The De-Risking Myth: Why European Tech and Industrial Giants are Doubling Down on China
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The Gap Between Policy and Practice
For the past two years, the political rhetoric emanating from Brussels and Washington has been centered on a single, urgent concept: ‘de-risking.’ The goal is a strategic decoupling—or at least a thinning—of the critical dependencies Western economies have on Chinese manufacturing. However, a new survey from the European Union Chamber of Commerce in China suggests that while policymakers are talking about exit strategies, the actual business community is moving in the opposite direction.
The data reveals a stark disconnect between geopolitical ambitions and industrial reality. Nearly 68% of surveyed European companies are either maintaining or actively expanding their operations within mainland China. Even more telling is the lack of appetite for relocation: only 7% of respondents reported moving factory sourcing outside the country or establishing alternative manufacturing hubs elsewhere. For the vast majority of EU firms, China isn’t a risk to be mitigated—it’s an ecosystem they cannot afford to leave.
“We don’t see sort of de-risking becoming a theme,” noted Jens Eskelund, President of the EU Chamber of Commerce in China. Instead, Eskelund suggests that European firms are becoming more dependent on China as a primary sourcing and manufacturing hub to remain competitive on a global scale.
The Automation Pivot
Historically, the allure of China was cheap labor. But the narrative has shifted. As China faces a tightening labor market and rising wages, the industrial sector hasn’t slowed down; it has simply evolved. The current competitive advantage isn’t found in the cost of a worker’s hour, but in the sheer scale of robotic integration.
Denis Depoux, a senior partner at the consulting firm Roland Berger, describes the pace of this transition as “mind-boggling.” During recent visits to privately owned Chinese copper manufacturing plants, Depoux noted that human presence on the production floor has vanished in some sectors, replaced by high-density automation. This shift fundamentally alters the cost equation: while the initial capital expenditure for robotics is high, the resulting speed and 24/7 operational capacity far outweigh the benefits of relocating to regions with lower human labor costs.
The electric vehicle (EV) sector provides the most visible example of this trend. Nio, the Chinese EV manufacturer expanding into Europe, utilizes factories where nearly a thousand robots operate autonomously across multiple vehicle models. This level of vertical integration allows Chinese firms to iterate products faster and at a price point that Western competitors, struggling with legacy supply chains and higher energy costs, find nearly impossible to match.
A Shift in Logistics Control
This industrial gravity is also altering how goods move across the globe. It is no longer just about where a product is made, but who controls the journey from the factory gate to the end customer. Michael Aldwell, executive vice president for sea logistics at Swiss shipping giant Kuehne+Nagel, has observed a trend where Chinese companies are seizing total control of the overseas supply chain.
In sectors like consumer electronics and batteries, the decision-making, shipping, and payment processes are increasingly centralized within China. When a Chinese supply chain organization is more mature than the destination market—which is often the case in rapidly evolving tech sectors—Chinese firms are opting to manage the entire logistics flow rather than outsourcing it to Western providers.
The Competitiveness Trap
The European Commission continues to scrutinize China’s trade practices, but for the companies on the ground, the choice is pragmatic rather than political. According to the EU Chamber, three-quarters of member companies found their Chinese production facilities to be more efficient than their operations anywhere else in the world.
This creates what can be described as a competitiveness trap. Because almost every major industry now has at least one Chinese competitor leveraging these hyper-efficient supply chains, European firms feel they must do the same to survive. In this environment, onshoring to China isn’t necessarily a strategic preference—it’s a requirement for price parity. As long as the combination of state subsidies, low industrial energy prices, and world-leading automation persists, the ‘de-risking’ push from Brussels may remain a theoretical exercise for the boardroom, while the actual factories continue to migrate East.
