Post by account_disabled on Feb 20, 2024 2:25:43 GMT -6
Western companies are slowly isolating their operations in China from rising tensions over trade and geopolitics between Beijing and the West, as governments call for greater “de-risking.” The notion, which has replaced the radical “decoupling” as a diplomatic buzzword this year, is a sign that the West is seeking a less adversarial approach to managing relations with China. But companies have yet to formulate clear strategies to give it substance, analysts say. While a small number of companies, such as American toy maker Hasbro, have announced plans to stop manufacturing in China entirely, the vast majority are still weighing their options, which range from partial divestitures to delayed spending decisions and ways to make their operations in China disruption-proof by making them serve only the Chinese market. “Europe is still thinking about what risk reduction is and how to implement it in practice,” said Agathe Demarais, senior policy researcher at the European Council on Foreign Relations.
Over the past year, the private sector has talked a lot more about localization strategies as a way to reduce risk, but it takes several years for the investment to bear fruit.” Beijing's pandemic lockdowns Job Function Email Database and Moscow's attack on Ukraine have intensified the sense of urgency as Western leaders worry about China's dominance in key supply chains, the potential for a showdown over Taiwan and trade hostility between Washington and Beijing. On Monday, EU Trade Commissioner Valdis Dombrovskis will meet Chinese officials to discuss the EU's growing trade deficit with China and the EU's anti-subsidy investigation into electric vehicle imports. You are viewing a snapshot of an interactive chart. This is most likely because you are not logged in or JavaScript is disabled in your browser. Signs of long-term changes in production are emerging. A report this year by the European Chamber of Commerce in China found that 11 percent of European companies surveyed had already reallocated investments away from China, while 22 percent had decided or were considering such a shift.
The first time since 2016, less than half of respondents planned to expand their operations in China this year. The American Chamber of Commerce in China found this year that 12 percent of American groups surveyed were considering moving their suppliers out of China, and another 12 percent were already doing so. “Most companies have no alternative to China,” said Trey McArver of consulting firm Trivium China, but “they have to find strategies to operate in a much higher risk environment.” Apple and Intel have allocated future investments to other countries, including India or Southeast Asia, while maintaining their plants in China, in a hedging strategy known as “China plus one.” But the most contemplated strategy is “China for China,” through which operations in China are reorganized so that they produce goods only for domestic consumption. Anglo-Swedish drugmaker AstraZeneca is drawing up plans to separate its Chinese subsidiary and list it in Hong Kong, partly to protect it from regulatory action against foreign companies.
Over the past year, the private sector has talked a lot more about localization strategies as a way to reduce risk, but it takes several years for the investment to bear fruit.” Beijing's pandemic lockdowns Job Function Email Database and Moscow's attack on Ukraine have intensified the sense of urgency as Western leaders worry about China's dominance in key supply chains, the potential for a showdown over Taiwan and trade hostility between Washington and Beijing. On Monday, EU Trade Commissioner Valdis Dombrovskis will meet Chinese officials to discuss the EU's growing trade deficit with China and the EU's anti-subsidy investigation into electric vehicle imports. You are viewing a snapshot of an interactive chart. This is most likely because you are not logged in or JavaScript is disabled in your browser. Signs of long-term changes in production are emerging. A report this year by the European Chamber of Commerce in China found that 11 percent of European companies surveyed had already reallocated investments away from China, while 22 percent had decided or were considering such a shift.
The first time since 2016, less than half of respondents planned to expand their operations in China this year. The American Chamber of Commerce in China found this year that 12 percent of American groups surveyed were considering moving their suppliers out of China, and another 12 percent were already doing so. “Most companies have no alternative to China,” said Trey McArver of consulting firm Trivium China, but “they have to find strategies to operate in a much higher risk environment.” Apple and Intel have allocated future investments to other countries, including India or Southeast Asia, while maintaining their plants in China, in a hedging strategy known as “China plus one.” But the most contemplated strategy is “China for China,” through which operations in China are reorganized so that they produce goods only for domestic consumption. Anglo-Swedish drugmaker AstraZeneca is drawing up plans to separate its Chinese subsidiary and list it in Hong Kong, partly to protect it from regulatory action against foreign companies.