Recently, the globally renowned computer peripheral manufacturer Logitech announced that by the end of 2025, it will reduce the proportion of China-made products targeted at the U.S. market from the current approximately 40% to just 10%. This move reflects an increasing trend of foreign tech companies choosing to withdraw or scale back their operations in China due to the stringent business environment.
Logitech’s CEO, Hanneke Faber, stated that the company is accelerating the relocation of production lines targeting the U.S. market out of China in response to the re-imposition of high tariffs on Chinese imports by the U.S. It is expected that by the end of 2025, the proportion of products manufactured in China for the U.S. market by Logitech will decrease to around 10%.
An engineer at a foreign tech company in Shenzhen revealed to a news outlet that many foreign-funded tech companies are feeling increasing pressure from the layers of technical requirements imposed by the government. He disclosed, “A friend of mine said that when his company first arrived in Shenzhen, they were asked by the authorities to comply with so-called technology exchange projects, provide core technical data, and even verbal directives. Failure to comply may affect approvals, market access, or operational convenience.”
Mr. Huang, a former management member of a foreign company in Shenzhen, pointed out that since 2019, the Chinese Communist Party (CCP) has been promoting the establishment of party branches and labor unions in foreign companies, raising concerns about technology leaks and political risks among many enterprises. He stated, “The authorities’ ‘exchange market for technology’ policy has weakened the innovation drive of enterprises, making it difficult for foreign enterprises, other than those key ones supported by the country, such as Huawei and DJI, to survive.”
On the other hand, in response to the tech restrictions imposed by the U.S. and the West, some private tech companies in China have been relocating out of the country since 2023. Mr. Huang also revealed that many manufacturing companies relying on semiconductor components have been facing challenges in stable access to Western technology and chips in the Chinese market, prompting them to transfer production lines to countries like India in search of a lifeline.
In addition to Logitech, several multinational tech companies have been adjusting their strategies in China in recent years. In the first half of 2025, Synopsys halted the sale and service of semiconductor design software in the Chinese market, Amazon closed its AI research lab in Shanghai, and several U.S. and European semiconductor equipment companies such as Applied Materials, Lam Research, and Intel are moving some manufacturing processes to Vietnam, Malaysia, Mexico, and other locations.
Shanghai Fudan University’s retired economics professor, who uses the pseudonym Chen Xiaohua, pointed out that the CCP’s long-standing policy of “exchanging the market for technology” comes with high hidden costs, as foreign companies are worried about technology theft and are unwilling to increase research and development investment.
In 2023, the CCP’s revised and enacted “Anti-espionage Law” significantly broadened the definition of national security, leading to a surge in compliance costs for foreign enterprises and a sudden drop in employee morale. In recent years, several foreign enterprise employees in China have been accused of “leaking secrets” or engaging in “spy” activities, significantly increasing the sense of insecurity among international corporate employees in China.
A Beijing international relations expert, known as Zhuang Yueran, told a news outlet that the CCP’s frequent anti-espionage propaganda and enforcement are deepening fears among foreign enterprises. “Many companies are investing substantial resources to enhance internal monitoring and training, further raising operating costs and accelerating the trend of withdrawal,” she said.
At a meeting of the CCP Central Political Bureau held on July 30, the urgency of “sovereignty security” and “national security” was once again emphasized. This suggests that both domestic and foreign enterprises will face more stringent regulatory environments in the future. Industry insiders in China believe that the highly sensitive political environment and policy uncertainties are making the business environment increasingly challenging for foreign enterprises.
Overall, amidst trade frictions, tech restrictions, regulatory pressures, and political risks, foreign-funded tech companies in China are opting to adjust their strategies, shift production chains, and focus on research and development, further accelerating the trend of manufacturing relocation from China.
Mr. Liu, a scholar from Peking University, believes that the CCP’s continuous strengthening of surveillance and control over foreign enterprises, along with the introduction of various restrictive policies, actually intensifies market uncertainties and operational risks. The government’s implementation of the “exchange market for technology” strategy ostensibly encourages tech cooperation but effectively requires foreign firms to transfer core technology for free, severely eroding intellectual property protection. Meanwhile, the broad interpretation of laws like the “Anti-espionage Law” has put immense pressure on foreign businesses in terms of compliance and information security, with employees possibly facing accusations of espionage due to unintentional actions, greatly undermining corporate confidence and investment willingness.
He further noted that the mandatory establishment of party organizations and labor unions within companies by the authorities has heightened concerns over political interference. In such an environment, foreign enterprises are forced to reassess their long-term development strategies in China. It is under these compounded institutional barriers and political risks that foreign tech companies are opting for withdrawal or relocation.