European companies consider shifting out of China

Nearly one in four European companies in China are considering shifting their investments out of the country and redirecting them to other countries – Bloomberg reports, citing data from a survey conducted by the EU Chamber of Commerce. It is noted that 16% of the surveyed companies are considering relocating to Southeast Asia, 18% - to the countries of the Asia-Pacific region, another 19% are looking for locations in Europe, 12% - in North America, and 11% - in South Asia. At the same time, 78% of respondents have complained that the business environment in China has become less attractive due to COVID restrictions.

In turn, the European Union Ambassador to China, Nicolas Chapuis, said that European companies are “delaying decisions” on new investments, but so far “nobody is leaving China.” According to the politician, now everyone is waiting from Beijing for an exit strategy for Covid restrictions. And recently, Beijing has begun easing some coronavirus restrictions.

The relations between European countries and China have always been balanced and predictable. However, last spring, the EU imposed restrictive measures against Beijing, accusing it of “systematic human rights violations.” China responded with sanctions against 10 European politicians and scientists, as well as four EU entities, criticizing Brussels for interfering in the affairs of the Xinjiang Uygur Autonomous Region.

Furthermore, the relations between the EU and China have become more complicated amid the Ukrainian crisis. Brussels has required Beijing to take the side of the West and not to assist Moscow in evading sanctions. There are also growing fears that China itself may be subject to sanctions due to the development of the situation with Taiwan.

Recently, more and more production facilities have being established or transferred to the countries of South and Southeast Asia – Vietnam, Malaysia, India, Indonesia, Pakistan. At the same time, China was preparing for leaving by Western companies. Over the past years, Beijing has either completely bought out Western and joint ventures, or expanded its share in their capital.