When foreign companies enter a local market, the first barrier they encounter before even their business plan may be the question of where the company originates. It is easy to expect that fully explaining investment scales and employment plans will dispel concerns, but a study released by Germany's ZEW on September 16, 2026, shows that factual misconceptions and preferences toward investors operate independently. Even when mistaken figures are corrected, evaluations of an investor's home country can remain unchanged.
In this study, German respondents estimated that China's share of total foreign direct investment was 33% on average. The actual share presented in the study was approximately 1%. In other words, they perceived China's share of investment as roughly 30 times larger than it actually was. However, this result stems from an experiment utilizing the 2023 innovation sample of the German Socio-Economic Panel rather than newly conducted public opinion polling in 2026. The recently released research results and the social perceptions at the time of the survey must be read separately to avoid excessively extrapolating judgments about the current market.
The Problem of Misunderstanding Numbers Versus Distrusting Counterparts
A total of 2,365 adults from 1,738 households participated in the survey. The researchers examined how perceptions change when facts are communicated by randomly providing information about investment shares. Providing this information reduced misconceptions about the scale of Chinese investment and brought about changes in evaluations of employment and innovation. However, it did not eliminate the preference gap based on the investor's region of origin when choosing between investment proposals where other conditions were compared.
This gap holds significant implications for companies expanding overseas. If a counterpart holds incorrect information, it is necessary to present accurate data. However, if the counterpart's concerns lie in long-term control or economic dependence, simply re-explaining the investment amount will not answer the question. How large a factory is built and who makes important decisions are separate issues, and how many jobs are created and who takes responsibility for those jobs during a crisis are not the same question.
Therefore, these results cannot be interpreted to mean that German consumers do not purchase Chinese products. The focus of the study is on perceptions of foreign direct investment and proposal selection, whereas the target of decision-making differs from everyday product purchases. Furthermore, directly applying the results regarding Chinese investment to companies from South Korea or other nations is inappropriate. The insight companies can derive is that information deficits and trust deficits must be treated as distinct management challenges rather than focusing on the advantages or disadvantages of a specific nationality.
Even the Same Employment Effects Are Evaluated Differently Based on the Investor's Background
In the study's choice experiment, even when other conditions were considered together, the likelihood of a Chinese investment proposal being selected was about 40 percentage points lower than an European Union investment proposal, and the difference from a United States investment proposal was about 20 percentage points. This is not a figure aggregating actual completed corporate acquisitions, but rather the result of respondents choosing among designed proposals. Nevertheless, it reveals a structural dynamic where economic benefits such as jobs and innovation cannot fully substitute for evaluations of an investor's background.
The way companies respond to this is often by promising greater benefits. This is an approach based on the belief that increasing the scale of employment or emphasizing contributions to the local community can change choices. However, as the scale of the promise grows, so does the burden of fulfillment. When demand falls short of expectations and investment scales must be adjusted, the gap between initial promises and reality creates new distrust. Offering difficult-to-execute conditions to secure acceptability results in bearing costs during the operational phase after crossing the threshold of market entry.
That is not to say there is no reason to explain economic benefits. What matters is the order of explaining benefits and control structures together. By presenting what kind of jobs and transaction opportunities the business provides to the region, and connecting this to the scope of decisions local organizations can make and who is consulted in the event of supply disruptions or worsening management, the subject of explanation changes. It is a shift from public relations that elevate abstract favorability to operational design that enhances the predictability of actual relationships.
Trust Is Built on Reversible Choices Rather Than PR Slogans
From the perspective of a local community or business partner welcoming new investors, the core risk is a situation where options diminish when unexpected events occur. If prices or conditions change after dependency on a single supplier has grown, the initial low cost may not serve as sufficient compensation. Declarations of long-term goodwill are less direct answers to such concerns than contract modification procedures, alternative supply possibilities, and handling principles in the event of business suspension.
For example, assuming a situation where a foreign manufacturing company begins its first transaction with a local partner, different risks are created between a method of monopolistically entrusting a large volume from the start and a method of verifying quality, delivery, and payment processing through limited items. The latter may experience slower initial scaling, but it provides both sides with an opportunity to observe actual behavior. Small-scale transactions themselves do not guarantee trust; what must be determined beforehand is what will be verified in tests and under what results expansion will occur, turning experience into the basis for subsequent decisions.
The distribution of local authority can be viewed from the same perspective. The mere existence of a local corporate entity does not automatically reduce on-the-ground concerns. If critical matters regarding customer complaints or workforce operations are all tied up in headquarters approvals, the decision-making structure experienced by the counterpart remains that of a distant organization. Conversely, clearly dividing the scope local managers can actually decide from matters that must be escalated to headquarters clarifies who can be held accountable when problems arise.
Providing Abundant Information Is Different from Answering Questions
The fact that providing information altered parts of perception in this study demonstrates the value of transparent explanation. However, distributing the same set of materials to all stakeholders may not be efficient. Workers may judge based on the future of jobs and skills, business partners on delivery and payment terms, and local communities on environmental burdens and business sustainability. Because the risks borne by each group differ even under the same investment plan, the units of information suited to their questions must also vary.
When explaining employment plans, presenting only the total headcount leaves unanswered which jobs will increase and what competencies are required. Announcing only the total purchase amount fails to reveal the items and qualification criteria in which local businesses can actually participate. Even when presenting environmental figures, the facility-wide improvement targets and the management of specific emission sources experienced by local residents can differ. Specifying the boundaries necessary for a counterpart's decision-making enhances the practicality of the explanation more than simply adding up large numbers.
It is also crucial to ensure that public relations and operations within a company do not make conflicting promises. If externally published supply chain localization targets collide with the quality and unit price criteria of the purchasing department, exceptions may repeatedly occur during execution. If expanding local employment is emphasized without being followed by training budgets or job design, recruitment itself may become difficult. Public messages must be crafted under conditions that execution departments can handle, including the responsibility to explain when modifications are necessary.
Performance Metrics for Overseas Expansion Must Be Divided into Further Stages
If management reads the fact that brand awareness has increased as a result of increased social acceptance, they may miss the timing to respond. Even if an investment plan becomes widely known, approval and opposition can grow simultaneously, and even if misconceptions decrease, actual contracting intentions may not budge. The difference between perception and choice shown by the study can be applied to corporate performance measurement as well. This involves recording whether facts were understood, conditions were accepted, and actual behavior followed as distinct stages.
In transactional relationships, the reasons for not moving to the next stage are often more useful than the number of attendees at an information session. The required investments vary depending on whether the barrier is price conditions, insufficient quality verification, or concerns about long-term supply stability. If price is the barrier, cost structures and delivery scopes can be adjusted, but if control is the issue, a lower price alone may not resolve it. Bundling these different reasons into a single low conversion rate leads companies to deploy misguided costs.
At the same time, caution is needed when simplifying trust into a single score. A response stating satisfaction with a current transaction and a choice to entrust critical operations over the long term do not represent the same level of trust. Furthermore, evaluations by local employees cannot substitute for evaluations by business partners or local communities. By tracking actual choices and their reasons starting from touchpoints where business risks are high, management can identify operational tasks to improve without having to perfectly quantify overall public opinion.
Management That Does Not Cover Region-Specific Concerns with a Single Headquarters Explanation
Standardization reduces costs in overseas expansion strategies, but standardizing explanations entirely can cause companies to miss specific local contexts. Even with the same facility investment, employment opportunities may be the primary issue in regions with weak existing industrial bases, while deepening dependence may be a greater question in regions already reliant on specific industries. Determining which situation is real requires understanding through local data and stakeholder inquiries, which cannot be replaced by simply translating messages that succeeded in another country.
Separating common principles maintained by headquarters from conditions adjusted locally allows a company to maintain consistency in its response while securing flexibility. The approach sets safety, quality, and commitment fulfillment as common standards while designing customer service authority or supplier development methods to match local conditions. However, creating conflicting promises across regions under the name of flexibility undermines trust in the long run. This is why a procedure to define modifiable ranges and record the reasons for changes is necessary.
In the short term, choices that quickly conclude contracts can conflict with choices that enhance long-term operational predictability. Monopoly conditions or large initial volumes generate immediate results but can also heighten a counterpart's concerns about dependence. Conversely, allowing substitutability and phased expansion clarifies the conditions under which a relationship can be maintained, even if initial revenue is small. Which approach is appropriate depends on the industry's investment payback period, supply alternatives, and the switching costs borne by the customer.
Materials Demonstrating Business Sustainability Must Include Failure Scenarios
When the problem of trust is broken down more specifically, expectations regarding normal operations and expectations regarding exceptional situations become visible. Business partners judge not only whether regular delivery deadlines will be met, but also when they will be notified if supply is interrupted. Employees may view not just hiring plans during growth periods, but also the procedures through which their opinions are heard when business is adjusted as important. Explanations that disclose only numbers from favorable situations leave the latter questions unanswered. Differentiating between situations difficult for a company to control and actions it can directly manage makes the scope of promises more realistic.
This distinction can also be reflected in the business plans of overseas subsidiaries. Instead of guaranteeing sales volume increases, methods can include setting deadlines and responsible persons for notifying supply issues, or specifying job transition and consultation procedures rather than promising to maintain all employment permanently. This differs from increasing phrases that reduce responsibility. It is the task of creating a basis for counterparts to judge what can be provided under given circumstances. The more specific a promise is, the more observable actual fulfillment becomes, preventing subsequent trust from relying solely on vague impressions.
Reporting systems between headquarters and local subsidiaries are prone to missing these fulfillment records. Revenues and expenses are regularly aggregated, but the number of times promised responses were delayed or repeated changes to supply conditions may be scattered. Conversely, business partners directly experience the process by which small changes accumulate. This may be why business performance viewed by headquarters and trust felt locally move in different directions. Managing the fulfillment of promises that do not immediately manifest as monetary values creates room to respond before problems escalate into contract terminations or conflicts.
A company cannot single-handedly resolve all concerns raised simply because it is a foreign enterprise. Factors beyond an individual company's explanations, such as interstate relations or industrial policies, also exist. Acknowledging those boundaries and focusing on transaction conditions and decision-making structures that the company can actually change is more practical. Rather than spending all public relations resources on unresolvable grand debates, accumulating consistent actions at the specific touchpoints experienced by customers and employees is more effective. The separation of information and preference demonstrated by the study also aids in making such resource allocation judgments.
For management evaluating whether to enter a market, the task remains to incorporate not only expected sales but also the time and responsibilities required to maintain relationships into investment plans. If costs such as personnel responding in local languages, supplier verification, and the handling of inquiries and disputes are omitted, business viability may appear better than it actually is. Conversely, if all such preparations are treated like short-term promotional expenses, they are the first to be cut under the pretext of slow initial results. Evaluating costs and benefits from the perspective of operational capabilities that enable market access allows for a sound judgment of sustainability post-investment.
The question posed by the German study goes beyond how to improve perceptions of foreign companies. It asks whether companies distinguish between accurately communicating facts and creating conditions where counterparts can bear risks. Misunderstandings of numbers can be reduced with information, but a lack of trust must be addressed through repeated actions and structures of responsibility. Companies creating sustainable opportunities in overseas markets are closer to those that design understandable relationships—including situations where promises might falter—rather than those that simply describe investment scales as massive.
