China’s reign as the manufacturing hotspot for foreign companies appears to be coming to an end. Greenfield and mergers and acquisitions (M&A) foreign direct investment (FDI) into China is plunging, and investors are growing more concerned about China’s future as other Asian countries become more appealing.
Key findings:
- Greenfield FDI levels halved since 2019.
- M&A deals down too.
- Companies look to diversify away from China.
- Costs, supply chain disruption and geopolitics are key concerns.
- Other Asian countries such as India, Malaysia and Vietnam stand to prosper.
China is seeing much lower levels of greenfield FDI
China’s number of inbound greenfield foreign investments is plummeting. We expect its total of inbound projects in 2022 to be only slightly higher than the levels achieved in 2020 at the height of the global Covid-19 lockdowns. Investment levels in 2022 are only half the level China received in 2019.