The flip-flop is spectacular. Considered for twenty years by Western investors as an unparalleled boon, China has been seen for several years as a risk. To the point that in 2022, the situation has reversed and it is now this risk that predominates in the eyes of many entrepreneurs. This is the main lesson of the latest annual “position paper” published by the European Chamber of Commerce in China on Wednesday 21 September.
The reason lies in a formula that appears at the top of the report: “Ideology trumps economics. » The maintenance of the zero Covid policy and the closing of borders, Beijing’s emphasis on self-sufficiency, the support given to Russia in the face of Ukraine – which makes an aggression against Taiwan even more likely, with geostrategic consequences but also unpredictable economic ones −, public opinion and therefore increasingly nationalistic consumers… All of this makes European investors worried, even suspicious. China is a country “less predictable, less reliable and less efficient”summarizes the report.
Although the vast majority of European companies present there do not plan to leave this country, which remains an incomparable market and industrial base, few are those who intend to increase their investments. Quite the contrary. Reducing its dependence on Chinese risk has become a priority for European firms. Despite additional costs and a temporary disorganization of the production chains, the industrialists of the Old Continent plan, for safety, to multiply the investments in the third countries rather than betting exclusively on the Chinese market.
Moreover, European investments in the Middle Kingdom are increasingly concentrated, reveals a study published by the Rhodium Group, a research organization, in mid-September. In 2013, the top ten European investors accounted for 40% of the continent’s investment in China. In 2019, this percentage reached 88%. It would have fallen to 70% in 2021.
Difficulty attracting talent
Four countries are doing well. First and foremost Germany (nearly 50% of European investments), followed at a distance by the United Kingdom, the Netherlands, then France. Concentration is also sectoral, with five main sectors: automotive, far ahead of food, pharmaceuticals, chemicals and consumer products.
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