European companies operating in China are increasingly re-evaluating their investment strategies in 2025. A recent survey indicates a growing pessimism regarding growth prospects in the region, attributed to economic challenges and evolving political landscapes.
The European Union Chamber of Commerce in China conducted a survey that reveals only 29% of companies are optimistic about their growth potential in China over the next two years. Rising home prices and declining consumer demand are impacting spending. Simultaneously, domestic Chinese firms are gaining a competitive edge through government subsidies.
To mitigate geopolitical risks, companies are diverting investments towards Europe. Some are adopting a "China for China" strategy, limiting their supply chains to the domestic market. Others are diversifying operations to Southeast Asia or Europe to safeguard against potential disruptions.