The “derisking” (“mitigation of risks”) with regard to Beijing, a new mantra of the European Commission – and now of the Biden administration – only half convinces European companies based in China. On Wednesday June 21, the new president of the European Chamber of Commerce in China, the Dane Jens Eskelund, told the press that “it remains conceptual”that the project “not yet mature” and that it is necessary “be more concrete”. His Shanghai deputy, Carlo d’Andrea, even criticized the European institutions for “See China through the prism of Ukraine”.
In fact, the members of this powerful lobby are worried about both the Chinese risk and the “China bashing”, or “China bashing”. “European public opinion has become so anti-Chinese that it has an impact on politicians and even on companies”, deplores a big European boss present in China.
If they criticize mezza voce the “derisking”, these business leaders do not deny that there is a Chinese risk. “Between the October 2022 Communist Party Congress emphasizing national security and self-sufficiency and the March session of Parliament emphasizing China’s openness to foreign investment, there is a contradiction and a great uncertainty”, observes Mr. Eskelund.
“No concrete sign of opening”
Moreover, the survey carried out by the chamber of commerce among its members shows that the “Chinese risk” is indeed a reality. In fact, 64% of business leaders who responded believe it is more difficult to do business in China in 2022 than before. A record level. The year 2022 was, in many ways, an annus horribilis: 30% of companies saw their turnover decrease, again a record.
Nevertheless, the relocation of activities outside of China remains a very minor phenomenon. Only 11% of companies would have transferred an existing investment abroad in China, and 8% would have finally decided to locate in a third country an investment initially planned in the Middle Kingdom.
Furthermore, decoupling is a reality, especially for IT departments and for management. Almost three-quarters of European companies based in China have located their data storage there to comply with Chinese law. Equally significant, both for security reasons and because they struggle to attract expatriates to China, 16% of European companies operating there now employ only Chinese people there. Even if it means moving their Asia headquarters to another country, notably Singapore. Result: there would only be 60,000 Europeans in China. A greatly reduced number.
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