Middle East conflict forces European firms in China to rethink supply chains

A flash survey of European companies in China reveals that over a quarter have adjusted supply chain strategies due to the Middle East conflict, with rising energy and logistics costs. Six in 10 chemicals and petroleum firms made changes, 35% onshoring production to China. In machinery, 14% of those adjusting aim to increase local capacity. The survey, published Tuesday, shows 81% struggle to source Middle Eastern inputs, two-thirds face longer delivery times and high transport costs, and 66% encounter higher energy costs. Nearly a quarter warn of possible production stoppages within three to six months if conflict persists. The automotive sector saw 62% of surveyed firms report demand decline. Overall, over 30% of affected respondents reported lower demand. US President Donald Trump's comments on Tuesday that Washington and Tehran must make a deal or face decimation further fuel concerns of protracted conflict.