In a recent report, the strategists outline how China has shifted from relying on cheap labour to leading advanced industries such as artificial intelligence (AI), electric vehicles (EV), industrial robotics, and renewable energy.
Chinese manufacturers operate on product development cycles that are significantly faster than those of traditional European competitors. For example, while European carmakers often take four to five years to develop a new vehicle model, Chinese producers complete the process in one to two years.
To withstand this competitive pressure, European companies must increase their pace of innovation.
“If you want to keep up, you are going to be replicating those Chinese accelerated product cycles”, says Thomas Thygesen, Head of Strategy in SEB’s Equity Research unit.
Nordic companies are well-positioned
Nordic industrial firms are relatively well-positioned to navigate this shift. Many regional companies maintain active research and production operations in China, using intense local competition to sharpen global competitiveness. This approach allows firms to refine products under demanding conditions before expanding internationally.
However, investing directly in Chinese equities remains risky. Chinese economic policy prioritises rapid production scaling over corporate profit margins or domestic consumer spending, leaving industrial profits largely flat for over a decade.
Rather than buying Chinese stocks directly, SEB suggests focusing on established Nordic exporters that maintain strong sales within China while generating profits elsewhere.
“If you can identify the companies that are selling in China and holding their ground, then you have a good starting point for selecting a winning portfolio”, Thygesen says.
Europe faces structural hurdles, including fragmented capital markets and slower decision-making. In contrast, Nordic countries benefit from strong venture capital ecosystems, high innovation rates, and balanced welfare models. By accelerating integration and adopting faster development cycles, Europe can maintain its economic strength.
The full report is only available to SEB's equity research customers.