Supply chain issues stemming from the war in Ukraine, added to strict measures and shutdowns due to COVID-19 in China, have caused the 23% of European companies operating in this country are considering the possibility of move to another place. This would mean that the number of European companies considering leaving China has doubled since the beginning of 2022.
We know this information from the report published this Thursday by the European Chamber of Commerce in China. This report consists of a impact survey that Chinese policy COVID-19 and the war of Russia in Ukraine on European affairs in China. Although respondents come from a wide range of sectors, regions and sizes, more than 90% said they were negatively affected due to current supply chain issues.
Continuing with the data, a 85% of respondents said they had difficulties in accessing raw materials and components, the 89% he said he had transportation difficulties said materials and components, leaving a 83% with international delivery difficulties. Indeed, since mid-March due to COVID-19, goods leaving the port of Shanghai have decreased by a quarter and road traffic in China has decreased by 40%. They also suffered 65% logistic interruptions due to the war in Ukraine and Russiamaking rail transport between China and Europe unviable.
European companies and China, a dystopia due to war?
To deal with the situation, several companies such as Foxconn, Tesla and SMIC have chosen to impose closed-loop systems in their factories in which employees live and work in the factory itself to maintain production In progress. In some cases it worked, but in others, like in foxconThe COVID outbreaks among employees has caused multiple closures.
“The introduction of stricter containment measures for COVID-19 in 2022, coupled with China’s imposition of full or partial shutdowns in at least 45 cities, is causing enormous uncertainty for businesses,” the Chamber said. .
“Our members are ready to weather the current storm, but if the current situation continues, they will of course increasingly assess alternatives to China,” said Jörg Wuttke, President of the European Union Chamber of Commerce. . “A predictable and functioning market is better than a market that, despite its high growth potential, is volatile and suffers from supply chain paralysis.”
Chinese tech executives expressed concern over this very result, warning the public of “serious consequences and losses“if the country’s strict lockdowns continue and factories remain closed.
via: The Registry