Amid the continuous decline of the Chinese economy, countries like the United States and Europe have intensified sanctions against the Chinese Communist Party. As a result, foreign-funded enterprises in China are increasingly withdrawing their investments and redirecting them to countries in Southeast Asia, India, and elsewhere. A recent inventory of foreign companies that have withdrawn capital from China reveals that at least 18 multinational corporations have announced the closure of factories in China and significant layoffs. Analysts anticipate that the situation of foreign divestment in China will continue to worsen.
According to reports from Chinese and foreign media, on September 19th, the well-known American technology giant Cisco cut 300 employees from its factory in Dalian, offering two compensation packages – N+7 or N+5. This marks the second wave of layoffs for the company this year.
Simultaneously, the German Volkswagen Group announced the formal closure of its factories producing Passat and Skoda in Nanjing next year.
On September 13th, Toyota Group’s Hino Motors announced the cessation of diesel engine production in China, with its subsidiary Shanghai Hino Engine ceasing operations on September 30th. This joint venture company, established in 2003, is 70% owned by Hino and 30% by Guangzhou Automobile Group.
At the end of August, Honda’s second joint factory in Wuhan ceased all production operations, resulting in the layoff of 2,500 employees.
In late August, IBM abruptly announced the dismissal of over 1,000 employees and the closure of its corresponding research and development department in China.
On August 20th, Konica Minolta from Japan declared the full closure of its factory in Wuxi next year, leading to an expected layoff of over 1,300 employees.
In early August, Swiss company Liebherr released a statement regarding the closure of its concrete business plant in Xuzhou.
Meanwhile, Canon’s factory in Suzhou began a gradual layoff process. Reports indicate that in 2021, Canon’s workforce in China decreased from over 1,500 to about 1,300 employees, and simultaneously closed ten nationwide offices as well as four branch offices in Tianjin, Qingdao, Dalian, and Harbin. The compensation package following the closure of Canon’s Zhuhai factory in 2022 had sparked widespread discussions.
On July 23rd, Nippon Steel Corporation withdrew from the joint venture company with Baosteel in Shanghai – Baosteel Nippon Steel Automotive Sheet. Nippon Steel transferred all its shares to Baosteel.
On July 12th, Japanese construction machinery manufacturer KATO officially exited the Chinese market, leading to the dissolution of its joint venture factory in Kunshan.
In June, Nissan announced the shutdown of its production plant in Changzhou, while Japanese automotive parts manufacturer Yazaki ceased operations at its production plant in Shantou during the same period.
On May 16th, US tech company Kingland dissolved its software company in Dalian, resulting in the layoff of over 160 employees.
In May, reports emerged that Microsoft’s AI research team in China had been relocated to the United States.
In April, SAP’s Shanghai branch in Germany began a layoff process with a compensation package of N+4, expected to continue until the first quarter of next year.
On February 29th, Bridgestone Corporation from Japan officially closed its production plant in Shenyang, leading to the layoff of over 1,200 employees.
In November last year, British chip design company Graphcore announced its exit from the Chinese market and the dismissal of the majority of its Chinese employees due to recent US export control measures restricting the sale of advanced technology in China.
In August last year, Japanese company Daido Electronics closed its production plant in Suzhou, officially withdrawing its investment with a compensation standard of N+3.
In July last year, Mitsubishi Motors from Japan announced its withdrawal from the Chinese market. According to reports, Mitsubishi Motors will invest up to 200 million euros in the new electric vehicle department of French automaker Renault to strengthen its foothold in Europe and other markets.
As early as July 2020, the Japanese Ministry of Economy, Trade and Industry announced a subsidy of 70 billion yen (approximately $500 million) to support 87 Japanese manufacturing companies in relocating their production lines out of China to Southeast Asian countries or back to Japan, aiming to reduce Japan’s reliance on China and establish a flexible supply chain.
Reports indicate that by 2024, around 150 to 200 companies have decided to partially or completely relocate production activities back to Japan, with this number continuously increasing.
In July of this year, the China-Japan Chamber of Commerce surveyed 1,760 out of 8,000 Japanese enterprises in China, revealing that 60% of the respondents believe that the Chinese economic situation this year will either “deteriorate” or “slightly deteriorate” compared to last year. This figure significantly increased from 50% in a survey conducted in May.
Professor Fan Jiazhong from National Taiwan University’s Department of Economics expressed to Dajiyuan that as the situation of foreign capital withdrawal from China intensifies without any signs of slowing down, one can foresee an unfavorable outlook for at least the upcoming seasons, if not the next year.
Fan emphasized that many foreign enterprises that once heavily invested in China are withdrawing, and even Chinese companies are as well. Due to the high uncertainty surrounding this year’s US presidential election, many enterprises, including Chinese ones, are preparing to mitigate risks. Therefore, it is expected that the trend of foreign companies withdrawing from China will worsen to avoid tariff issues.