The alarming scale of China’s economic slowdown is pushing European exporters to accelerate a move into premium goods and services, sacrificing volumes if necessary to sustain margins.
As Chinese rivals gain expertise in areas from elevators to healthcare to sweeteners, while unexpectedly weak demand exposes yet more unneeded supply, prices are falling even in areas foreign suppliers thought were insulated from local competition.
German industrial group ThyssenKrupp AG, Dutch healthcare and consumer group Philips Electronics NV and British food ingredients group Tate & Lyle PLC are among those adjusting for lower growth and a new intensity in price wars.
“The message which we have given the team in China is the following: You need to move up your margin,” ThyssenKrupp chief executive Heinrich Hiesinger told analysts this month, referring to the group’s elevator business.
“If they have the risk that the growth or the market would force that margin going down, then they would get the message: Be more selective, because we do not want you to dilute,” Hiesinger said.
As Chinese national champions like telecoms giant Huawei Technologies Co (華為), train maker CRRC Corp (中國中車) and power generation equipment maker Shanghai Electric Group Co (上海電氣集團) have grown, foreign rivals have retreated to higher ground or left.
Denmark’s Vestas Wind Systems AS is focusing on producing higher quality wind turbines for the Chinese market after failing in a decade of attempts to make inroads at the lower end, which is flush with cheaper locally made turbines.
Solar power, too — a key strategic industry for China — is a closed shop for foreign suppliers, and in coal power generation, which produces most of China’s electricity, Chinese suppliers dominate the market.
A rise in Chinese competition has sometimes come from unexpected quarters.
Tate & Lyle is refocusing its sucralose artificial sweetener business on customers that care about quality, safety and provenance more than price after prices were hammered by a glut of cheaper product from China.
Late last year, Tate & Lyle forecast sucralose prices would fall 25 percent year-on-year as it had to renegotiate supply contracts at lower prices to protect share from Chinese rivals.
In July, it said it was “managing the mix between volume and margin very, very carefully right now.”
“Telecoms, rail, power generation and transmission are pretty much all Chinese. The big question is now what happens in healthcare equipment,” Barclays PLC analyst James Stettler said.
Healthcare is a key area in which China wants to promote its homegrown medical devices and create incentives for medical institutions to use locally made products.
The medical equipment devices market is dominated by foreign players such as Siemens AG, General Electric Co, Philips and Toshiba Corp.
“We see the market slowdown. Obviously, we also see there the emergence of local competitors that nibble at the market share ... and I think that is what all major companies will have to reckon with,” Philips CEO Frans van Houten said last month.
With technology transfer thanks to joint ventures that foreign firms set up to produce in China, foreign suppliers cannot hope to keep indefinitely their ownership of the market for high-end computed tomography or magnetic resonance imaging.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
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New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
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