Asian firms shift investment towards Europe in supply chain ‘realignment’, ING says

Asian companies, particularly those in China, are undergoing a structural transformation in their supply chains, with many redirecting investments towards Europe amid a decoupling from the US, according to a senior banker at ING.

As Washington continues to negotiate with trade partners, companies active in the region – both local and international – recognised the need to diversify their supply chains, said Uday Sareen, CEO and head of wholesale banking for Asia-Pacific at the Dutch bank.

“We see a structural change in supply chain realignment,” he said in an interview, noting that ING had collaborated with over 700 international corporations and a similar number of Asian firms across various sectors in the Asia-Pacific region. “The US tariff scenario is a significant component of costs for manufacturers and the supply chain.”

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Chinese foreign direct investment (FDI) in the EU and UK jumped 47 per cent to €10 billion (US$11.7 billion) in 2024 from a year earlier – the first significant rebound in Chinese investment in Europe since 2016, according to research provider Rhodium Group’s China cross-border monitor.

The two markets’ share of total Chinese FDI last year rose to 19.1 per cent from 15.4 per cent in 2023. The US attracted less than €2 billion or 4 per cent of global Chinese outbound FDI in 2024.

Projects related to electric vehicles (EVs) led the tally in Europe, pulling in €4.9 billion, or 83 per cent of all Chinese greenfield FDI last year. Greenfield investment means building new business operations from scratch, rather than acquiring existing firms.

Among notable ongoing Chinese investments in Europe, Contemporary Amperex Technol­ogy, the world’s largest EV battery producer, is expected to begin production at its €7.3 billion factory in Hungary at the end of 2025. BYD’s first EU factory, in Hungary, is due to start production next year. The world’s largest EV maker is also building a plant in Turkey, taking advantage of the nation’s EU customs-union agreement.

Chinese makers of home appliances and consumer electronics have also made moves in Europe, with Haier’s takeover of Carrier’s Dutch refrigeration business division for €716 million and Midea’s sales in Europe rising.

(L to R) ING’s Uday Sareen, Asia-Pacific CEO, and James Poon Kai-leung, mainland China and Hong Kong country manager, pictured in Hong Kong on September 11, 2025. Photo: Jonathan Wong alt=(L to R) ING’s Uday Sareen, Asia-Pacific CEO, and James Poon Kai-leung, mainland China and Hong Kong country manager, pictured in Hong Kong on September 11, 2025. Photo: Jonathan Wong>

“The US gets a lot of attention,” Sareen said. “But the corridor between China and Europe in the EV and battery sectors grew in the past 12 months. Two-thirds of global trade has nothing to do with the US.”

“This [US-China] decoupling creates the realignment and reshifting of the supply chain,” he said. Apart from Chinese companies diversifying into Europe, Asian companies in sectors such as electronics, pharmaceuticals and automotive were pursuing a “China plus one” strategy to strengthen their supply chains, Sareen added.

These trends, along with a rising demand for digital transformation and infrastructure, were expected to continue and fuel deal activity, he said.

On Wednesday, e-commerce giant Alibaba Group Holding announced plans to launch its first data centres in Brazil, France and the Netherlands, with additional data centres to be added in Malaysia, Dubai, Mexico, Japan and South Korea in the coming year. Alibaba owns the Post.

“Fluctuations in foreign exchange and interest rates are very relevant concerns of customers,” said James Poon, ING’s country manager for mainland China and Hong Kong. Use of the bank’s transaction services and trade finance has risen amid growing customer demand to expand into Europe and Southeast Asia, he added.

Across Asian markets, ING increased its headcount by nearly 10 per cent in the past two years, including hiring around 60 bankers to gain more sector and product expertise, Sareen said.

Revenue from ING’s Hong Kong and mainland China businesses accounted for almost a fifth of the total Asia-Pacific market, and mainland China recorded double-digit growth last year, he added.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2025 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2025. South China Morning Post Publishers Ltd. All rights reserved.