Entire sectors of once-leading European industries, such as chemicals, plastics, metals, and automobiles, are now facing fierce competition from countries like China, and are suffering from soaring energy prices, weak economic growth, and a lack of continental solidarity.
Liquidation of the “World’s Number One” Company
At the beginning of 2019, the French investment bank Bpifrance hailed a successful funding round for the startup Insect, which aspired to be the “world’s number one” in alternative proteins.
But after the pandemic, unprecedented inflation, and soaring energy prices, the company’s grand ambitions were shattered. It was liquidated this week, after being forced to lay off three-quarters of its workforce in June.
The “Insect” case is not unique. Efforts to stimulate the entire industrial sector, launched by successive governments since Emmanuel Macron’s presidency, have been experiencing a growing slowdown in France since 2024.
A Structural Failure
While France is particularly affected by this decline due to the instability of the political landscape, which overshadows efforts to promote industrial projects, it is not alone in this predicament.
At the beginning of December, Germany’s largest industrial association deemed the decline in the country’s industrial production a “structural failure.”
On Friday, the French Ministry of Industry predicted a “very difficult and complex” end to the year for European industry in general, including its traditional centers.
The German Association of Chemical and Pharmaceutical Industries sounded the alarm, as production fell to its lowest level in 30 years. Meanwhile, the French pharmaceutical company Arkema revealed at the beginning of November that it had observed “very significant differences in dynamics” in terms of competitiveness across the various geographical regions where it has subsidiaries.
The plastics industry, in turn, is now "on the brink of collapse." In addition to rising electricity and gas prices, the organization "Plastic Europe" denounced "stricter regulations," "higher labor costs," and falling prices due to global competition.
The Rise of Chinese Power
China is often behind this fierce competition, especially as it has begun redirecting significant exports to Europe after many markets in the United States closed.
Perhaps the best evidence of this shift is that, according to the French trade association CLiva, the European Union will import more cars from China than it exports to it for the first time in 2025.
It is no secret that China aspires to become the world's leading industrial power. In 2024, it produced more than one billion tons of steel, representing about 55 percent of global production, compared to 130 million tons in the European Union, according to the European lobbying group Euroover, which also notes that China sells a portion of its production in Europe at lower prices.
But Chinese dominance is not limited to product quantities and prices; numerous sources have pointed to improvements in quality.
Anaïs Foy-Gilles, a researcher at the Institute of Business Administration in Poitiers, France, noted that China “has proven its ability to meet complex demands in many sectors.” Therefore, it is essential to "ensure the proper functioning of European industry".
Lack of Consensus
The pleas for help from European industries have been heard. The European Commission has introduced a “steel plan” aimed at reducing the quotas for foreign steel that can be imported duty-free. Measures to aid the automotive industry are also expected to be announced.
France is calling for “European preference” in this sector to “encourage a significant portion of the added value of a vehicle” or its key components to be produced in Europe. However, these measures are not unanimously supported, and many fear their counterproductive effects.
For example, steel-using industries, members of the Federation of Mechanical Industries, fear price increases and a decline in competitiveness if the Commission’s “steel plan” is implemented, deeming it “inflationary in nature.”
Grain producers have expressed concern about rising fertilizer prices following the application of the European carbon adjustment mechanism at the border, which would impose a carbon tariff on imported products equivalent to that applied to European manufacturers.
In general, “these mechanisms affect the first part of the value chain and not the final products, and can therefore be circumvented”; for example, through an initial transfer outside of Europe, as Foy-Gilles pointed out.
