Chinese firms seek European base for factories amid trade tensions, tariffs

European industrial real estate developer CTP expects increased demand from Chinese firms that do not want to get caught in the trade war

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Chinese EV maker Nio has leased nearly 10,000 square metres of space from CTP in Budapest. Photo: CTP

Published: 2:00pm, 25 Dec 2024

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.”

Jaromir Cernik, the Asia director at European industrial real estate developer CTP. Photo: Handout

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.