EU Firms Keep China Factories Despite De-Risking Push

Jan de Vries · 2026-05-27

You've probably seen the headlines about the EU trying to reduce its reliance on China. But here's the thing: many European companies aren't actually leaving. In fact, they're doubling down. A recent CNBC report highlighted this trend, showing that despite political pressure to "de-risk," big manufacturers are expanding their operations in China. Why? Because China's supply chain is still incredibly efficient, and the cost savings are hard to ignore. For a company making everything from car parts to electronics, moving production to Europe or the U.S. would mean higher prices for consumers. And in today's economy, that's a tough sell. ### The Reality of De-Risking The EU's push for de-risking sounds good on paper. It's about diversifying supply chains so that a crisis in one region doesn't shut down production. But the reality is messier. Many European firms have spent decades building relationships and infrastructure in China. Walking away from that overnight isn't practical. Instead of leaving, companies are taking a middle path. They're keeping their Chinese factories running while also exploring options in places like India or Mexico. This way, they get the best of both worlds: low costs now and backup plans for the future. ### What This Means for European Startups If you're a European startup looking to incorporate or scale, this trend matters. The EU's regulatory environment is getting stricter, especially around data privacy and sustainability. But if you're manufacturing physical products, China still offers unmatched speed and scale. Consider this: a startup making smart home devices can prototype in China in weeks, not months. The same process in Europe might take three times as long and cost 40% more. For a bootstrapped company, those numbers are deal-breakers. ### The Cost Comparison Let's talk numbers. Manufacturing a mid-range electronic component in China might cost around $12 per unit. In the EU, that same component could run $20 per unit. For a company producing 100,000 units a year, that's a difference of $800,000. That kind of margin can make or break a young company. - **China manufacturing cost**: $12 per unit - **EU manufacturing cost**: $20 per unit - **Annual savings**: $800,000 for 100,000 units Of course, there are trade-offs. Shipping times from China to Europe can take 30 to 45 days by sea. Air freight is faster but costs 5 to 10 times more. Still, many startups find the savings worth the wait. ### A Quote to Keep in Mind "The supply chain is not just about cost. It's about trust, speed, and flexibility. Right now, China ticks those boxes for most European companies." This is the kind of thinking that's driving decisions right now. It's not about politics; it's about survival. ### What's Next for EU Inc? The EU Inc proposal aims to make it easier for startups to incorporate across Europe. That's a good thing. But it doesn't change the fact that many of these companies will still rely on Chinese manufacturing for years to come. The key is to build flexibility into your business model. If you're thinking about where to incorporate, consider [nofollow] your options carefully. The EU offers stability and access to a large consumer market. But if your product needs to be made cheaply and quickly, don't ignore the reality of global supply chains. In short, European companies are not abandoning China. They're adapting. And smart startups should do the same.