European Firms Expand China Operations Despite EU De‑Risking Push

Steam cracker units at the BASF Zhanjiang Verbund site in Zhanjiang, Guangdong province, China, on Thursday, March 26, 2026.

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BEIJING — A new survey from the European Union Chamber of Commerce in China shows that more European companies are maintaining or expanding their supply chains on the mainland to stay globally competitive.

Nearly one‑third of respondents said they were increasing their presence in China, while 37 % reported no change to their supply‑chain strategy over the past two years.

The survey drew on responses from almost 300 chamber members collected between January and February, all of whom are familiar with their firms’ China strategies.

Overall, 68 % indicated they are staying in or expanding operations in China. By contrast, only 7 % said they are moving sourcing abroad or establishing alternative manufacturing bases.

“We don’t see de‑risking becoming a major theme,” said Jens Eskelund, president of the EU Chamber of Commerce in China. “If anything, European firms are becoming more dependent on China as a sourcing and manufacturing hub.”

Automation lowers costs

Cost remains a primary driver for European firms increasing production in China, the EU Chamber survey found.

Relatively low labor costs have long underpinned China’s role as a global manufacturing hub. As factories confront labor shortages, many are turning to automation at speed.

“The cost of labor, which might already be lower, is becoming irrelevant because of automation,” said Denis Depoux, senior partner and global managing director at Roland Berger, which helped design the survey.

“The level of automation compared with two years ago is mind‑boggling. You don’t see anyone relying on manual labor anymore,” he added, referring to a recent visit to a privately‑owned Chinese copper manufacturer.

Although automation can require higher upfront investment, factories ultimately produce goods faster.

For example, Chinese electric‑vehicle maker Nio operates a Chinese plant with 941 fully autonomous robots that can handle multiple vehicle models without workers on the production floor, enabling 24‑hour operation.

Roland Berger highlighted that this efficiency is supported by lower industrial energy prices and raw‑material costs in China. Quarterly price negotiations with suppliers and selective state subsidies often allow Chinese products to reach global markets earlier and at significantly lower cost.

About three‑quarters of EU firms in China said their local facilities are more efficient than operations elsewhere.

“In most industries today, you face at least one Chinese competitor—or an international competitor leveraging Chinese supply chains,” Eskelund said. “To compete on price and quality, you simply need to be part of those supply chains. It’s not merely a matter of wanting to onshore to China.”

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