The European Union Chamber of Commerce in China has released a report urging European companies to eliminate single-source dependencies on both China and the United States. It highlights how firms are squeezed between Beijing's preferential policies for local companies and Washington's trade volatility. The chamber stresses that recent geopolitical shocks underscore the urgent need for supply chain diversification.
The European Union Chamber of Commerce in China released a report on supply chain dependencies on Wednesday, advising companies to eliminate single-source dependencies on both China and the United States where possible. Chamber president Jens Eskelund said at an earlier media briefing: “We are probably only seeing the very tip of the iceberg when it comes to understanding dependencies.” He noted European industries' deep reliance on Chinese inputs, adding: “I’m not even sure that Europe would be able to make toothpaste without China.”
While the strength of China’s industrial clusters means many global companies remain reliant on its supply chains to stay competitive, the report said the fallout from recent geopolitical shocks had underscored the urgent need to diversify away from single-country dependencies. That scrutiny extends to the US, with the Trump administration’s unpredictable use of tariffs and flip-flopping on trade deals leading some member companies interviewed by the chamber to view China as comparatively more reliable.
Despite China's push for localization through initiatives like Made in China 2025, European firms face pressure from Beijing's preferential policies for local companies. Voices such as French President Emmanuel Macron and the German Economic Institute have also called for reduced dependencies. Companies like Dutch chipmaker Nexperia have felt the impact of supply chain disruptions. The report calls for diversification to enhance supply chain security.