European companies in China did not choose to “decouple”

International Business News  –  “China’s attraction to European companies outweighs tensions,” Bloomberg reported on the 18th, saying that European investment in China is still at a considerable level, and companies are looking for ways to deal with any threat of “decoupling”.

A few days ago, Germany’s Iver Institute for Economic Research released a report that envisages the loss of Western countries and China’s “decoupling” to both sides, and advocates reducing dependence on China. Bloomberg quoted another German think tank senior analyst Gunter as saying on the 18th, “If the definition of ‘decoupling’ is that foreign companies directly leave China, or at least significantly reduce their business in China and diversify their investment away from China, then this It definitely didn’t happen. In general, we’ve seen the opposite in most industries.”

EU investment in China in the first half of 2022 is up 15 percent from a year ago, according to Rhodium Group, an American economic research firm. Despite the recent weakness in investment, European companies have not pulled out of China as some feared. In fact, rising geopolitical tensions may even encourage companies to expand local production chains, analysts say. “We haven’t seen any large-scale exodus yet, and companies are still struggling to complete planned projects,” said Witzke, a research analyst at Rhodium Group. “At least for European companies, especially the big ones with significant interests in China. Enterprises, continue to complete the planned investments”, even with some delays under the epidemic prevention and control.

The report said that despite more than a year of tension between Europe and China, and the second quarter of this year in some Chinese cities of the epidemic prevention and control has affected demand, but the European exports to China is still flowing, the first six months of this year, the total value of shipments and last year basically the same. The Chinese market has been a financial savior for many foreign companies in recent years. The Chinese government brought the new crown pneumonia outbreak under control in 2020 and quickly reopened the economy, which grew by 8.1 percent last year, making up for the loss of recession and embargoes in other countries’ markets.

Many foreign companies believe that the gains in the Chinese market outweigh the losses. Earlier this year, BMW invested billions of dollars to open a new factory in Shenyang, Audi opened its first electric car factory in China, and Airbus’ local assembly line in China last month, the report said. Helped it secure more than $37 billion in orders. It is unclear whether this situation will change in the future, but for now, some European companies doing business in China have not opted for a radical solution like “decoupling”, but have adopted a “localization strategy”, that is, establishing local Supply chains and partnerships to avoid getting caught in the vortex of geopolitical risk.