Chinese companies have expanded their presence in the markets for cutting-edge materials, electric vehicles and 16 other key products and services, a Nikkei survey shows.
Despite the U.S. and other countries trying to ensure their economic security by assuming protectionist crouches, they are finding it difficult to reduce their reliance on Chinese supply chains for EVs and other products.
Nikkei looked at the shares of markets for 63 end products, services, core parts and materials indispensable to global economic activity.
Among the top five market leaders in each category, Chinese companies in 2022 expanded their shares of the markets for EVs, battery materials, liquid crystal display panels and 15 other key products and services from the previous year.
Chinese companies also captured shares of more than 30% in 13 of these markets.
The presence of Chinese companies is especially noticeable in the EV and related markets. Although Tesla in 2022 had the biggest slice of the EV market, 18.9%, three Chinese makers controlled a bigger combined share, 27.7%. Tesla’s share that year was 3.4 percentage points narrower than it was in 2021. BYD, meanwhile, captured the second largest share, 11.5%, up from 6.9%.
Four of the top five producers of insulators for lithium-ion batteries, used in EVs and other products, are Chinese companies commanding a combined share of 63%. Sinoma Science & Technology, which was outside the top five in 2021, ranked second with an 11% share.
In the market for lithium-ion batteries for EVs, BYD expanded its share to 14.4% from 7.7%. BYD and other Chinese makers together secured a share of more than 60%.
The supply of EVs has become dominated by Chinese companies from the upstream to downstream process.
BYD on Aug. 28 reported a net profit of 10.9 billion yuan ($1.5 billion) for the January-June period, up threefold from a year earlier. In July, it announced a decision to build a plant for EVs and other products in Brazil.
Gotion, China’s fourth largest battery maker, plans to begin operating a factory in Germany later this year.
Under the circumstances, reducing reliance on China for EVs and related products is becoming more difficult.
As the U.S.-China confrontation shows no sign of unwinding, American companies have been responding in a variety of ways. Apple and others are diversifying their supply chains from China to India, while Sequoia Capital, a leading venture capital company, in June decided to spin off its China division and separately manage U.S. and Chinese funds.
Tesla CEO Elon Musk visited China in May and reportedly told a senior Chinese government official that his EV maker was opposed to a U.S.-China “decoupling” and would expand its business in China.
In the semiconductor sector, 14 Chinese companies in the first six months of this year raised more than $6.83 billion through initial public offerings (IPOs).
American chip producer Micron Technology, meanwhile, has said it will spend 4.3 billion yuan to introduce high-performance packaging and inspection equipment at its plant in China.
The Nikkei survey also shows that U.S. companies held the biggest shares in the markets for 22 products, the most among all countries. No. 2 China led 16 markets.
Japanese companies controlled the largest slices of six markets, down from seven.
“To disperse risks, it is important to diversify supply chains on a region-by-region basis,” said Kumiko Pivette, senior manager at PwC Japan.
Based on her familiarity with economic security and geopolitical risks, Pivette said Chinese companies’ leads in some markets for cutting-edge technologies related to military strength and national power might drop as there are moves to relocate manufacturing operations out of China.
