Bank of Spain warns of Spanish companies’ dependence on Chinese procurement
China in the spotlight. The Asian giant has been and continues to be a major supplier to the global economy and especially to the Spanish economy. Last year, this country was the main source of imports of goods outside the EU for Spain and the EU as a whole, which shows high commercial dependence on China, which could be dangerous if geopolitical tensions continue to rise.
10% of companies in our country import critical materials from the Asian giant. to maintain its activities. This is stated in a report prepared by the Bank of Spain (BdE). The banking organization notes that critical resources are those without which, in the opinion of companies, this could be accomplished. relevant part of the production process, There may be significant delays or reductions in the quality of goods or services offered.
In turn, the critical products that Spain imports from China are considered “highly dependent” They come from several suppliers and are few in the EU. and difficult to replace. As such, they are “particularly vulnerable” products to possible disruptions in international trade flows.
Dependence on Spanish companies mainly affects key sectors such as manufacturing, extractive activities and trade.as this percentage increases to 20%. This is similar to that observed in Italy (17%) and lower than in Germany (34%).
In manufacturing, China’s influence is even greater in some sub-sectors. 80% of companies in the Spanish pharmaceutical sector import vital materials from this country.as well as six out of ten manufacturers of computer, electronic and optical products, or 40% of companies in the chemical sector and the production of electrical materials and equipment.
More than half of Spanish companies have not taken any measures to diversify
Of the total number of Spanish manufacturing companies importing critical inputs from China, only 22% have taken steps to reduce their exposure to this country.
Half of the Spanish manufacturing companies that decided to diversify replaced suppliers from this country to others located in the European Union (EU), which is also the strategy most often used by Italian and German companies. In particular, 30% of companies in Italy and 40% in Germany have already taken measures to reduce their dependence on the Asian giant.
Nevertheless, Most manufacturing companies in our country have not taken any measures to reduce dependence on China.. Specifically, 51% of them say they have not acted and do not plan to act to reduce this impact, and 27% will consider taking some action during the year.
In this line, therefore, two-thirds of affected companies believe it will be difficult or very difficult to replace critical inputs from China. in case of sudden disruptions in the supply chain. This percentage increases to 70% among manufacturing companies and reaches about 90% in sectors such as computer manufacturing, electronic and optical products, electrical materials and equipment, or non-metallic mineral products.
Risk of addiction
BdE warned the risk that this dependence may entail if there are interruptions in trade exchanges or increased geopolitical tensions. The European Union’s decision to raise tariffs on Chinese electric vehicles or the Xi Jinping regime’s threat to impose tariffs on European imports in sectors such as dairy, brandy, pork and the auto industry have increased the likelihood that escalating tensions could materialize. could lead to a scenario of greater commercial fragmentation between the EU and China and have a significant impact “significant” in economic activity.
Almost a quarter of Spanish companies say such a scenario would have a “negative impact” on their operations.due to possible disruptions in trade and investment flows, this percentage rises to more than 40% in the case of manufacturing.
This is why the organization advocates that the measures recently implemented by the EU should be developed and assessed in a “rigorous way”, since some of them may have “undesirable” consequences both for the European single market and for the national one.