(Yicai) July 10 -- European firms spearheaded overseas investment in the Yangtze River Delta, a region of China known for its strong manufacturing industry, in the first half of the year, despite uncertainty around investing in the sector worldwide.

The region, which encompasses Shanghai and the provinces of Jiangsu, Zhejiang, and Anhui, secured 51 foreign-funded projects in manufacturing and research and development in the six months ended June 30, according to figures from global commercial real estate services firm Cushman & Wakefield. That was slightly lower than for the same period of last year.

Europe was the main source of investment, accounting for 35 of the 51 projects. Germany led with 20, followed by Italy (4), Sweden and France (3 each), Switzerland (2), and other European nations (3 combined). Investors also came from Japan (4), the United States and Singapore (3 each), as well as six other countries and regions.

The number of projects from Italy grew the fastest, likely reflecting increasingly close business ties between Chinese and Italian companies, He Chao, head of leasing and transactions for industrial real estate at Cushman & Wakefield China, told, told Yicai. He also noted a steady uptick in Swiss investment, with major projects landing in the Yangtze River Delta in each of the past three years.

Foreign investment is concentrating in three core sectors, namely automotive, health technology, and equipment manufacturing, He said, adding that larger projects are increasingly being sited in Shanghai, while smaller and mid-sized ventures are gravitating toward neighboring Jiangsu.

European carmakers are doubling down on China, according to Sun Jie, head of industrial real estate at CBRE China. “They believe that if they don’t build factories here, they’ll lose their future in this industry,” she said.

These companies are drawn not only by China’s vast market, but also by the chance to be directly involved in the country’s fast automotive evolution, Sun noted.

Cushman & Wakefield’s data also confirms Sun's observation. Among the 51 foreign-funded projects inked in the Yangtze River Delta in the first half, 14 were to do with vehicle production, parts, and supporting facilities, with nine settling in Shanghai.

Sun further noted that many foreign firms are setting up their global R&D centers in East China because the region has a deep engineering talent pool. This advantage is expected to continue for at least the next three to five years. Sun added that some recent potential investors she has contacted for R&D projects come from Italy, Germany, France, and South Korea.

Editors: Tang Shihua, Martin Kadiev