European firms need to abandon overreliance on China and US, chamber report warns

A new report recommends European companies avoid an overreliance on China or the US in their supply chains, as companies find themselves squeezed between Beijing’s preferential policies for local companies and Washington’s trade volatility.

The European Union Chamber of Commerce in China advised companies to “eliminate single-source dependencies on both China and the United States where possible” in its “Dealing with Supply Chain Dependencies” report released on Wednesday.

“We are probably only seeing the very tip of the iceberg when it comes to understanding dependencies,” the chamber’s president, Jens Eskelund, said at an earlier media briefing, at which he noted European industries’ deep reliance on Chinese inputs.

“I’m not even sure that Europe would be able to make toothpaste without China.”

While the strength of China’s industrial clusters means many global companies remain reliant on its supply chains to stay competitive, the report said the fallout from recent geopolitical shocks had underscored the urgent need to diversify away from single-country dependencies.

That scrutiny extends to the US, the report showed, with the Trump administration’s unpredictable use of tariffs and flip-flopping on trade deals leading some member companies interviewed by the chamber to view China as being comparatively more reliable.