China's export control over rare earth materials has drawn global attention to its manufacturing prowess. China accounts for 55 percent of global steel output, 60 percent of aluminium, 80 percent of tungsten, 40 percent of copper and 70 percent of cement. While this scale confers a significant advantage in manufacturing, it also exposes overcapacity and other challenges when demand or exports falter. In 2024, the total profit of China's industrial enterprises above the designated scale for statistics reporting fell by 3.3 percent year-on-year. Within this, the profit of ferrous metal smelting and rolling industry recorded a sharp 54.6 percent decline, while the petroleum, coal and other fuel processing sector shifted from profitability to loss.1 Industries generally face survival challenges due to weak demand growth.

Advancing Sustainability: Policy Guidance, Company-Level Innovation, and a New Global Landscape for ESG Compliance

• National Policy Sets the Direction for Sustainability Drive with Detailed Dual Carbon Targets and Measures
• Green Technology Innovation by Leading Firms Boosts Long‑Term Economic Competitiveness
• Chinese Firms Upgrade ESG Systems and Green Governance to Build Global Trust and Competitiveness

Automotive

At the beginning of 2025, Roland Berger's automotive team introduced the key theme of the year: "Automotive Industry Consolidation Accelerates: How to Survive, and How to Win", emphasising that while the automotive industry transformation is seemingly a "marathon" in the long run, addressing the short-term uncertainties of 2025 has become a pressing imperative for every business leader.

However, the short-term challenges and uncertainties in 2025 have exceeded expectations. In the domestic market, they began with a price war early in the year and followed by new disruptions brought by affordable models with advanced driver assistance systems. March saw intensive "anti-involution" discussions within the industry, followed by frequent autonomous driving safety incidents around mid-year. In overseas markets, it is from the escalation of tariff barriers in April, a series of newly issued policies by foreign countries, to another wave of global semiconductor supply disruptions in October.

Management teams in China's automotive industry have faced considerable shocks in both domestic operations and overseas expansion. They responded with ongoing adjustments throughout a year that proved both challenging and rewarding.

Fortunately, under the guidance and policy direction of the government, China's automotive industry has maintained steady development amid intense competition. It has gradually shifted from price competition to quality competition. After passing several significant milestones last year, the thriving Chinese automotive industry kept its development momentum in 2025: passenger vehicles' monthly production and sales have exceeded 3 million units for the first time in history, the monthly penetration rate of NEV once approached 60 percent, and Chinese brands' market share has stabilised above 60 percent, with its vehicle export volume continuing to rise. From the flourishing Shanghai Auto Show in April, to the stellar appearance of Chinese brands at the Munich Motor Show in September, and the forward-looking technology showcased at the China International Import Expo in November-China's automotive industry continues to make strides in technological innovation and brand upgrading, raising the bar for the global intelligent electric era.

China's automotive industry is advancing steadily with its development, transformation, and upgrades, along with accelerating structural optimisation and consolidation. In this marathon of transformation, we expect to see the continuation and progression of many changes in 2026, accumulating transformative energy for the industry in the long run. Looking ahead to 2026, we have summarised six key evolving themes that will profoundly impact every participant in the automotive industry value chain.

Civil economics

The year 2026 marks the beginning of China's 15th Five-Year Plan period and serves as a pivotal starting point for demonstrating the country's development certainty amid a globally uncertain environment. On one hand, it continues the strategic direction and policy momentum established in the latter half of the 14th Five-Year Plan, seeking progress while maintaining stability. On the other, it highlights a series of new development priority shifts: a transformation in urban development models, a transition from the growth of strategic emerging industries towards the construction of a modern industrial system, and a deepening evolution from technological innovation to industrial innovation. Together, these shifts reflect a clear prioritisation and a comprehensively coordinated, system-oriented approach to national development.

Consumer Goods & Retail

As the traffic dividend reaches its ceiling and the demographic structure approaches its inflection point, China’s consumer goods and retail industry is entering a profound "gearshift moment". The growth logic once driven by scale expansion, channel coverage and population growth has gradually lost its efficacy. Collectively, we are stepping into the deep waters of value creation, which requires more patience and refined operations.

Against this backdrop, the focus of industry competition has shifted from fighting for market share to creating meaning, from reaching audiences to managing user lifetime value. Consumers are no longer satisfied with products alone - they seek emotional resonance, identity affirmation and lifestyle solutions. Brands that remain confined to functional competition will inevitably fall into the downward spiral of "involution", which in today’s China means excessive zero-sum competition where companies invest ever‑greater resources without generating growth. At the same time, channel fragmentation, e-commerce platform diversification and the rise of experience-centric offline stores have formed a structural transformation for retail channels. It is reshaping the way people, products and places connect, driving companies to evolve from a sales mindset towards a user‑centric operating mindset.

We have identified 10 key trends that will shape the trajectory of the industry over the next three to five years. These trends do not exist in isolation; together they point to a central question: How, in an era of "fixed-size market competition", can companies continuously create irreplaceable value for users through product innovation, organisational restructuring and ecosystem collaboration? This is both an evolutionary challenge for survival and a journey back to the essence of business. Let us now open the door to these trends.

Health

Over the past several years, China's healthcare industry has entered deep waters shaped by structural reforms and cyclical forces. Amid far-reaching policy adjustments and fierce market competition, the sector has continued to move forward with resilience.

Looking ahead to 2026, a dual narrative is defining the industry's future landscape with unprecedented clarity. On one hand, the model of "greater standardisation, cost reduction and efficiency improvement, quality first" is becoming the bedrock for the industry's stable development. This demands that all participants operate within a compliant framework while pursuing the utmost operational efficiency and superior product quality. On the other hand, the shift towards a model that is "more stratified, value-oriented, as well as innovative and open" defines the transformative pathway for the industry's upward breakthrough. This direction is driving the differentiation and upgrading of the payment system, service models, product innovation and even health consumption mindset, thereby ushering in a new era of development centred on value creation and powered by innovation.

Energy, Water & Environment

As the 14th Five-Year Plan approaches its conclusion, the blueprint for the 15th Five-Year Energy Plan is gradually unfolding. The year 2026 will mark a pivotal juncture in China’s energy transition and its journey to address climate change. The "Dual Carbon" targets have moved beyond broad strategic declarations into a phase of detailed, market-oriented and deep-level implementation.

At the United Nations Climate Change Summit in September 2025, Chinese President Xi Jinping announced a new round of Nationally Determined Contributions, including the goal that by 2035, the combined installed capacity of wind and solar power will exceed six times that of 2020, striving to reach 3.6 billion kilowatts. This signals the beginning of a new chapter for the industry.

Policies, technologies and market mechanisms are now working in concert with unprecedented force to reshape the entire energy ecosystem in China. Roland Berger has systematically identified six critical trends and variables for 2026 to help Chinese energy companies navigate the industry cycle, seize first-mover opportunities, rebuild their competitive advantages, and stage a strong comeback.

Electronics & Electrical/Semiconductor

At present, the electronics and electrical market is accelerating towards higher performance, greater integration and enhanced intelligence. These trends are driving the dual transformation in the global semiconductor industry: a shift in technological paradigms and a restructuring of supply chain systems. The semiconductor industry has become the "industrial grain" underpinning strategic sectors such as the digital economy, artificial intelligence and new energy vehicles. Hence, its technology iteration and supply chain security have become decisive factors shaping the global economic landscape and influencing national strategic autonomy.

On one hand, Moore’s Law is approaching its physical limits, with process nodes at 2nm and below facing quantum tunnelling, thermal dissipation and other bottlenecks. On the other, the rapid emergence of applications including generative AI and autonomous driving is fuelling exponential growth in computing power demand, propelling the industry from a process-driven model to one powered jointly by new architecture and packaging technologies.

Meanwhile, the traditional ecosystem of global collaboration is being disrupted by geopolitical tensions. Technology blockades and resource export countermeasures are compelling enterprises to strike a delicate balance between efficiency and security.

Against this backdrop, the development paradigm of semiconductor enterprises has fundamentally shifted: To achieve sustainable growth, companies need to position the surge of AI computing power as their central growth engine and advanced packaging as the critical pathway, build a resilient ecosystem through developing proprietary technologies and establishing globalised supply chains, as well as leverage lean intelligent manufacturing processes.

The following sections examine five core trends, analysing the direction of industry transformation in 2026 and outlining corporate response strategies.

Industrial Products

In 2025, China's industrial products and equipment sector is entering a deep transformation phase characterised by electrification, AI transformation and systematisation. Driven by the joint influence of electrification and China's strategy of technology self-reliance, the focus of competition is shifting from capacity expansion to technological accumulation and full value chain collaboration. The reshaping of the global supply chain landscape is also accelerating the process of domestic substitution. Migration towards the higher end of the value chain, service-oriented transformation and decarbonisation have become the core dimensions for companies to build their competitiveness in the new era.

Against this backdrop, Chinese companies are guided by the strategic principle of "navigating deep waters with dual engines" to steadily build sustainable competitive barriers. "Navigating deep waters" signifies that the industry has entered a stage requiring intensive breakthroughs. Enterprises must achieve solid progress in the "deep-water zones" which calls for core technology advancement, cost efficiency improvement and supply chain resilience. Businesses need to leverage systemic capabilities to adapt to an increasingly complex competitive environment. Meanwhile, "dual engines" emphasises technology upgrading and operational optimisation as the twin drivers jointly propelling the industry's migration towards the higher end of the value chain.

On the one hand, new technologies such as electrification, automation and AI transformation are reshaping product architecture and industrial ecosystems, opening up fresh growth opportunities. On the other hand, amid intensifying competition in the market with limited growth, refined operational capabilities-including full life-cycle cost control, flexible supply chain development and enhanced organisational resilience – will be the critical pillars enabling companies to ride out cycles. The old growth model reliant on resource input and economies of scale is no longer sustainable. Companies urgently need to leverage digital tools to improve transparency in internal management, harness data and AI to boost operational efficiency and decision‑making capability, and complete systemic upgrades in governance mechanisms, organisational collaboration and resource allocation.

Looking ahead to 2026, as domestic substitution continues to deepen, electrification accelerates and AI applications move from pilot projects to large‑scale deployment phase, Chinese industrial products and equipment companies are expected to occupy a more commanding position in the new global industrial landscape. This leap from "quantity" to "quality" will not only provide a comprehensive test of their technological and managerial capabilities, but also demonstrate that China's industrial sector has embarked on a path of high‑quality growth.

Material & Process

Ongoing shifts in the global economy and technology are profoundly reshaping the development landscape of the mining, metals, chemicals and advanced materials industries. Geopolitical dynamics, industrial upgrading and the green transition are interwoven, reconstructing value chains and driving breakthrough innovation.

As resource-rich countries seek greater localisation of their industry chains, Chinese companies are accelerating the evolution of their overseas expansion models. For mining companies, navigating high-price cycles and pursuing lean management have become critical levers to strengthen their competitiveness.

Meanwhile, the rise of emerging industries is elevating the structure of materials demand. Client-centric model and "glocalisation" strategies are increasingly decisive factors for success. At the same time, ESG principles and circular economy concepts are propelling the rapid roll-out of renewable materials value chains.

Looking ahead to 2026, faced with new opportunities and challenges, companies in the materials and process industries must proactively embrace transformation, build systematic capabilities, and achieve sustainable, high-quality development.

Steel & Metal

With the advancement of human technology and society, demand for materials will continue to grow. By the middle of this century, global material consumption is projected to double compared with 2015, reaching approximately 190 billion tonnes, of which metal materials will account for 20 billion tonnes. The generation of solid waste is expected to rise by 70 percent compared with today, while greenhouse gas emissions from the materials sector will represent 66 percent of global emissions.

Consequently, the importance of topics such as the circular economy, decarbonisation applications and long‑life materials will continue to increase. Within the broader trajectory of the materials industry, ferrous and non‑ferrous metals, which are key components of the sector, are facing unprecedented challenges. Building on the foundations of traditional metal smelting and processing, we have identified five major trends shaping the future of the metals industry. These trends aim to help companies better anticipate industry developments, navigate cyclical shifts, and seize opportunities to recreate values, re-enhance capabilities and ultimately achieve the re-transformation of "turning stone into gold" under the new normal.

Technology

The global technology industry now stands at a critical crossroads as growth drivers shift and structures are being reshaped. Geopolitical landscapes are undergoing profound adjustments, technological revolutions are accelerating in their iterations, and global economic recovery is becoming increasingly uneven. These three macro trends are resonating and intertwining, propelling industries to move beyond traditional development paths and enter a new stage of "reconstructing order and reshaping value".

• At the technological level, the core logic of development has shifted from conceptual exploration to pragmatic implementation. Purely scale-driven expansion and speculative hype are fading into the background, while technology adaptation and value transformation serving genuine demand have become the future direction recognised across the industry.
• At the industrial level, supply-chain systems are experiencing systemic restructuring, moving from a paradigm of "efficiency first" to "balancing security and efficiency". Regional collaboration and ecosystem co‑creation are emerging as critical pillars to withstand uncertainty.
• At the market level, the dual drivers of consumer demand upgrading and industrial structural optimisation are reinforcing each other. The integration of new and traditional industries is accelerating. Cross‑sector competition coexists with collaborative innovation. These trends will give rise to entirely new industrial ecosystems and competitive landscapes.

In this era defined by transformation and opportunity, grasping macro trends and staying firm on core directions will become the critical prerequisite for businesses to navigate cycles and achieve sustainable development.

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