European Union firms are increasingly looking for new suppliers and supply chains outside China to counter the effects of export restrictions imposed by Beijing, a European lobbying group said in a survey released on Monday.
Around 32% of respondents told the European Union Chamber of Commerce that they are looking to source impacted goods from other markets, while 36% plan to work on establishing supply capacities outside of China.
Beijing imposed export restrictions on rare earths in April amid a trade dispute with the U.S.
China is the world's leading producer of rare earths, which are highly sought-after in industry as well as in the high-tech and defense sectors.
Of the 75 firms questioned by the EU Chamber of Commerce, 24% said they manufacture goods in China that are or will be affected by export restrictions, while 68% said that "their overseas production facilities rely on inputs from China that are or will be subject to China's current export controls."
Firms looking to import rare earths from China need to go through a complex export application process with the Ministry of Commerce.
Some 40% of EU businesses surveyed said that Chinese authorities take longer to grant approval than the 45 days promised, indicating that the additional paperwork is adding more than two months to delivery times.
Some 11% of companies said they were worried over "having to disclose information about sensitive intellectual property as part of their application."
"China's export controls have increased the uncertainty felt by European businesses operating in the country, with companies facing risks of production slowdowns or even stoppages," said Jens Eskelund, president of the European Union Chamber of Commerce in China.
