China

Multinationals Eye Production Shifts, China Blamed: ECB Survey

 

Dozens of multinational firms are planning to move production to so-called friendlier countries, according to a European Central Bank (ECB) survey, with China cited as the major worry in company boardrooms.

More than 40% of multinational firms surveyed by the ECB said they were looking to “near-shore”, or bring production closer to their point of sales.

Firms have increasingly discussed shifting production sites after the pandemic and Russia’s war in Ukraine disrupted value chains, but there has been little evidence of mass relocations.

Seeking on-the-ground confirmation, the ECB surveyed 65 major firms with a global footprint and 49% said they were looking to “near-shore”, while 42% wanted to “friend-shore” some operations, or move them to more welcoming locations.

 

Also on AF: China Allows Ant Group to Release Finance AI Products to Public

 

“As to those countries which posed – or could pose – a risk to supply chains in their sector more generally, two-thirds of all respondents cited China,” the ECB said in an Economic Bulletin article.

More than half of the firms sourced critical materials from a specific country or small number of countries, and nearly all said that these supplies now faced elevated risk.

“A large majority of these identified China as that country, or one of those countries, with all of them considering this an elevated risk,” the ECB added.

Near-shoring was already a tendency in recent years but friend-shoring is a new phenomenon as only 11% said they were already pursuing such a strategy in the past five years.

The European Union is still likely to be a loser in such corporate movements as the number or firms looking to move production out of the bloc remains larger than the number moving it in, and this could have a “significant” impact on employment.

The moves could also fuel inflation as close to half of firms said they expected the changes to result in higher prices, the paper added.

 

  • Reuters with additional editing by Sean O’Meara

 

Read more:

EU Denies China Decoupling Plan But Admits ‘De-Risk’ Aim

Big US Firms Should Disclose China Risks, Says Ex-SEC Chair

Biden to Warn US Firms to Expect Greater China Risks in Hong Kong, FT Reports

EU to Beef Up Japan Ties on Chips, AI to ‘De-Risk’ From China

 

 

Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.

Recent Posts

Nikkei, Hang Seng Dip on Israel-Iran Fears, China Stocks Gain

Escalating tensions in the Middle East put pressure on equities while gold and the US…

51 mins ago

China’s GDP Growth Seen Slowing in the First Quarter

Analysts expect first quarter GDP will come in around 4.6% on Tuesday, which would be…

2 hours ago

Floods, Droughts, Earthquake, Big Freeze Cost China $3.3bn

China’s emergency management ministry said the country had also been hit by a drought, sandstorms…

22 hours ago

China Slams ‘Biased’ EU Over Electric Vehicle Imports Probe

A Chinese industry body chief said Brussels’ investigation was ‘tainted’ and stacked against his country’s…

24 hours ago

US Lawmakers’ Fury Over Huawei’s Intel AI Chip-Powered Laptop

Republicans have hit out at the Biden administration over continuing supplies of high-end American tech…

1 day ago

Huawei Signals New High-End Smartphone After Mate 60 Success

Speculation has been growing for months about Huawei’s P70 model which is expected to be…

2 days ago