China's advanced manufacturing is renewing the attention of foreign-invested companies for the country's manufacturing sector amid an innovation-led upgrade of the industrial chain.

"We see booming innovations in areas including the new energy vehicles, and connected and automated driving trucks in China, and we consider China a place to pursue the development and application of such future-oriented products," said Holger Scherr, president and CEO of Beijing Foton Daimler Automotive Co. Ltd. (BFDA), and head of the Mercedes-Benz business unit.

David Fan, executive vice president and China president of the Japan-based auto part supplier Marelli, also noted the growing innovation capabilities of the Chinese market, as one of the important reasons for the country's market and supply chain to hold an irreplaceable position to Marelli.

China's manufacturing sector has remained a land of opportunity for foreign-invested companies over the years for its manufacturing prowess and the most comprehensive industrial chain in the world. In 2023, foreign investment into the sector accounted for 27.9 percent of the total, up 1.6 percentage points from the previous year, official data showed.

This year, the country has put developing new quality productive forces, featuring high-tech, high efficiency and high quality, on top of its agenda.

The upgrade of industrial and supply chains is among the three aspects, which the development of new quality productive forces will cover, according to Zhang Qingjie, head of digital enablement and head of AI at KPMG China.

Some foreign-invested companies have already noticed the gradual repositioning of China's industrial chain, and are adopting a preemptive strategy to tap into the shift.

"We plan to promote a model of inverter compressor for heat pumps this year in Europe. The model is developed through a technology platform that we built in China, reflecting the change of Chinese market's core competitiveness from a comprehensive supply chain to an innovation-oriented one," said Xu Yang, president of Danfoss China, a Denmark-based energy efficiency solution company.

Xu said the company has been actively leveraging China's innovation capability and improving its smart manufacturing. In April, Danfoss will launch the construction of the second phase of their Haiyan campus in Zhejiang Province, east China, which is its largest manufacturing base in China, according to Xu.

The BFDA, on the other hand, said it would keep strengthening its research and development capabilities, and deepen the work with its Chinese tech partners in fuel-cell and other fields.

"The Mercedes-Benz truck plant obtained a plant permit for producing new energy vehicle products this year, which lays foundation for us to seize further opportunities of technology innovation," Holger Scherr said.

"BFDA must and wants to leverage the innovation edge of the Chinese market," he added.

Industry insiders believe that now is a good time for foreign-invested firms to ride the waves of China's development of new quality productive forces, which entails strategic opportunities for industries including artificial intelligence, internet, and new energy, among others.

China announced the launch of the "artificial intelligence (AI) plus" initiative at the annual sessions of the country's top legislature and top political advisory body, or the "two sessions," which wrapped up in March.

Zhang Qingjie believes multinationals could take the advantage of the cooperation with Chinese firms on digital economy and AI technologies to gain a better understanding of the Chinese market and its technological environment and share its innovation achievements.

"China's AI technology is on a fast track to make breakthroughs on its perception, deduction, and generalization abilities. It will prompt leapfrog development of the manufacturing sector in terms of production efficiency, quality control and cost saving," Zhang said.