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Why Chinese companies are striving for Europe right now
In light of geopolitical tensions and drastically increased transport costs, more and more Chinese companies are orienting themselves towards continental Europe. Establishing new production and logistics sites there, being closer to European customers and at the same time circumventing punitive tariffs, but also seeking opportunities abroad amid intense domestic competition and local price deflation – that’s what it’s all about. This also results in interesting opportunities for European partners.
“We expect that in 2025, about 10 to 15 percent more Chinese companies will come to Central and Eastern Europe than in the previous year and open locations there,” says Jaromír Černík, Director Asia at CTP based in Hong Kong. Europe’s largest listed developer of business parks with a total of 12.5 million square meters of existing properties is recording increasing interest from Greater China, especially in locations in Central and Eastern Europe. “First and foremost is Hungary, where hundreds of Chinese companies are already based. This is followed by Slovakia and Serbia”, says Černík. CTP may soon announce a larger settlement from China in Hungary. Poland is also a very interesting and fast growing as a large market, but still has few companies from China. The same applies to Romania.
Increased transport costs as a driver
Specifically, the interest is aimed at setting up European sites where final assembly is carried out on the basis of components from China. “Especially Chinese automotive suppliers want to be closer to manufacturers (OEM) such as Audi or Volvo and are settling with factories in sequence“. In fact, according to Statista, the price for worldwide transports of a 40-foot container has developed dynamically by January 2025. At an average of around $3,860 on January 16th, 2025, the value was still well below the record high of around $5,937 on July 18th, 2024. But freight rates have been rising again since October 24th, 2024. “The disruption of logistics routes and the volatility in prices have made Chinese companies more cautious and motivated them to open a location in Europe,” says Černík.
Technology instead of employees
In order to manage labour costs, Chinese companies bank increasingly on automation, according to Černík. “In most cases, large machines and state-of-the-art technology are used to process raw materials and components imported from Asia. This significantly reduces the need for workers, comparing to the processes we saw a decade ago”, explains Černík. The first step is usually to lease a location for five years, whereby CTP provides the necessary infrastructure and space and can implement the desired concept for the customer in an identical manner in ten countries. If the first step proves to be successfu as time to market is critical, some may ask for purchase of a property afterwards, but most would seek derisked expansion in other countries.
Besides automotive, logistics plays a role
With regard to industries, the focus is on automotive, including Plastic Injection Moulding most recently in Slovakia or Battery Pack Assembling in Hungary. In addition, E-Commerce plays an incremenal role. “Such companies have a need for warehouses to store products and also logistics systems to serve the last mile”, says Černík. Moreover, CTP has also invested in brownfield properties, i.e. areas in need of renovation. In those locations where there is sufficient power supply, data centers could be built there.
Avoidance of punitive tariffs
In addition to near-shoring, geopolitical developments and the introduction of punitive tariffs also played a role for Chinese companies. The risk is to be reduced by setting up European locations. This approach is already known from Donald Trump’s first term in office, when some Chinese manufacturers moved part of their activities to a third country from which no or lower tariffs were due on exports to the USA. Changing products or intermediate warehouses in countries with lower tariffs was also a practiced approach at the time. Whether this will be repeated in the next few years is difficult to assess at the moment. However, the settlement of Chinese companies is now clearly visible, especially in Eastern Europe. “We see Chinese companies following each other. In Hungary, for example, it has developed like a snowball: if the first companies have had good experiences, others will soon follow”, says Černík. Local cooperation partners and service providers who support the development of the location can also benefit from this.
Board Journal – February 15, 2025
