Dutchman De Jong arrives on the back of a prolific season for FC Twente, in which his 25 goals made him the second-highest scorer in the Eredivisie behind Bas Dost - another Bundesliga newcomer, having traded Heerenveen for Wolfsburg.
Xhaka has established himself in Switzerland's midfield since making his debut against England last year, and turned down a call-up to their Olympics squad in favour of settling in with his new team-mates at Monchengladbach.
But after losing Marco Reus, Dante and Roman Neustadter from last season's first-choice line-up, Favre told kicker.de: "We have not improved the squad.
"We have lost three key players. Replacing this quality is not easy.
"They were our backbone. It is like Barcelona losing (Lionel) Messi, Xavi and (Gerard) Pique.
"We have signed young players who have played in Holland and Switzerland. It is one thing to play well there, but the Bundesliga is another matter.
"We must be realistic, they need time."