By John Revill
ZURICH (Reuters) – ABB is seeing some customers shifting investments from China to India and other parts of Asia due to geopolitical tensions, the industrial and engineering group’s Chief Executive Bjorn Rosengren said on Thursday.
The maker of factory robots and automation systems reported a 9% drop in new orders from China – ABB’s second biggest market – during the three months to the end of June.
The downturn was compensated by growth in other parts of Asia, with India increasing new orders by 7%, ABB said as it reported its second quarter earnings.
“We believe that many of the investments that were planned from the beginning in China are now ending up in India instead,” Rosengren told reporters.
“A little bit of a shift, which is probably natural when you consider the geo-political challenges in China,” he added.
Rising tensions between Beijing and the West have made many companies wary of their dependence on China, especially with U.S. attempts to block China’s access to the latest technology.
The German government last week published a strategy paper highlighting the economic and security risks of investing in China, although it was vague on proposals to reduce critical dependencies.
Although careful not to single out China, ABB’s German rival Siemens has also announced plans to spend more on facilities in Germany, the United States and other parts of Asia to increase its “resilience”.
Tech companies in particular were investing more in India, ABB’s Rosengren said, with the country now ABB’s fifth biggest market.
The downturn in China also added to concerns about the world’s second-biggest economy, which earlier this week flagged tepid economic growth as demand weakened at home and abroad.
Rosengren said the high expectations for the Chinese market following the reopening after its zero-COVID policy was scrapped had not been fulfilled.
Meanwhile, some customers who had pre-ordered large quantities last year to avoid supply chain bottlenecks were also now running down their inventories, he added.
Still, the executive did not think the weakening in the Chinese economy would be prolonged, saying he expected stimulus packages to be launched by Beijing.
“If it happens in the next quarter or the quarter afterwards, that is difficult to speculate,” he said. “We are not panicking.”
(Reporting by John Revill; editing by David Evans and Angus MacSwan)
Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibilty for its content.