European Firms Deepen China Manufacturing Ties Despite De-Risking Push

CNBC reported Tuesday that most European businesses are holding firm or deepening their China manufacturing footprints, even as policymakers in Brussels push companies to reduce exposure.

A new survey from the European Union Chamber of Commerce in China found that 68% of respondents are either maintaining or expanding operations in the country. Just 7% said they were relocating factory sourcing or building alternative production bases elsewhere.

Survey Signals a Shift in Business Confidence

EU Chamber President Jens Eskelund told CNBC that de-risking has not taken hold among members. If anything, he said, European firms are growing more reliant on China as a sourcing and manufacturing location.

Nearly one-third of respondents said they were deepening their China supply chains further. Another 37% reported no change in strategy over the past two years. The survey drew on responses from close to 300 members collected between January and February.

A further 24% said they were pursuing a hybrid approach. That means expanding in China while also building alternative supplier relationships elsewhere.

Why China’s Manufacturing Edge Keeps Growing

Cost remains a central factor, but the drivers are changing fast. Denis Depoux, senior partner and global managing director at consulting firm Roland Berger, which helped compile the survey, told CNBC that traditional labor cost advantages are becoming less relevant.

Automation is replacing workers at a rapid pace across Chinese factories. Depoux said the difference in automation levels compared to just two years ago is striking. He noted a visit to a privately owned copper manufacturer where barely any workers were visible on the floor.

Faster production cycles and round-the-clock operations are the payoff. Electric vehicle maker Nio, which has expanded into Europe, runs one factory using 941 robots that operate fully autonomously across multiple vehicle models simultaneously.

A Broader Ecosystem Locks in Europe’s Dependence

China accounts for roughly 28% of global goods manufacturing, even as U.S. and EU tariffs have pressured supply chain decisions. That scale creates an ecosystem that is difficult to replicate elsewhere.

Michael Aldwell, executive vice president for sea logistics at Swiss shipping company Kuehne+Nagel, told CNBC’s Squawk Box Asia that Chinese firms are increasingly controlling supply chains end to end. Sectors driving that trend include electric vehicles, batteries, and consumer electronics.

The European Commission did not respond to CNBC’s request for comment on the survey findings. Brussels is reportedly intensifying scrutiny of China’s broader trade practices even as European companies quietly dig in deeper.

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