European companies step up efforts to decouple from China

European buyers are seeking to reduce their dependence on China, sourcing executives say, as the European Union increases scrutiny of goods from the world's largest export economy. "The big trend right now is for companies to reduce their dependence on China," said Richard Laub, chief executive of Belgium-based Dragon Sourcing, adding that while the US had taken the lead in decoupling European countries stepped up efforts to look for alternatives since the end of the pandemic. "Non-food [is] very, very dependent on China ... Those types of companies in Europe are pushing hard to look for alternatives," he added. "A lot of the European countries, you know, may not have any problems working with China, but they think that if China's going to be impacted, OK, they better also think about how it's going to affect them," said William Fung, deputy chair of Fung Group, which controls Li & Fung, one of the world's largest sourcing groups by revenue. "As a result, there will be more diversification away from China, even though China may be the most optimal place, you know, you can't afford to be optimal and wrong," he added. Naveen Jha, who runs a clothing and textiles sourcing business from eastern China's Changzhou, said that European businesses were sourcing an increasing share of their garments from India, Bangladesh and Vietnam, despite incurring longer lead times and higher costs. European companies have benefited from the price competitiveness of Chinese goods as US buyers have looked elsewhere, said Frederic Neumann, chief Asia economist at HSBC. But even so, he added, companies in certain chemicals, pharmaceuticals and electronics businesses are looking to reduce their China dependence.