Roughly one-third of European companies in China affected by Beijing’s expanding export control regime intend to diversify their supply chains, with firms concerned about supply chain disruptions, long delivery delays and rising costs, a new survey has found.
The European Union Chamber of Commerce in China found in a flash survey of 131 member companies that more than half expected to be hit by Chinese export controls, with the group calling for policymakers to find a long-term solution to provide businesses with stability and predictability.
Around 36 per cent of the affected companies planned to work with suppliers to develop capacity outside China, while 43 per cent had yet to decide how to adjust their supply strategies in response to the export control policies, according to the report.
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“China’s export controls have increased the uncertainty felt by European businesses operating in the country, with companies facing risks of production slowdowns or even stoppages,” said Jens Eskelund, president of the European Union Chamber of Commerce in China, in the report published on Monday.
Europe has felt a deep impact from China’s recent announcement of export control measures on a string of products, most notably rare earth elements that are vital to the production of hi-tech goods ranging from electric vehicles to fighter jets.
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Beijing announced in October that it would further expand its rare earth export controls, but suspended the introduction of the measures for one year after Chinese President Xi Jinping met US President Donald Trump later that month.
The report found 56 of the 131 companies that responded to the survey did not expect to feel an impact from China’s export control measures.