EU companies’ greenfield investments in China will be delayed by German automakers in the second quarter of 2024, despite calls from European Union political leaders to “de-risk” economic ties with China. led by a rapid increase to record levels.
Greenfield investments – the creation of new companies and new facilities – soared to 3.6 billion euros ($3.9 billion) in China between April and June, according to consultancy Rhodium Group.
This is the highest level ever for a quarter and significantly exceeds the EU’s average quarterly investment of €1.8 billion from 2022 onwards. German companies accounted for 57% of total EU greenfield investment in China in the first half of this year.
The top five EU business investors were Germany’s Volkswagen, BMW, chemical giant BASF, Sweden’s Inka Group, which owns furniture retailer IKEA, and Dutch high-tech company STMicroelectronics.
Automakers will account for around half of all EU investment in China from 2022 onwards, according to Rhodium Group analysis. The splurge on greenfield sites is likely driven by companies’ desire to localize production. More and more companies are manufacturing “in China, for China” to protect China’s supply chains from geopolitical tensions.
This surge in investment comes despite escalating trade tensions between the EU and China, partly centered on the auto sector.
