Acasă » General Interest » Horváth: Two thirds of European companies want to relocate some of their business activities out of China

Horváth: Two thirds of European companies want to relocate some of their business activities out of China

9 February 2023
General Interest
energynomics

About 62% of representatives of companies included in a Horváth study, most of them from Europe, indicated that they have clear plans regarding relocation from China, and 54% have similar plans regarding relocation from the US.

Thus, two out of three European companies intend to transfer some of their business activities from China to other countries, and “westernized” Asian countries, such as India, Japan, Singapore, South Korea, Taiwan and Indonesia, are targeted to become markets instead of China. This is the main conclusion of the study “Deglobalization Tendencies” carried out last year by the management consulting company Horváth.

The majority of respondents in the study state that they will focus on capitalizing on business growth opportunities primarily in Europe (66%), then in Asia (47%), North America (37%) and South America ( 33%), while the outlook on markets outside Europe is becoming increasingly critical. Thus, 80% of managers and investors see the dependence on “foreign” markets as a negative aspect, 77% believe that these markets raise problems regarding risk management, and 78% find that these non-European markets have caused them difficulties regarding supply chains.

About 85% of respondents rate the cost of compliance with local regulatory requirements in foreign markets, particularly China and the US, as very high.

Instead of globalization, companies propose “localization” of value chains (from production to sale), which would translate into “production in China for the Chinese market or production in Europe for the European market.” Regionalization of businesses mainly considers activities related to logistics (52%), production (51%), sales (40%) and procurement (37%). Increasing diversification in procurement (from two or more sources) and security of companies’ delivery capabilities are rising on management’s agenda.

The Horváth study shows that 71% of respondents plan to develop their businesses in other markets and countries, for certain parts of their value chain, and in choosing these markets the most important factors are: political stability (56%), security of supply (54%) and sustainability (53%).

“Amid the recent economic turbulence, it is natural for managers of European companies, both suppliers and sellers, to look for new solutions for the rapid restructuring of global economic relations. More and more companies want to minimize dependencies, in order to increase their resilience and ensure continuity of supply. New, lower-risk sales markets that share the same values need to be developed, with Europe being a top priority. At the same time, sustainability objectives must also be taken into account,” says Kurt Weber, Managing Director, Horváth Romania.

The Horváth study, entitled “Deglobalization Tendencies”, was carried out last year by surveying 150 top managers from all industries, from 6 main European markets: Germany, France, Italy, Poland, Spain and Great Britain. The interviewed managers work for companies with annual sales of at least 200 million euros.

Leave a Reply

Your email address will not be published. Required fields are marked *