Agencies
Chinese companies are increasingly looking to set up factories in central and eastern Europe to circumvent tariffs and business disruption amid heightening geopolitical tensions, according to a European industrial real estate developer.
Amsterdam-listed CTP anticipates a 10 to 15 per cent increase in clients from China next year, according to Jaromir Cernik, the company’s Asia director. CTP is Europe’s largest developer and manager of logistics and industrial real estate by gross lettable area, owning 12.6 million square metres of space across 10 countries.
Donald Trump’s return to the White House in January is also likely to reinforce the need to find locations outside the mainland as a hedge against more punitive measures that Washington is likely to impose on Chinese exporters, he said.
“So many Chinese suppliers work with BMW, Mercedes-Benz, Volkswagen and Volvo,” Cernik said. “These companies are mostly privately owned looking for expansion, looking for production facilities close to the final customer,” he said in an interview. “We call it near-shoring, ‘made in Europe, for Europe’. That’s why we have an office in Hong Kong.”Chinese electric vehicle (EV) makers are the most susceptible to trade barriers and tariffs, which will require them to locate production in the markets they want to serve. The European Union in October enforced import tariffs of up to 45 per cent on EVs produced in China. As a result, the value of EV exports to the EU fell 36 per cent year on year in November and volumes declined 23 per cent.
Although the tariffs are likely to lead to reduced demand for Chinese-made electric cars, the EU remains an attractive market for Chinese carmakers, according to research firm Canalys.
One of CTP’s clients, EV maker Nio, has leased a 10,000-square-metre facility in Budapest, Hungary, including nearly 600 square metres for an office.
Other Chinese companies that have leased space from CTP include Shanghai Huizhong Automotive Manufacturing and Yangfeng Automotive in Serbia, electrical component producer Shenzhen Uniconn and Xinquan Automotive Trim in Slovakia, and car parts supplier Ningbo Jifeng in the Czech Republic.
“We have two to three more deals that we closed in Hungary, but we have not officially announced yet,” Cernik said.
Cernik also believes Trump’s protectionist policies will indirectly benefit Europe.
“We expect more [Chinese] companies to locate directly in Europe because there will be a lot of trade barriers and logistics disruption,” he said. “So they will need to be closer to their customers and the Trump policy might mean that companies would be more willing to expand their production outside China.” With a presence in 10 countries in Europe, Cernik said CTP is well-positioned to meet the requirements of Chinese companies looking for a base on the continent.
“If you already are part of the global supply chain, you will not wait,” he said. Chinese companies will have a risk management plan in place, as they would not want to get caught in the crossfire of a potential trade war, he added.
As such, Cernik said several Chinese companies are currently scouting for locations and comparing the advantages of countries such as Serbia, Poland, Slovakia or the Czech Republic as their European base.
