Trade crisis: Western companies are withdrawing from China!

Trade crisis: Western companies are withdrawing from China!

In the context of rising tariffs and trade conflicts between China and Western countries, a large number of companies and their future prospects are at stake. The tariff-related developments significantly affect foreign companies, particularly Western firms, which have made high profits and increased their market share in China. The EU has expressed growing concern about China's economic power and sees it as a threat to the competitiveness of its industry. This is particularly clear from the rising tariffs, which make it more difficult for Western companies to access their countries of origin and encourage migration to alternative markets.

China has become a magnet for foreign direct investment (FDI) since the economic reforms of 1979, with foreign investment now reaching an impressive US$3.66 trillion. Over 400,000 foreign-invested companies are registered in China, employing more than 50 million people. Despite this positive outcome, Western companies are facing increasing pressure to move production abroad due to new tariffs and protectionist measures.

Withdrawal and reorientation

The trade war between the USA and China, which began in 2018 with mutual tariff increases, has far-reaching consequences. The US imposed tariffs of up to 25% on various products from China, forcing companies like Apple to increase their production costs and pass some of them on to consumers. Given this situation, many Western companies are already planning to relocate their production facilities from China to Vietnam and India. For example, Apple increased iPhone production in India by 7% in 2023, and Nike is investing more in factories in Vietnam and Indonesia.

This shift is in line with China's “Made in China 2025” strategy, which aims to support local companies in strategic sectors and fill gaps left by the withdrawal of Western firms. The need for Western companies to seek alternative and reliable supply chains outside of China is becoming increasingly urgent. Türkiye is highlighted as a potential location.

Additional challenges and dangers

The challenges facing Western companies include not only rising costs and market access restrictions, but also supply chain risks and intellectual property issues. Many analysts point out that a complete exit from the Chinese market remains difficult due to China's economic size and strategic importance. Geopolitical tensions therefore require flexible and risk-focused strategies in order to effectively meet the challenges.

In addition, the EU recently imposed additional taxes on electric vehicles from China to ensure fair competition. These tax measures are a response to Chinese companies benefiting from subsidies that give them competitive advantages in the European market. Concerns about competitiveness and the tense trade situation between China, the USA and Europe highlight the complexity of these international economic relationships and the defining trade conflicts that have developed over the last few years.

The significant challenges affecting many industries – including mechanical engineering, plant engineering, electrical engineering and chemicals – make it clear that the end of free trade is in sight. According to economic analysts, the availability of consumer goods could become further limited and prices could rise, weighing on the entire global economy and creating uncertainty.