European Firms Deepen China Manufacturing Ties Despite De-Risking Push
CNBC reported Tuesday that the majority of European businesses are holding or increasing their China manufacturing footprints, contradicting the EU’s stated push to reduce dependence on overseas production.
The findings come from a fresh survey by the European Union Chamber of Commerce in China. The chamber polled nearly 300 members between January and February on their mainland China supply chain strategies.
Survey Reveals Little Appetite for Retreat
Roughly two-thirds of respondents said they were either maintaining or expanding their China operations. Around one-third reported actively deepening their onshoring in China. Only 7% said they were relocating factory sourcing or building alternative manufacturing bases outside the country.
EU Chamber President Jens Eskelund told CNBC that de-risking is not emerging as a meaningful trend. He said European companies are in fact becoming more reliant on China as a sourcing and production location, not less.
About a quarter of respondents said they were pursuing a dual strategy, growing in China while also developing backup suppliers elsewhere.
Automation Reshapes the Cost Equation
Cost remains the central driver behind European companies China manufacturing decisions. China has long benefited from comparatively low labor expenses, but that edge is now being reinforced by rapid factory automation rather than replaced by it.
Denis Depoux, senior partner and global managing director at consulting firm Roland Berger, which helped compile the survey, told CNBC the pace of automation uptake in Chinese factories over the past two years has been dramatic. He noted that on a recent visit to a Chinese copper manufacturer, he saw virtually no workers on the production floor.
Depoux explained that while automation carries higher upfront costs, it accelerates output speeds substantially. Chinese electric vehicle maker Nio offered a concrete illustration. One of its China plants runs 941 robots that operate autonomously across multiple vehicle models around the clock without any floor workers present.
A Roland Berger report published in March also highlighted lower industrial energy prices, cheaper raw materials, and state subsidies as factors that allow Chinese-made goods to reach global markets faster and at lower price points.
Background: China’s Manufacturing Dominance Persists
China currently accounts for roughly 28% of global goods manufacturing despite years of US and EU tariff pressure. The European Commission has been stepping up scrutiny of Chinese trade practices, though Brussels did not respond to CNBC’s request for comment on the chamber’s findings.
Eskelund said that in most industries today, at least one competitor is leveraging Chinese supply chains. He argued that companies needing to compete on price and quality have little choice but to become part of those chains, regardless of political preference.
Three-quarters of EU chamber members said their China facilities outperformed their operations elsewhere on efficiency measures, underlining how structural advantages continue to outweigh geopolitical risk calculations for many firms.
