More than a third of European companies in China are considering diverting part of the supply chain outside the Asian country, to mitigate the impact of export controls implemented by Beijing.
According to a survey released on Monday by the European Union Chamber of Commerce in China, 36% of companies are considering developing supply capacity outside China and 32% plan to obtain input from other markets, while 43% have not yet made a strategic decision.
The survey, carried out between November 6th and 24th with responses from 131 companies, reveals that the majority have already been affected or expect to be affected by Chinese measures, which cover rare earth minerals, lithium battery technologies, superhard materials and extraterritorial controls on products that incorporate components processed in China.
According to the report, the most immediate impact is on delivery times: 40% of respondents indicated that approval procedures added more than two months to supply times, while another 34% reported delays of between one and two months.
The difficulties center on the process of applying for an export license with the Chinese Ministry of Commerce.
Almost 40% complained about the lack of transparency, 21% considered the requirements unclear and 40% stated that requests exceeded the official processing limit of 45 days established by the authorities.
Some companies have expressed concern about the amount of sensitive information they must provide, including intellectual property.
The problems do not end after the license is granted: 42% reported additional delays at customs and 26% said the obstacles added a week or more to the shipment of previously authorized goods.
Supply disruptions are affecting both exporters with factories in China and European producers who rely on Chinese parts or equipment.
The document states that 60% foresee “moderate or significant” interruptions if all announced controls are fully implemented, and 13% fear total production interruptions.
Chamber President Jens Eskelund warns that Chinese authorities have “added uncertainty” to the operations of European companies, coinciding with a period of trade friction between Beijing and Brussels.
The institution’s vice-president, Stefan Bernhart, recommended the establishment of a “general licensing system” in the short term, which would provide “much-needed stability and predictability”.
In April, Beijing imposed restrictions on several categories of rare earth elements and derivatives, which led some European companies to temporarily halt their production lines.
Despite the partial suspension of certain measures following the November summit between China and the United States, part of the control regime remains active and continues to affect supply chains.
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