Many companies from the European Union and South Korea gradually withdraw from China. This is because China’s economic growth is slowing down, and the United States and the European Union are reshaping global supply chains against China.
According to New York Times, this month, Chinese officials announced that the economy grew at its slowest pace since the early days of the pandemic. China’s strict Covid-19 policy has exacted a heavy toll on business. The company’s exports into China are no longer on the rise.
Moreover, unemployment is high, the housing market is in crisis, and nervous consumers are causing the Chinese economy is looking shaky. Many companies such as A.H. Beard and Adidas believe sales are unlikely to recover in China.
Tony Pearson, chief executive of A.H. Beard, said, ‘I certainly don’t see China returning to the rates of growth that we had seen previously.’
On August 1, The European Union Chamber of Commerce in Korea announced that 23 percent of European enterprises canceled or postponed their investment in China in the year’s second quarter.
According to a survey by the Federation of Korean Industries, 86 percent of South Korean companies in China answered that their investment environment is deteriorating compared to a decade ago. More than 38 percent of the respondents mentioned government risks, 20 percent discriminate, and 18 percent are U.S.-China trade disputes.
In recent years, more and more Korean companies are leaving the Chinese market. Typically as Samsung SDI closed two EV battery pack plants in China last year, and LG Electronics closed two plants there.
Instead, they focus on investing in the United States. Samsung Electronics will invest 17 billion dollars in Texas, SK Group is planning to invest 22 billion dollars in the U.S. Hyundai Motor’s planned investments are 10.5 billion dollars, and LG Group is 11 billion dollars.
Some experts said this investment trend would continue because the US and the European Union are resetting global supply chains to isolate China.