Report: Siloing and diversification: One World, two Systems

Release: 9 January 2025
Based on EU Chamber member's survey and in-depth interviews, this report highlights the high cost to businesses and the economy as a result of companies being compelled to silo their operations in China.

Geopolitical and trade tensions, and China's self-reliance policies, coupled with growing domestic and global regulatory risks, are leading many multinational companies to separate certain China-based functions, or even entire operations, from those in the rest of the world. Some European Chamber members have invested considerably in this process so that they now resemble Chinese companies in all but name: they have localised their supply chains, workforce, sales and procurement functions, and have siloed their research and development, data and information technology systems, in an attempt to comply with evolving regulatory requirements and to be seen as a "reliable partner" both in the eyes of the Chinese authorities, and their local partners and customers.

This is a considerable trade-off: siloing gives rise to an increase of both overall costs and global compliance risks, as well as the need to have duplicate operations and production, ultimately resulting in inefficiency, reduced innovation capacity and a loss of international competitiveness. And while this may see their products being qualified as "made in China", it is not guaranteed.

Download the report: here
(free publication / name + email address)