European manufacturing is exodus to China!
European manufacturing is exodus to China!
A group of European high-end manufacturing industries are moving out. This is also affecting a number of second and third tier cities in China, which may thus usher in a new round of industrial upgrading and change! This year, after all, we haven’t heard of warming Sino-European relations either, and the domestic market is not physically hot, so why is there a trend of European manufacturing heading to China? From January to August 2022, China's actual use of foreign investment grew by 20% year-on-year, and the actual use of foreign investment in high-tech industries grew by 33.6% year-on-year, which is more than twice the growth rate of China’s overall absorption of foreign investment during the same period, the most prominent of which is the high-tech manufacturing industry, which grew by 43.1%. The Germany-based Merck KGaA, Switzerland-based INEOS and France-based TOTAL, to name a few of the most prestigious multinational companies in Europe, have recently expanded their investments in China frequently, which has attracted the attention of government authorities.
It is true that European manufacturing is moving out. But why? In fact, the reason is very simple: Europe is in the midst of a violent energy crisis, which is the result of a war between Russia and Ukraine. The EU and Russia are imposing sanctions on each other, and the big one that Russia has put in place is to stop supplying gas to Russia. Bearing in mind that the EU's energy sources are mainly oil (35%) and gas (24%), Russia was already the EU’s largest third-party energy source and Europe’s largest gas exporter, accounting for around 45% of the EU’s gas imports. The stoppage of natural gas supply from Russia to Europe has directly led to a huge shortage of natural gas energy in Europe, and the price of natural gas has subsequently skyrocketed, and with it, the price of electricity has also started to skyrocket. The stoppage of natural gas supply from Russia to Europe has directly led to a huge shortage of natural gas energy in Europe, and the price of natural gas has subsequently skyrocketed, and with it, the price of electricity has also started to skyrocket. Any manufacturing industry is inseparable from energy and electricity, as it is the energy-intensive industry. In our impression, such high-tech manufacturing industry as chips is also very dependent on electricity resources, because the more high-tech and advanced the process is, the more electricity is consumed. It can be said that the energy shortage has already been a stranglehold of the European industrial manufacturing industry.
As long as the energy crisis remains unresolved, it will be difficult to say that European manufacturing will survive, so relocation is inevitable. And where will they flee to? Why China? The US is naturally a good place for companies to relocate, but it also has higher labor costs. South East Asia has cheap manpower, but it is nowhere near the size of our market in terms of talent pool, infrastructure development, industry chain completeness and market size. On the contrary, China, apart from the great development of old energy, has maintained a good relationship with Russia, Mongolia and the crude oil countries in the Middle East, and the energy prices have remained very stable, while the development of new energy has also stepped in the forefront of world. Moreover, in advanced manufacturing industries such as lithium batteries and new energy, the domestic market also has a basis for development and industry chain completeness. Though, at the moment, the reason for the outward migration of European manufacturing is the European conflict. However, in the long term, China is also the obvious choice for European manufacturing out-migration.
Admittedly, the circumstances this year has brought us a lot of negativity, but as we face the crisis, we also embrace many opportunities. Admittedly, the circumstances this year have brought us a lot of negativity, but as we face the crisis, we also embrace many opportunities. The world is not as good or as bad as we thought it would be. The important thing is that we are still on the path of progress! Jiayue is constantly advancing despite difficulties and doing a good job with every product. Jiayue will continue to offer a stable diaper export service. Jiayue standard and customized baby/adult/pet diaper, wet/dry wipes, sanitary napkins, under pad, and raw materials. We has a steady monthly export volume, we have a wealth of experience in exporting and brand development which has helped our customers to become well known locally. Jiayue provides OEM&ODM service, free design and samples. We are looking forward to cooperating with you with our professional service team and strong R&D team!
