A recent survey has exposed the heavy financial toll and operational upheaval that Chinese export controls are imposing on European companies operating in the country. The findings indicate that these measures are forcing a fundamental rethink of business strategies, with one firm facing additional costs exceeding a staggering €250 million.
Survey Reveals Staggering Costs and Sourcing Shifts
The poll, released on Monday by the European Union Chamber of Commerce in China, was conducted between November 6 and 24. It found that the financial impact is severe and widespread. Beyond the single case of €250 million, another respondent estimated the curbs would add costs equal to roughly 20% of its total global revenue for 2025.
Confronted with these challenges, about one-third of the European firms surveyed stated they plan to move their sourcing of materials away from China. This significant shift underscores the growing vulnerability of European supply chains to disruptions in the flow of critical raw materials and advanced technology from China.
Rare Earths and Data: The Core of China's Controls
The report highlights that the cost stems largely from China's restrictions on resources like rare earths. These controls were initially imposed as a countermeasure during the trade war with the United States, responding to American tariffs and other limitations. While China has temporarily suspended broad new curbs on exports containing even trace amounts of certain rare earths as part of a trade truce with the US, negotiations on terms for general licenses are ongoing. Both sides have already missed a target to conclude these talks before Thanksgiving.
"Introducing a general licensing mechanism in the near future would provide much needed stability and predictability, and could put a floor under the deterioration of business confidence caused by these export controls," said Stefan Bernhart, Vice President of the European Chamber.
While rare earth and critical mineral restrictions are the most prominent, China's export control regime also includes limits on transferring sensitive data abroad and exports of certain types of semiconductors.
Operational Hurdles and Limited Relief Tools
The survey revealed deeper operational concerns. Approximately 11% of respondents expressed worries about information disclosure requirements in their applications, which they fear could include revealing sensitive intellectual property.
Although the European Commission has an online platform for companies to register export license requests and track customs clearance, its adoption appears low. The chamber noted that only 18 respondents reported using this tool. The survey involved a total of 131 chamber members, with 75 confirming they were impacted by the Chinese export controls.
The plan by companies to diversify sourcing away from China faces its own challenges, given Beijing's dominant position in the mining and processing of rare earths. The survey did not specify where or how firms intend to achieve this shift. Trade data underscores the dependency: Germany is the largest single buyer of China's rare-earth magnets. Recent Chinese customs figures show shipments to Germany have eased for two consecutive months after a record high in August.
Ultimately, the survey paints a clear picture of rising costs and eroding confidence, pushing European businesses to urgently reconfigure their supply chains in response to Beijing's strategic trade policies.
