The manufacturing landscape in China has been significantly impacted by the ongoing US-China trade conflict and broader global economic downturns. As anticipated five years ago, trade tensions between the two nations persist, irrespective of changes in U.S. administrations. Structural imbalances in trade flow and market openness remain unresolved, prolonging uncertainty for American companies operating in China. The recent return of the Trump administration adds further unpredictability, making long-term planning for U.S. businesses even more challenging.

Opportunities for European Companies

While U.S. firms face growing risks, European companies may find strategic advantages in the shifting dynamics. Historically, Chinese manufacturers have preferred working with large-volume American buyers willing to pay premium prices. However, in the past year, we have observed greater flexibility from Chinese factories, including a willingness to accept smaller orders and technically complex projects. This shift presents an opportunity for European SMEs looking to establish or expand their sourcing operations in China. Additionally, raw material prices remain favorable, creating cost advantages for companies sourcing from China. However, businesses must be mindful of supplier stability, as manufacturers losing U.S. contracts may either shut down or pivot to new industries, posing potential risks for existing supply chains.

China’s Domestic Market & Supply Chain Strength

China’s government is implementing economic stimulus measures aimed at revitalizing domestic markets. As these policies take effect, Chinese businesses may shift focus toward domestic opportunities, potentially diverting attention away from international clients. Despite these uncertainties, China remains a dominant force in global manufacturing, accounting for over 25% of worldwide production. Its extensive, well-integrated supply chain for nearly all industries ensures that China will continue to be a competitive sourcing destination in the foreseeable future."Companies that stay agile and adapt to these evolving market conditions will be best positioned to capitalize on new opportunities while mitigating risks",says Per Linden,CEO of Scandic sourcing.

If you want to know more discuss with us at Scandic Sourcing: sourcing@scandicsourcing.com