Four stories that matter from the past week:

1. Washington has set a July 4, 2026, deadline for the EU to fully implement its 2025 trade deal, with tariffs on European cars and trucks jumping from 15% to 25% if missed. A loss of €3.5 billion in 2026 and €5.7 billion in 2027 if this goes through is estimated for the European automotive industry. In fact, European auto suppliers are operating on average EBIT margins of 3.6%, meaning a 25% tariff would push many directly into losses.

2. How to counter-attack in a tariff war? Impose a tariff on another party. On May 28, the EU discusses potential restrictions on Chinese imports. Commissioners were asked to bring examples of Chinese activity across every area, from trade and agriculture to defence, health and digital. Indeed, Chinese imports are sometimes priced at 40% below local EU equivalents, as a result of what we call the “overcapacity strategy”. The surge in imports spans electric cars, machine components, medical devices, and foodstuffs.

3. On May 27, The Economist published an article called “Japan, South Korea and Taiwan are suffering industrial rot”. How come? Taiwan's economy is growing at 13.7%, and South Korea’s corporate profits are up 159%.
   This growth depends a lot on AI and semiconductors (15% rise in the region’s industrial output since 2019). In fact, they make up 80% of Taiwan’s exports and over 40% of South Korea’s, making the region 73% more concentrated than the rich-world average. Excluding chips, Taiwanese exports have fallen 40% since 2022, while non-AI industrial output in South Korea and Japan is also reducing, as Chinese manufacturers have moved from buying Northeast Asian intermediate goods to producing them domestically at lower cost.
   The argument of the Economist was that these 3 countries put all their eggs in one basket, and they should diversify before China or the US would soon take over with cheaper alternatives.
   We laughed a bit when reading this, and remember the Gen Z saying of “oh no, my lobster is too buttery, and my steak is too juicy”. What a champagne problem to have. And plus, what are the actual choices here to diversify? What else to bet on? Footwear? Phones? Spaceships?

4. There might be other parts of East Asia that are worth betting on. We previously published the report on the China-Vietnam Industrial Corridor, mapping out the interesting dynamics of “China+1” under Trump’s reign. We continued to monitor this corridor, and published another analysis on Vietnam alone, explaining Vietnam’s economic boom, and what it means for Investors. Next week, a private delegation will move through 8+ industrial parks and zones in North of Vietnam with our team, with more delegations planned in July and August. We’ll keep you posted on more developments on the ground.

Have a nice week ahead. Stay sharp, and keep building.

Anh & Tri

On behalf of the Tocco team

Leon’s Thoughts on Vietnam’s Economic Boom

Leon, Tocco Founder & CEO, explained why the narrative of “Vietnam replacing China” is lazy, what the unspoken challenges are for investors and industrialists, as well as the opportunities for those who know how to use Vietnam’s “balancing act”.

This episode is also available on Spotify and Apple.

Further Readings · Material & Manufacturing News · 06.2026

• (Southeast Asia 🌏) After Hormuz: The Case for ASEAN Energy Sovereignty. Following the March 2026 blockade of the Strait of Hormuz, Southeast Asia is experiencing severe energy shocks. The region’s limited fiscal space (tax-to-GDP ratios of 10-16%) means governments are bleeding emergency funds to stabilize prices. While geographic diversification (buying non-Gulf LNG) is a band-aid, the structural solution is accelerating the ASEAN Power Grid, which could cut regional decarbonization costs by $800 billion compared to siloed national approaches.

• (China 🇨🇳) China’s industrial profits surged 24.7% year-on-year in April, marking the fastest growth since late 2023. Computing and electronics earnings more than doubled, and upstream oil and mining sectors surged due to higher crude prices, while downstream sectors like furniture manufacturing plunged 54.4%. With the Producer Price Index also jumping 2.8%, the most since July 2022, operators should anticipate rising input costs squeezing margins across lower-tier manufacturing.

• (UK 🇬🇧) Scottish designer Elis Blackwood is scaling a slow-craft methodology that uses industrial waste streams and transforms them into highly durable architectural surfaces and art pieces. Blackwood’s approach treats durability as the primary strategy, utilising mechanical fixing and tension rather than permanent adhesives to ensure components remain fully reversible and separable at the end of their lifecycle.

• (France 🇫🇷) Michelin announced plans to eliminate up to 1,500 French roles (nearly 10% of its workforce) between 2027 and 2029, following two factory closures and 1,246 cuts last year. Q1 sales dropped 5.4% to €6.2 billion. The company stated plainly that labour costs, energy prices, and tax burdens in France are “significantly higher than other industrialised nations,” rendering domestic operations unprofitable despite €3.5 billion in local investments over the past decade. Renault is also laying off engineering positions.

Share The Industrialist Review

Four stories that matter this week:

1. Shein is acquiring Everlane for $100 million. Everlane built its entire identity on “radical transparency,” ethical supply chains, and what it called “Cleaner Fashion,” while Shein is definitely not anywhere close to that. They produce an estimated 1 billion items per day, and their Scope 3 emissions increased 170% in 2023 and 2024. They have already acquired stakes in Forever 21 and Missguided, and shown interest in Topshop. The pattern? Shein absorbs struggling Western fashion IP to acquire brand equity, customer data, and geographic preferences that feed its algorithmic production engine (a practice that Zara made famous).

   We covered Allbirds’ collapse (and rebirth into an AI company) a few weeks ago, and now it’s Everlane. Another moment of “you’re supposed to fight them, not join them”. But it was true before, and it’s still true now: “sustainability” brands that don’t make money will get bought by the rivals they set out to defeat.

   To receive new posts and support our work, consider becoming a free or paid subscriber.

2. Speaking of capital, Vietnam posted its strongest FDI numbers in five years, with $18.24 billion in registered foreign capital across 1,249 projects. But the headline hides a deeply bifurcated landscape. We found 5 interesting graphs and numbers to depict the picture. One of those is how Thai Nguyen Province topped the country with $6.07 billion across just 12 projects. Meanwhile, Ho Chi Minh City pulled in $3.75 billion but across 656 projects, roughly only $5.7 million each. Read our full analysis here.

   With these readings, we are excited to bring a private delegation to Vietnam’s industrial corridors in summer 2026. If you have a specific project or agenda for Vietnam, send us your case at anh@tocco.earth, and we’ll see if it’s a fit.

3. Moving up North. In China, sodium-ion batteries reach mass production viability with a 60 GWh storage deal. By eliminating the need for lithium, cobalt, and nickel, sodium-ion offers a structurally different cost and safety profile. Procurement teams evaluating grid and cold-climate storage should treat the second half of 2026 as an active evaluation window, as this proven alternative will soon place significant pricing pressure on the default lithium iron phosphate (LFP) market. More details are found here in our analysis.

4. On the other side of the world, the US Environmental Protection Agency announced plans this week to rescind Biden-era drinking water limits on four PFAS “forever chemicals” and delay compliance deadlines for two others until 2031, claiming the previous rules were rushed and legally vulnerable. The timing creates a rather confusing regulatory landscape:

   • While the US federal government is rolling back water standards, state attorneys general are pursuing PFAS in consumer products, as we covered with the Texas investigation into Lululemon’s apparel just weeks ago.

   • The EU, meanwhile, is moving forward with a broad restriction process covering over 10,000 PFAS substances across multiple industrial sectors.

   We’ll keep covering these PFAS restrictions in the upcoming months.

Have a nice week ahead. Stay sharp, and keep building.

Tri & Anh

On behalf of the Tocco team

Conversation with Janet A. Ginsburg 🦋

This week on Long Game: Leon, Tocco CEO, had a chat with a strategist, systems thinker, and award-winning journalist on:

• Why the world’s singular focus on “net zero” and “circularity” is not enough

• Why we are quietly undergoing a massive, planet-altering “material transition”.

• Why fresh water and phosphorus are the two ultimate limiting factors for human survival

• The devastating impact of U.S. political instability on long-term science and innovation funding, and how it is crippling the research pipeline.

And so many more fascinating topics. This episode is also available on Spotify and Apple.

Follow Janet’s Substack here :

Further Readings · Material & Manufacturing News · 05.2026

• (China 🇨🇳 / Vietnam 🇻🇳) Tocco Report: The China-Vietnam Industrial Corridor: 2026 Edition. The China-Vietnam border increasingly functions as a single, highly integrated manufacturing system. Our latest report breaks down the operational logistics and current cost structures to watch over the next few months to determine if this tariff-arbitrage model remains viable.

• (China 🇨🇳 / Global 🌏) Definitive Guide to Chinese Service & Humanoid Robots 2026: Top 12 Leading Makers. Chinese vendors accounted for nearly 85% of global commercial service robot shipments in 2024. Fascinating space to look at in Q2 2026. If you are working with industrial-grade robots, also check out this report: Industrial Robotics·Executive Outlook 2030.

• (Global 🌏 / Israel 🇮🇱) Cooling Earth with Silica Particle? Israeli-U.S. startup Stardust Solutions has unveiled its proprietary solar geoengineering technology, which involves spraying 0.5-micron amorphous silica particles 11 miles into the stratosphere to reflect sunlight. Backed by colossal $75 million in funding, the company is aiming for full-scale commercial deployment by 2035 and projecting $1.5 billion in annual revenue from government contracts. We can only hope they had done a thorough test of what this might imply for the biosphere.

Four stories that matter this week:

1. Trump visited Beijing from May 13 to 15. The headlines were big, but the actual deals? Nothing much. The US side said China agreed to buy about 200 Boeing jets, plus agricultural and energy packages. China’s official statements described these as “preliminary” or “intention” rather than finalised contracts. Both sides announced a willingness to set up trade coordination bodies, which is more institutional than transactional. On Hormuz, the White House readout said both leaders agreed the Strait should remain open.

   So what did the visit actually produce? Perhaps something arguably quite valuable right now: the signal that there won’t be an imminent major conflict between the two largest economies. We’ve said it before: certainty is the new trade currency, and last week, a small deposit was made. Next week, Putin will visit Beijing. We’ll cover what it means for industries & manufacturing sector.

2. Speaking of China, Shein is accumulating lawsuits lately. The Texas attorney general sued in February on two simultaneous claims: product safety (independent testing found PFAS in Shein garments at concentrations up to 3,300 times EU safety limits) and data privacy (whether the company’s data handling exposes consumer information to the Chinese government). In London, Shein accused Temu of copying roughly 2,300 product photos. Temu conceded that claim almost immediately, but then counter-claimed another case: Shein locked fast-fashion suppliers into exclusive manufacturing agreements to block competitors from accessing the same factories. That part goes to a separate trial next year. If it holds, Shein’s market dominance gets reframed not as efficiency but as a competition law violation. All of this lands while Shein, perhaps, is still trying to IPO, first blocked in the US in June 2024, and faced resistance in London in 2025.

3. Speaking of capital, Vietnam just posted its strongest FDI numbers in five years. Total registered foreign investment in the first four months of 2026 reached $18.24 billion, up 32% YoY. Manufacturing and processing absorbed 69% of total registered capital. Singapore led with $7.4 billion (39.9%), followed by South Korea at $4.8 billion (25.7%). China led in the number of new projects (33%).

   On the trade side, total export-import turnover for the first four months of 2026 reached $344 billion, up 24.2%. The trade surplus with the US grew 24.4% to $46.9 billion, while the trade deficit with China widened 33.4% to $46.4 billion. The pattern we’ve covered before in packaging and electronics: supply chains move, but dependency cannot change fast. Meanwhile, exciting developments cannot be denied: business registrations are surging too; 77,800 new enterprises in the first four months, up 50.7%.

   IMP: We are bringing a private delegation to several Vietnam’s Northern industrial parks starting June 8. It’s a small group, invitation only. If you have a concrete project or agenda for Vietnam, send us your case at anh@tocco.earth, and we'll see if it's a fit for this cohort.

4. And this week’s premium read from Tocco Editorial team: “How Europe lost the Tech Race”. We looked at one number first: Venture capital deployed in Europe in 2025 reached €66.2 billion, only 22% of the US figure despite comparable economic size. Europe produces more tech startups than America, but has 80% fewer scaleups and 85% fewer unicorns. The energy crisis compounded the structural problem for the European market: EU industrial electricity prices in 2024 were €0.199 per kWh, versus €0.082 in China and €0.075 in the US. Read the full analysis here.

Enjoy your weekend. Stay sharp, and keep building.

Anh
On behalf of the Tocco team

Further Readings · Material & Manufacturing News · 05.2026

(Colombia 🇨🇴) OffMatter: A Neotropical Material Language. A conversation with OffMatter founder David Cabra Jaramillo on algae, cassava starch, Colombian botanical pigments, and what it means to design the material before the object.

(China 🇨🇳) Color, Material, Finish: 10 Chinese EV Brands Taking CMF Seriously - A look at ten companies and the specific material, colour, and finish strategies they’re applying across their current ranges.

(UK 🇬🇧) Starting July 1, Britain plans to slash tariff-free steel import quotas by 60%, with some categories cut up to 90%, and raise out-of-quota tariffs from 25% to 50%. The British Chambers of Commerce (BCC) warned this could push manufacturers to rely on specialist steel grades not produced domestically, with some facing millions in additional costs or production halts. The goal is to rebuild domestic share from 30% to 50%, but the BCC argues the unintended consequences could push firms toward cheaper overseas suppliers.

(China 🇨🇳 / Global 🌏) China has banned exports of sulphuric acid, the world’s most used industrial chemical, after its imported sulphur supply was disrupted by Hormuz. Roughly half of the global sulphur supply came from the Middle East in 2025. Sulphuric acid is used in batteries, textiles, fertilisers, petroleum refining, drinking water treatment, and chip manufacturing. We will cover more on this story next week.

Between hantavirus headlines and everything else this week, we considered just sending you a blank email with “go touch grass, stay healthy” as the subject line.

But the world goes on, and there are important signals this week:

1. In one week, engineered/lab-grown meat made so much noise:

   • On May 5th, Californian startup Biosphere received a $9 million grant from the US Army to build portable bioreactors producing gas-fermented proteins for “remote and logistically constrained environments”.

   • One day before, May 4th, the US Army is calling on companies and researchers to develop alternative proteins for Meals Ready-to-Eat (MREs), covering precision fermentation and novel biomanufacturing methods. From 2027, vegan options will replace the current vegetarian dishes. For context, the US military issues over 37 million MREs every year, and they are one of the world’s largest food procurement operations.

   • Across the Atlantic, on May 7th, UK startup Meatly raised $14 million to build Europe’s largest cultivated meat facility in London, with pet food launches planned for 2027.

   • Meanwhile, Amsterdam became the world’s first capital city to ban advertisements for meat and fossil fuels in public spaces, effective May 1.

   Now, hear me out. I’m a vegetarian, so perhaps I should be very happy about this. But I can’t help thinking: why specifically lab-grown meat? What about tofu or tempeh, which have been around for thousands of years?
   Anyhow, it seems like the second spring for lab-grown protein is here, after a very tough 2024-2025 period. This time, the push is definitely coming from institutions, not just startups in previous waves. If we dig deeper, on February 14th 2021, Bill Gates did an interview with MIT Technology Review and declared, “Rich nations should shift entirely to synthetic beef”. Things seem to be falling into pieces indeed.

2. Some will win, some will lose. US inflation hit 3.3% in March 2026, up from 2.4% in January and the highest reading since May 2024. Energy prices rose 12.5% year-on-year, with gasoline up 18.9% and fuel oil up 44.2% as a direct or indirect result of Hozmuz. The IMF now doesn’t expect inflation back at the Fed’s 2% target until 2027 at the earliest.
   This affects the manufacturing sector massively; the ISM Prices index surged to 84.6 in April, its highest since April 2022 (Covid time with supply chain disruption). For context: an ISM Prices Index reading above 50 means prices are rising, 84.6 indicates a broad, sharp increase in input costs across manufacturers. Manufacturing is still expanding (PMI at 52.7 for the fourth straight month), but it’s expanding on rising input costs and lengthening lead times, the combination that compresses margins fastest.
   Among all manufacturing sectors, chemical and petrochemical producers are taking the brunt, with crude- and polyethylene-linked product lines already running through multiple price spikes. We wrote an in-depth analysis here for those who are watching how this will unfold for the manufacturing sector in the US in the upcoming months.

3. Speaking of where money is flowing, Singapore pulled in $197 billion in FDI in 2025, up 8.4% year-on-year. The US, Netherlands, Ireland, Mainland China, and the UK accounted for 46.8% of total inflows. Finance and insurance alone received 63.9%. For context, in comparison: Indonesia got $53 billion, Vietnam $38 billion, and Malaysia/Thailand combined for around $21 billion. Singapore continues to punch absurdly above its weight as a capital magnet in ASEAN. As for manufacturing sector, Singapore remains the “leader” in high-end industrial value (Precision Engineering, Pharma, Chips etc.), though in sheer physical volume and total manufacturing output, Indonesia (Resource Processing, EVs, Food etc.) and Vietnam (Smartphones, Textiles, Electronics etc.) have overtaken Singapore. If you’re in this space, dive into our Guide “Sourcing in China & Vietnam 2026” which gives context around China-ASEAN’s industrial ecosystem.

4. Back to Europe, on May 5th, the EU confirmed this week that the EUDR will be enforceable from December 30, 2026, with no further delays. Implementation for most micro and small operators begins June 30, 2027. This follows two rounds of delays since the regulation was first set to take effect at the end of 2024.

   The timing is interesting. Just a week earlier, 32 US Congress members wrote to Commission President von der Leyen, urging her to “hold the line and implement the EUDR as currently written.” Their letter directly called out the Trump administration’s efforts to weaken the regulation, noting that the USDA has been lobbying European capitals to introduce a “no risk” classification for certain countries, including the US. The Congressional representatives argued that the Trump administration, having repealed domestic forest protections, “cannot be seen as a credible negotiator on the EUDR.”
   UN data shows the US is responsible for 120,000 hectares of forest loss annually over the last decade. Globally, over 10 million hectares are deforested each year, accounting for up to 21% of greenhouse gas emissions.
   But that’s fine, because according to Bill Gates again, planting trees for climate change mitigation is“complete nonsense”, and he asked, “Are we science people or are we the idiots?” To which I’d answer: planting trees is for idiots because it doesn’t make any money. For others, I guess they do engineered meat.

5. Still on regulation, a broad coalition of food, beverage, and packaging companies, including Coca-Cola, Heineken, Carlsberg, Ball Corporation, and Ardagh Group, has written to EU leaders asking for parts of the PPWR to be delayed.
   The regulation is due to apply from August 12, 2026. The signatories say they support the objectives but warn that key provisions remain unclear, less than four months before implementation, and that divergent national interpretations could fragment the Single Market.
   Zero Waste Europe has pushed back strongly, arguing that the PPWR went through a full co-decision process and should now move to implementation as planned.

   The deregulation push in the EU has gained momentum since the end of 2025. REACH revision was dropped. PPWR is being challenged. EUDR has already been delayed twice. The pattern is quite clear: regulation in the EU gets announced with ambition and runs headlines, then meets downsizing. We’ll keep tracking what actually sticks.

Enjoy your weekend. Stay sharp, and keep building.

Anh

On behalf of the Tocco team

Who Made Our Curated Materials Lists This Week?

The materials landscape is getting noisier. More suppliers, more claims, more labels that don’t always hold up under scrutiny. Finding the right partner in any of these spaces takes time that most teams don’t have.

That is why our team has been building curated supplier maps across the material categories where we see the most activity and the most confusion. Each one is handpicked, validated, and updated weekly as new information comes in.

Currently live on MatterDrop: PHA (top 20) , Low-VOC Coatings and Paints (top 30), Seaweed-Based Materials (top 27), Bio-based Adhesives (top 15), Leather Alternatives (top 35), Cellulose Foams and Moulded Pulp (top 26), Bio-based Pigments and Natural Dyes (top 15), and Mycelium-Based Materials (top 29). Twenty more categories are coming next week.

If you’re sourcing in any of these spaces, take a look. If you produce and supply - and think you should be nominated in these lists or other ones, submit your information, and our team will validate if relevant within 24 hours.

Check All Themes Here

Conversation with John Gibson, Biomechanics Designer on Footwear & Joint Pain

This week on Long Game: Leon, Tocco CEO, sat down with John Gibson, a movement scientist, computational designer, and footwear researcher who builds what the industry hasn’t thought to make yet.

The conversation goes places you wouldn’t expect from a footwear episode:

• why the modern shoe industry work like processed food for our musculoskeletal system?

• why standard consumers shouldn’t be wearing the same ultra-performance gear as elite marathon runners?

• and why the future points toward hyper-personalised, 3D-printed shoes created from a phone scan?

• they also get into biomimicry, biodegradable PHA-based knitted materials, zero-waste production, and the unglamorous reality of being a young entrepreneur pushing through constant cycles of failure?

Available on YouTube, Spotify, and Apple Podcasts.

Further Readings · Material & Manufacturing News · 05.2026

(Global 🌏) 10 Brands Using Natural Pigments and Dyes in 2026. Our roundup of consumer brands moving away from synthetic colorants toward plant-, mineral-, and waste-derived alternatives. See what’s working at scale for these brands.

(UK 🇬🇧 / Italy 🇮🇹) Naturbeads Gets €4.1M EU Funding to Replace Microplastics with Cellulose Materials. The University of Bath spinout will use European Structural Fund money to scale its first commercial plant in Puglia, Italy. Output starts at 20 tonnes/year with a path to 500 tonnes. Naturbeads is targeting cosmetics, paints, detergents, and biomedical applications ahead of EU rules banning microplastics in rinse-off cosmetics from 2027, leave-on cosmetics from 2029, and makeup from 2035.

(Europe 🇪🇺) How is the Strait of Hormuz Crisis Impacting European Plastics Recycling? ICIS analysts walk through how the conflict is reshaping virgin–recyclate spreads across PET, rPP, and rHDPE. With over 80% of Middle East PE export capacity routed through the Strait, soaring virgin prices have temporarily improved the economics for recycled materials in Europe. Also read up on our coverage of the broader Hormuz fallout here for full context.

(Finland 🇫🇮)ASK Scandinavia: Building a Responsible Luxury Accessories Brand. Founded in 2017 by Karoliina Bärlund, the premium accessories label has built its product line around alternative materials. Dive into their story and learn how they did it in a featured interview with us.

Four stories that matter this week:

1. On April 28, the UAE announced to leave OPEC and OPEC+ (the latter includes Russia) on May 1. OPEC was founded in 1960 to give leading oil producers collective control over global prices through the management of supply limits. Since 2020, the UAE and Saudi Arabia have clashed over oil policy, with tensions surfacing during OPEC+ summits in 2020 and 2021. While the UAE wanted to increase production post-pandemic, the Saudis pushed for lower output to sustain high prices. This divide stems from different economic needs: Saudi Arabia requires high oil revenue to fund its massive Vision 2030 projects, whereas the UAE’s more diversified economy is less reliant on crude prices.
   The UAE's departure from the oil cartel means that Abu Dhabi no longer finds value in the Saudi-led group. As Energy Minister Suhail Al Mazrouei told the New York Times: “The world needs more energy. The world needs more resources, and [the] UAE wanted to be unconstrained by any groups.”
   This shift may trigger a broader withdrawal from organizations like the Arab League, the Organization of Islamic Cooperation, or the Gulf Cooperation Council, as regional players prepare for, as experts call, “an unpredictable post-war landscape.”

2. Some disbanded, and others flock together. On May 1, China extended a zero-tariff policy to all 53 African nations it has diplomatic relations with, becoming the first major economy to do so. The policy rolled out in two phases: 1/ the first phase, in December 2024, covered 33 least-developed African countries across 100% of tariff lines; 2/ the second, effective this week, extends to the remaining 20, including South Africa, Nigeria, and Egypt.

   The motives are straightforward. Western markets are closing to China-made goods (US tariffs, EU countervailing duties on EVs, to name a few), and China needs alternative export channels. Meanwhile, Africa has been the fastest-growing destination for Chinese exports since 2018. At the same time, Africa needs industrial goods for its infrastructure buildout, and China is currently overproducing exactly those goods.
   We wrote a deep analysis of this zero-tariff deal between China and Africa in our article “China-Africa Zero-Tariff Policy: What It Means For Supply Chain and Sourcing” and what it entails for the rest of the world.

3. Some pushed forward, others deferred. On April 27, the European Commission decided NOT to propose a major revision of REACH (Registration, Evaluation, Authorisation, and Restriction of Chemicals), which aimed at tightening legal requirements on chemicals used in products in Europe. After six years of postponement, Environment Commissioner Jessika Roswall confirmed that “now is not the time” and that Europe is “at a point where we need certainty and predictability.” (indeed, as high production and energy costs due to the Iran War are hurting European manufacturers since February this year)
   The REACH revision was first announced in 2020 as one of the most ambitious chemicals reforms of the European Green Deal, and it has been postponed on multiple occasions since. The Commission is now working on “a minimal reform of the current framework”. Roswall also said the upcoming EU PFAS restriction proposal could arrive by year-end. Until year-end, it’s still a long way to go, and anything could happen to this EU PFAS proposal, given the trend of deregulation in Europe since the beginning of 2026 (the first shot was the EU Omnibus Package). For teams who need to stay close to this development of the PFAS ban in the EU and other regions, check out our report “The 2030 PFAS-free Roadmap: Viable Alternatives” and prepare your industrial strategy.

4. Speaking of strategy, our team published an essay called “Overcapacity is the Strategy”, covering China’s industrial overcapacity, and why the standard media’s reading of it misses the point. They keep quoting these numbers: nearly 24% of Chinese industrial firms operating at a net loss by the end of 2025, and manufacturers pricing products at a loss for 37+ consecutive months.
   Yes, numbers don’t lie, but the interpretations often do. In this essay, we explained how China’s industrial system uses excess capacity to reduce component costs, accelerate product iteration, and stress-test industries through brutal competition, creating survivors across major industries (EV, steel, solar, batteries, waste-to-energy, etc.). For industrialists and investors, if you have to read one thing next week, read this essay. For others, it’s simply an important read for your view on manufacturing and supply chain.

Enjoy the rest of your weekend. Stay sharp, and keep building.

Anh & Tri

On behalf of the Tocco team

Help Us Find The People Worth Listening To

The industrial world is becoming harder to read. Geopolitics, energy, regulation, AI, materials, manufacturing, and supply chains are now one connected story.

That is why we are expanding our conversations through Long Game with Leon Ge (available on YouTube, Spotify, and Apple Podcasts) and Remake by Tocco.

If you are building, researching, designing, investing in, manufacturing, regulating, or explaining something that helps the rest of us understand this moment, we would like to hear from you.

You can nominate yourself, recommend someone else, or send us a topic we should cover.

A recent example: Leon’s conversation with Tu Minh Tri, Cambridge and LSE alumnus and young Vietnamese political scientist, on what is happening in the world and how to think more clearly in unstable times.

Pitch a Guest or Join Us

Have An Industrial Problem We Should Look At?

Before we open MatterBrief more widely, we want to hear what is already breaking, blocking, or becoming urgent in your world.

Supplier risk, material substitution, regulatory deadlines, cost shocks, sourcing uncertainty, manufacturing bottlenecks, geopolitical exposure, hard-to-find technologies - send us the problem.

We are building Tocco to help industrial teams make sense of exactly these questions, using our network, research workflows, data, and AI-assisted tools.

Tell Us What You’re Trying to Solve

Further Readings · Material & Manufacturing News · 05.2026

(China 🇨🇳) China’s First All-Electric 10,000-Tonne Container Ship Enters Service. The Ning Yuan Dian Kun is now operating commercially on the Ningbo-Zhoushan to Jiaxing corridor. 742 TEU capacity, roughly 20 MWh battery power delivered through containerized battery packs, shore charging, plus battery swapping.

(Global 🌏) Less Than 1.7% of People Use 33% of Global Energy. A new article in Science breaks down the asymmetry. One third of final energy is consumed by only 1.7% of the population in the “excessive high energy consumption” category. While half of the world uses only 9%. Decent living standards require 13 to 18 GJ per capita per year. The average in Western Europe is about 100.

(USA - Europe 🇺🇸 🇪🇺) On May 1, President Trump announced plans to hike tariffs on EU-imported cars and trucks from 15% to 25%. He said at the White House, “We have a trade deal with the European Union. They were not adhering to it. So I ​raised the tariffs on cars and trucks to 25%, that’s billions of dollars coming into the United States, and it forces them to move their factory production much faster.” We previously discussed how tariffs didn’t work (at least, not the way President Trump wanted). Let’s see if this time will be different.

(Global 🎙️) In the latest episode of Long Game, Leon discusses his journey from a Chinese village with a $250 GDP per capita to travelling across 50+ countries, and his take on the extreme danger of algorithm-driven echo chambers, why democracies in declining economic cycles are vulnerable to populism, and societal-technological disruptions we are unprepared for. Available on YouTube, Spotify, and Apple Podcasts.

Five stories that matter this week:

1. Climate advocates in Europe are rejoicing, and I quote one from World Fund VC, “The Hormuz disruption is doing something that a decade of sustainability arguments never quite managed: it is making the business case for petro-alternatives impossible to ignore.” Besides this weird, joyful tone (mind you, it is a warzone with actual people dying, while millions of businesses are being affected), this is nothing close to a business-as-usual case.

   Speaking of electrification, electricity is only 23% of Europe’s total energy use. The rest: transport still runs on 92% fossil fuels, buildings on 71%, and industry on 61%. Worse, in 2024, 95% of oil and 88% of natural gas used in the EU were imported. Switching from Russian gas to US LNG doesn’t fix this, given the latest developments in the Middle East. The vulnerability is structural.
   Furthermore, the machines at the centre of Europe’s electrification (aka EVs, heat pumps, wind turbines, grid infrastructure, etc.) are built from critical minerals. And the supply chains for these are concentrated in a small number of countries that do not have the incentives to sell their resources to Europe easily. We break down this critical mineral supply problem in our latest premium piece, “Europe Electrification and the Critical Minerals Gap: What Is at Stake Before 2030” for those who want to see the full picture.

2. Speaking of structural vulnerability, within a window of thirty months, the Strait of Hormuz, the Panama Canal, and the Suez Canal have all been impaired or seriously stressed. Each disruption has left quite a lasting premium on ocean freight, marine insurance, feedstock pricing, and inventory costs. The World Bank calculated that the Red Sea crisis raised shipping costs 141% by the end of 2024, which is now a permanent addition to the global manufacturing costs.

   We wrote more extensively on these chokepoints and their economic implications in our premium piece, “The Hidden Tax on Industrial Manufacturing: Energy Chokepoints and What They Cost”. Inside, you’ll also find structural responses for businesses, as we believe these occurrences are no longer once in a blue moon.

3. Moving on to public policies, Laurence Tubiana, President and CEO of the European Climate Foundation, made an argument on April 23: a 20% surtax on the annual profits of the world’s 100 largest oil and gas companies would have raised $1 trillion since 2015. Instead, that money funded share buybacks and fossil fuel infrastructure, locking in the very dependence that leaves Europe exposed to crises. The European Commission’s emergency energy package, she says, falls short by not pursuing a “windfall profit tax” (i.e., one-time, higher tax rate levied on a specific company or industry that has benefited from a sudden, massive increase in profits without extra effort or investment of their own).
   Before we even discuss the effectiveness of this proposal, we have to look at the reality: under normal EU law, any proposal involving taxation requires the unanimous agreement of all 27 member states. By the time a levy is negotiated, the profits may have already moved. The ambition is right. The execution challenge is, as usual, almost immovable.

4. Speaking of ambitions, two stories landed in the same week on hydrogen. On April 16, Russia and China signed a memorandum to create the first cross-border “hydrogen corridor,” with plans for localized hydrogen production and refuelling infrastructure along major highways in the Far East. Days later, on April 21, UK-based startup Rivan Industries raised $34 million to build what it calls the “largest synthetic natural gas plant in Europe,” using a Sabatier reaction system that combines green hydrogen with CO2 captured directly from the air to produce synthetic methane, chemically identical to natural gas and supposedly injectable into the existing UK grid without modifications.

   commented on the latter, “Europe’s looming fuel shortage does what pitch decks failed to do recently: revive uneconomic hydrogen fantasies. Taxpayers are on the hook, of course.” Whether this is visionary infrastructure or expensive experiments (backed by strong political will), it depends on whether the tech and the economics work.

5. Speaking of closing the economics, on April 22, CATL announced it will begin mass production of sodium-ion batteries in Q4 2026. The batteries have completed verification and can support roughly 300 km of range in extended-range vehicles and 500 km in battery electric vehicles. Sodium-ion won’t replace lithium. The energy density sits at about 160 Wh/kg, making them better suited for vehicles priced below 100,000 yuan (around $14,660) or for energy storage. But the performance in extreme cold is striking: at -30°C, sodium-ion delivers nearly three times the discharge power of lithium iron phosphate batteries, retaining over 90% capacity at -40°C. CATL’s chairman Robin Zeng has said the technology could eventually capture 30 to 40% of the battery market. We previously covered CATL’s expansion beyond cells into automotive chips. The pattern for China's industrial competitive landscape is clear: develop a fully vertical stack. Read more on China’s New Five-Year Plan and/or the EV race in China to understand what that means better.

Enjoy your weekend. Stay sharp, and keep building.

Anh & Tri

On behalf of the Tocco team

Help Us Find The People Worth Listening To

The industrial world is becoming harder to read. Geopolitics, energy, regulation, AI, materials, manufacturing, and supply chains are now one connected story.

That is why we are expanding our conversations through Long Game with Leon Ge (available on YouTube, Spotify, and Apple Podcasts) and Remake by Tocco.

If you are building, researching, designing, investing in, manufacturing, regulating, or explaining something that helps the rest of us understand this moment, we would like to hear from you.

You can nominate yourself, recommend someone else, or send us a topic we should cover.

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Further Readings · Material & Manufacturing News · 04.2026

(Netherlands 🇳🇱) Foamlab Raises €3M to scale production of high-performance foams made from bacterial cellulose. The round was led by Icos Capital, with participation from Capricorn Industrial Biotech Fund and others.

(Global 🌏) Metamaterials - the invisibility cloak never quite materialised. What did materialise is a $2.5 billion global industry growing at over 30% a year, building from smartphone cameras to satellite antennas. The gap between the original hype and the actual outcome is one of the more interesting stories in modern materials science.

(Spain 🇪🇸) Turning Sea Lettuce into Weavable Materials in Galicia. Biodesigner Paula Camiña Eiras is partnering with traditional basketmakers to turn sea lettuce, an invasive algae pulled from shellfish farms, into a weavable biomaterial.

(Global 🎙️) The Belgian CEO who spent 20 years inside China returns for round 3 with Leon, Tocco Founder. This time: why the Iran conflict might be “the Waterloo of America,” Europe’s shift from pragmatic statecraft to what he calls “hypocrisy”, the truth about the “China threat. Available on YouTube, Spotify, and Apple Podcasts.

1. On April 13, Texas Attorney General Ken Paxton launched an investigation into Lululemon over the potential presence of the “forever chemical” PFAS. The Canadian activewear brand generated over $11 billion in 2025 alone. The investigation will also look into the brand’s "restricted substances" list, testing protocols, and supply network practices to dete…

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In our own materials/manufacturing/industrial world, fundamental changes are also happening. The industrial formula used to be straightforward: minimise unit cost, stretch your supply chain across the g…

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Four stories that matter this week:

1. On March 30, Le Monde wrote this piece about a young French researcher who concluded that ‘Climate change will cost 50% of GDP by 2100’. Commentators explained that this mathematical formula is better because, instead of measuring climate damage using local thermometers, it looks at global temperature, oceans included.

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If it were 5 years ago, we collectively could have paid more attention to this.

But as the Gen Z told us to “read the room”, one simply has very little attention left for this great Moon endeavour, while a lot else is at stake on Earth.

In our own world of materials, manufacturing and procurement, the stakes inclu…

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Five stories that matter this week:

1. EIT Manufacturing, the EU-backed body tasked with digitising Europe’s industrial base - filed for liquidation on March 27.
   Over 200 companies are now waiting for the grants they were promised, half of them SMEs and startups. EIT Manufacturing ran grant programmes ranging from €50k to €500k since its launch in 2019. Its…

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Six months ago, Jake quit what Washington politicians would call a “dream job”: a production role at a brand-new, multi-billion-dollar EV battery plant. The job checked every box on paper: it was billed as “manufacturing b…

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Five stories that matter this week:

1. The White House agreed to pay TotalEnergies $1 billion to walk away from its East Coast offshore wind projects - and redirect that capital into US LNG production instead (four trains at the Rio Grande LNG plant in Texas, plus upstream oil in the Gulf and shale gas). In return, the US reimburses them dollar-for-dollar o…

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Whether you like China, source from China, compete with China, regulate against China, or simply live in a world increasingly shaped by Chinese industrial capacity, a five-year plan is the coordination document mapping where the state wants capital, engineering, infra…

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This is exactly the reason why I do not want to sugar-coat the reality for Europe.

If Europe wants a true reindustrialisation, the first thing to do is not another slogan, another conference, another speech on competitiveness. The first thing is to look at where things really stand.

And where things stand is this: significant parts of its industrial system are much weaker than many Europeans still want to admit.

Not that Europe has no excellence left. But excellence is no longer enough when the industrial base is soft, the middle is hollowing out, and too much of the cost structure has turned against you:

• EU industrial production increased by an annual average of just 0.6% between 2000 and 2024.

• Yes, 2025 showed a modest average rebound of 1.5%. But by January 2026, industrial production was falling again - down 1.2% year-on-year in the euro area and down 0.6% in the EU.

That is not the profile of a continent in confident industrial ascent. It is more like the profile of a continent fighting against drift.

Across industries: A Crisis of Competitiveness

Start with energy, as it is the master variable - sitting upstream of everything else in the physical economy: steel, chemicals, glass, ceramics, refining, fertilisers, paper, aluminium, machine shops, foundries, logistics.

When energy turns volatile, the whole industrial organism starts moving either more slowly, more defensively, or more expensively. The IEA says EU electricity prices for energy-intensive industries in 2025 remained more than twice US levels and nearly 50% above China’s.

In chemicals specifically, Europe’s gas disadvantage versus the US has been brutal. The latest Middle East shock hit this further: Reuters reported that the euro zone economy is close to stalling, with oil up sharply this year, delivery delays worsening, and inflation expectations rising fast.

One of the reasons European decline is so easy to misread is that - like many other cases in history - it often arrives not as one dramatic collapse, but as thousands of executive decisions. Delay this CAPEX. Idle that line. Import this feedstock instead of making it locally. Shift the next plant there, not here. Run the European site for premium or niche output only. This trend doesn’t look temporary.

Illustration for this trend found in the chemical industry. Europe’s chemical industry still has €635 billion in turnover, about 1.2 million jobs, deep know-how, and a central position in modern manufacturing. But the centre of gravity has shifted. Cefic says Europe’s share of the global chemical market has fallen to 13%, while China has risen to 46%. BASF, Europe’s flagship chemical company, is at the same time expanding heavily in China while warning investors about weak demand and higher costs at home.

Steel tells a similarly hard truth.

EUROFER reports European steel production hit a historic low in 2025, while imports gained a record share of the EU market. Even if demand rebounds modestly, European steel consumption in 2026 is still expected to remain around 11 million tonnes below pre-pandemic levels. Britain’s response this month: cut tariff-free steel quotas by 60%, raise out-of-quota tariffs to 50%, and explicitly try to rebuild domestic share from 30% to 50%. We can understand the instinct. But tariffs can buy time; they do not, by themselves, create competitiveness.

Automotives follow the same trend.

Though Europe still has brand power, engineering prestige, supplier depth, and some of the best industrial storytelling in the world, nothing has been guaranteed. ACEA says EU new car registrations rose 1.8% in 2025, yet volumes remain well below pre-pandemic levels. At the same time, it is reported that Chinese automakers doubled their share of the European market to 6% in 2025.

The battery layer is even more sobering: according to Reuters, the cost gap between EU-made and Chinese batteries is still around 90%, even if scale and better execution could narrow that gap sharply over time. I wrote previously about Germany vs China in the EV race and how it reveals the industrial infrastructures beneath.

Too much European debate still treats China as a geopolitical problem, a subsidy problem, a dumping problem, or a values problem. Sometimes it is all of those things. But that is not the whole story, and serious industrial people know it. China is also a capability problem for Europe, because it has become the toughest real-time industrial proving ground in the world across more and more sectors: EVs, batteries, solar, robotics, manufacturing speed, digital supply chains, and increasingly the fusion of software and hardware.

That is why recent remarks from Mercedes leadership in Beijing matter. At the China Development Forum, Ola Källenius described China as a “dynamic innovation landscape” and stressed Mercedes’ long-term commitment. In Chinese media coverage of the same forum, he was quoted even more bluntly: if you want to play football, you play in the Champions League, and China is the Champions League of the automotive industry. Whether one prefers the diplomatic version or the sharper one, the underlying point is the same: the hardest game is being played there. Serious firms know it.

Resilience vs. Fragmented Policies to treat symptoms

Now, to be fair, Europe is not simply declining across the whole board.

Europe still has aerospace, premium machinery, pharmaceuticals, precision engineering, serious materials science, defence-industrial momentum, and a regulatory machine strong enough to shape markets far beyond its borders. Renewable electricity reached 46.9% of EU net generation in 2024. Battery storage deployment in the EU rose to 27.1 GWh in 2025. Germany’s March flash manufacturing PMI even climbed to 51.7, its highest in 45 months, even as the broader private-sector picture softened.

France is a good illustration of both the resilience and the problem.

Because France, thanks largely to nuclear power, has been more shielded than some gas-heavy peers. Reuters reported that French electricity prices are down 29% this year, while gas-dependent systems such as Italy have been hit much harder. But cheaper power alone has not magically restored industrial momentum. France’s private sector contracted in March at its fastest pace since October, with the flash composite PMI at 48.3 and input-cost pressure rising sharply. So yes, energy architecture matters enormously.

This is the resilience part of the story. But energy relief by itself does not single-handedly rebuild a system that has potentially lost speed, density, and confidence.

Among the problems, the low-end goods parcel flood could be a great illustration.

In 2025, 5.8 billion low-value e-commerce parcels entered the EU, up 26% year-on-year, according to the European Commission figures. To shield local French retailers from this competition, the French government imposed a new fee starting March 1, 2026: a €2 flat charge for every individual item under €150 in packages entering France directly from outside the EU.

The policy had a critical flaw: it only applied to packages arriving directly in France. The EU’s core "free movement of goods" rule allows products legally shipped into any EU country to move freely to all other EU member states with no extra fees. Chinese platforms immediately exploited this loophole: they rerouted all their China-origin cargo flights from France to neighboring EU countries (Belgium and the Netherlands). Packages landed there first, then were trucked into France, completely avoiding the €2 fee.

The result was the exact opposite of France’s intent:

• No drop in Chinese e-commerce packages to French shoppers - only a change in their delivery route

• Severe harm to France’s domestic aviation and logistics sectors: Paris’ Charles de Gaulle Airport saw a 60% plunge in China cargo flights (losing ~50 weekly flights), a 92% drop in e-commerce customs filings, freight industry layoffs, and closure risks for small regional airports

• Neighboring EU countries gained all the rerouted cargo and logistics business, becoming accidental winners. This outcome was entirely foreseeable: Italy had implemented an identical policy earlier in 2026, with the same rerouting result.

After all, a customs fee on small parcels is not an industrial strategy. It may reduce distortion, but it does not rebuild tooling, supplier depth, or mid-market manufacturing confidence.

If you gaze long enough into the abyss

This is why I think the honest conclusion is neither declinist nor comforting.

Europe’s problem is not that it has no excellence left.

Europe’s problem is that excellence is becoming too isolated.

Too much of the industrial middle has become fragile. Too much of the energy-intensive base has become uncompetitive. Too many policymakers still confuse prestige with capability.

If Europe wants a true reindustrialisation, it needs more than speeches about sovereignty and more than defensive tariffs at the border. It needs cheaper and more stable industrial energy. Faster permitting. Faster capital formation. Serious local demand support in strategic sectors.

That is the abyss Europe needs to look into.

Not because Europe should give up.

Precisely because it should not.

By Leon Ge

March 24 2026

This essay is the first in a series on Europe’s industrial condition and the harder question of reindustrialisation. I am approaching it as a Chinese operator with deep exposure to the West (10 years in France, 10 years in Singapore) and a strong interest in where industrial capability is truly compounding, where it is fragmenting, and why. The goal is to look squarely at reality and from that, make decisions.
In the next pieces, I’ll go further into where policy, capital, and execution in Europe need to change if reindustrialisation is to mean anything more than a slogan.

Private invitation: FutureMade China

A small group of founders, investors, and senior operators will join us in 2026 for a closed-door immersion into China’s industrial frontier - from advanced manufacturing and robotics to AI, biomanufacturing, and the ecosystems shaping the next decade. If you want to see the China that most executives never get access to, apply for an invitation here.

For the first 48 hours, you can find maps, missiles, oil price hikes, and all matters of crisis. And then, everything just became white noise in the background. People started talking as if the worst was behind them.

Spoiler alert: it isn’t. The global supply chain moves a hell of a lot slower than social media, and the Hormuz blockage is simply the first domino to fall.

People still think of “oil” when they hear Hormuz. That’s not wrong, but it doesn’t cover everything that entails. Crude oil is much more than just fuel. It is the lifeblood of the global economy.

Take a look at headlines beyond the Western hemisphere, and you’ll immediately see the ripples. I would describe the past ten days not as a crisis that has calmed down, but as a public that has moved on faster than a system can stabilise.

As a matter of fact, it is still a war zone out there. Trump has threatened to strike Iranian power infrastructure if Hormuz is not reopened. Iran has threatened Gulf power and water infrastructure in response, while saying some shipping may pass only under its terms. The IEA is already discussing whether further oil stock releases may be needed after the record 400 million barrel release earlier this month.

That is still only the first wave. The second one is about almost everything that relies on crude oil and open trade routes.

Take LNG. Reuters reports that Iranian attacks have wiped out 17% of Qatar’s LNG export capacity, with repairs potentially taking three to five years. That’s enough to steer strategies off track. ADNOC (Abu Dhabi National Oil Company) in the UAE is also adjusting LNG output because of shipping disruption, while European policymakers have been forced back into gas-security mode. The phrase “temporary disruption” becomes harder to use with a straight face when the damage may last longer than some business plans.

Next, crude oil. It can be an abstract idea to many people, but diesel, gasoline, and jet fuel aren’t. In fact, many Asian nations have felt the effects of the war in their daily lives.

• In Cambodia, roughly a third of petrol stations closed at one point before emergency supplies reduced the closure rate.

• Vietnam has accelerated its shift to E10 fuel rather than sticking to its timetable.

• Thailand has moved to freeze some cooking-gas prices and promote subsidised biodiesel.

• China has limited how much of the global fuel shock gets passed through domestically.

Europe is now sending gasoline east, because Asia has cut down massively on their exports. The global market is actively redefining how refined oil products are traded, rather than simply repricing them. This means higher transport costs, worse distribution, and more pressure on consumers and manufacturers.

Then comes the silent killer, in the form of fertiliser.

Reuters reports that roughly one-third of global fertiliser trade passes through Hormuz. Middle Eastern urea prices have already risen about 40%, U.S. prices about 32%, and production has been halted or disrupted in multiple countries. There are no strategic fertiliser reserves equivalent to oil stockpiles. That means no Plan B here, contrary to popular assumptions. If the disruption persists, we will see it in delayed planting, lower yields, and a fresh food-price shock that will hit poorer importing countries first and hardest.

By the time the headlines feel old, the consequences have already made themselves known through fuel, fertiliser, food, and factories, slowly but surely. This is how modern shocks work - slow and hidden, yet they pack a powerful punch.

Sooner or later, the public will feel it in their grocery lists, their energy bill, their takeaway lunches, and will be none the wiser until it's too late.

Europe is already feeling the industrial version of this. Reuters reports that companies across Germany and the wider industrial Europe are freezing hiring, raising prices, delaying investment, and reconsidering production plans due to higher energy and raw material costs. BASF, Henkel, Evonik, and other manufacturers are again being pushed into defense. Some Asian suppliers are invoking force majeure. This is not just bad news for commodity traders, but also for designers, buyers, product teams, CFOs, and founders who still believe geopolitical shocks remain safely outside the walls of their business unless they are in oil and gas.

Stay with me now:

• If Hormuz disruption lasts another 30 days, this remains mainly a fuel, freight, and insurance story.

• If it lasts 60 days, it becomes a much broader fertiliser, chemicals, and industrial-input story.

• If it lasts 90 days, it starts becoming a food, inflation, and political-stability story in the most vulnerable countries.

I’m only making educated guesses, of course. The already-visible data: first shipping and energy, then fuel products, then farm inputs, then food systems, then politics.

This is why the most misleading signal in the world right now may be the surface calm that follows the storm. It’s much easier for people than systems to recover.

Which, in turn, creates a dangerous calm for all parties involved.

I’m not seeing things from a militaristic lens, but one that’s industrial. I grew up in China, spent years in Europe, and have lived close enough to manufacturing, supply chains, and cross-border systems to know that physical consequences usually arrive later than emotional ones. People will feel fear and fatigue long before they face reality.

That is what Shockwatch is for. We are not trying to out-report foreign correspondents, nor compete with the noise machine. We are only tracking how geopolitical shocks affect decision-making before firms have to pay.

Stay tuned for more.

Trust me, there will be, unfortunately.

Leon Ge
23 March 2026

* The name “Hormuz” is a linguistic descendant of Ahura Mazda, the Zoroastrian god of light and wisdom. It evolved over centuries from the Middle Persian forms Ohrmazd or Hormoz into the name we recognize today.

Why we publish this

FutureMatters exists to help busy teams understand how the physical world is being redesigned by conflict, rules, machines, materials, trade, and industrial strategy.

About the author: Leon Ge writes and builds at the intersection of AI, manufacturing, regulation, materials, and industrial strategy. He is the founder of Tocco.

Subscribe to get the next issue of Shockwatch and the weekly FutureMatters brief. You can also follow Leon on LinkedIn for shorter notes and field observations.

Private invitation: FutureMade China

A small group of founders, investors, and senior operators will join us in 2026 for a closed-door immersion into China’s industrial frontier - from advanced manufacturing and robotics to AI, biomanufacturing, and the ecosystems shaping the next decade. If you want to see the China that most executives never get access to, apply for an invitation here.

Five stories that matter this week:

1. As predicted last week, higher gas prices linked to Iran conflicts are hurting European heavy industry fast. One of Britain’s last major chemical plants says it will shut the site if energy prices stay this high for the next three months and will import from China or the US. The owner says his UK factory has gone from …

Read more

That is the frame I would offer.

After two decades living and working between China, Singapore, France and wider Europe, and after spending the last few years visiting Chinese industrial hubs, industrial parks, suppliers, founders, manufacturers, and local officials across the country, I have come to think that the car story is widely described but still badly understood.

Too many people still tell it as a simple EV story.

It is not.

It is an operating system story.

And Germany, for all its prestige, is now being forced to compete against a newer and harsher one.

Germany’s old formula was real

For a very long time, Germany’s automotive strength rested on a formula that was powerful enough to feel almost natural: engineering prestige, supplier depth, export discipline, industrial consensus, relatively cheap energy, and a highly profitable relationship with China. Reuters put it more bluntly in 2024: Germany’s long-time formula relied on cheap energy from Russia, lucrative trade ties with China, and consensual industrial relations. That formula is now under strain on all three fronts. (Reuters)

This is why the current pressure on German carmakers should not be read as a normal cyclical wobble.

It is not one bad quarter.

It is not merely that EV adoption is difficult.

It is that the environment that once made German automotive excellence scalable has become less forgiving, while the environment that now favours speed, software, battery economics, and brutal iteration increasingly points elsewhere. (Reuters)

The scoreboard is ugly enough already

The recent numbers are not subtle.

Mercedes-Benz Cars sold 1.80 million vehicles in 2025, down 9% year on year, with China down 19% to 551,900 units. BMW Group’s sales in China fell 12.5% to 625,527 vehicles. Audi delivered 617,514 vehicles in China, down 5%. Porsche’s China deliveries fell 26% to 41,938 cars, while group operating profit collapsed from €5.64 billion to €413 million and its operating return on sales fell to 1.1%. Volkswagen Group’s total deliveries were broadly stable at 8.98 million vehicles in 2025, but China deliveries fell 8%, and its battery-electric deliveries in China fell 44.3% to 115,500 units. (Mercedes-Benz Group)

None of this means German carmaking is dead. That would be lazy.

Volkswagen has just reclaimed the top-selling position in China in the first two months of 2026 with a 13.9% market share, narrowly ahead of Geely at 13.8%, while BYD fell to 7.1% after subsidy changes and fading tax incentives hit the market. Audi has regained the leading premium position in China. BMW remains globally large and profitable. Mercedes still dominates the over-1-million-RMB segment in China. Porsche’s 911 continues to be an icon. (Reuters)

But that is precisely the point.

This is not an obituary.

It is a stress test.

The deeper problem is not “EVs”. It is tempo.

If you reduce the story to “German carmakers were slow on EVs”, you miss the real shift.

The real shift is tempo.

Chinese automakers and suppliers do not merely produce electric cars. They compress time. They compress model cycles, software updates, supplier response times, localisation speed, charging infrastructure deployment, and the willingness to ship before every last uncertainty has been philosophically resolved.

Volkswagen’s own response tells the story. It’s the first mass-produced EV developed with Xpeng, the ID. UNYX 08 reached production in 24 months. Reuters reports Volkswagen says its new China-based architecture allows vehicles to be developed 30% faster. The group plans more than 20 new models in China in 2026 and 50 new-energy vehicles there by 2030. That is not the behaviour of a company making cosmetic adjustments. That is the behaviour of a company being forced to adopt a new clock. (Reuters)

That is why I do not think the best frame is “China has overtaken Germany”.

The better frame is this:

• Germany still carries much of the brand equity of the old automotive order.

• China increasingly carries more of the operating logic of the new one.

And the wider German system is under pressure too

Cars do not exist outside industrial conditions.

German industry is not being tested only by BYD, Geely or Xiaomi. It is being tested by energy, labour costs, slower growth, tariff pressure, and a broader erosion of the old business environment. Reuters reported last week that euro zone industrial output is now 3% below its 2021 level, and Germany has been one of the hardest-hit countries, with output 9% below 2021 levels. The same report points to high energy costs, competition from China, U.S. tariffs, poor productivity growth, and weak global demand for European cars as the reasons. (Reuters)

The energy side matters more than many people want to admit. Reuters noted in February that Germany had for decades relied on relatively cheap Russian gas, which had been a key industrial advantage. The IEA also reported that German wholesale electricity prices rose 37% in the first half of 2025, with average prices just below USD 100/MWh. In other words, Germany is trying to run a manufacturing-heavy model after losing one of the inputs that helped make that model work. (Reuters)

The labour side is becoming visible too. Reuters reported in August that German industry had shed around 245,500 jobs since 2019, and that the sharpest annual decline was in car manufacturing, where around 51,500 jobs were lost in a year. Volkswagen alone is planning major cuts through 2030. (Reuters)

China’s automotive machine is bigger than most people still realise

China is not only making more EVs. It is becoming the centre of gravity for the industrial learning curve itself.

According to the IEA, China produced 12.4 million electric cars in 2024, more than 70% of global EV production. China also sold over 11 million electric cars in 2024, with electric vehicles accounting for almost half of all car sales in the country. That is not just scale. That is training data for an industrial system. (IEA)

And the speed frontier keeps moving. Reuters reported last week that BYD’s Denza Z9GT will launch in Europe with charging from 10% to 70% in five minutes, with up to 800 km of range, while BYD’s own sales grew from 420,000 cars in 2020 to 4.6 million in 2025. Even if specific models or subsidy conditions fluctuate, the direction of travel is unmistakable. (Reuters)

But here is the nuance most lazy articles miss

China’s automotive rise is not clean.

It is not smooth.

And it is not built on pure profitability or Western-style market hygiene.

Reuters reported in September that foreign brands’ share of China’s car market fell from 62% in 2020 to 31% in the first seven months of 2025. But the same Reuters investigation also found an oversupplied market, deep discounting, local-government inducements, pressure to keep factories running, and a system in which capacity has outrun rational demand. AlixPartners estimates only 15 of China’s 129 EV and hybrid brands may be financially viable by 2030. (Reuters)

This matters because it sharpens the argument.

China is not winning because everything is tidy.

China is winning, in many layers of the value chain, because the system is willing to be harsher, more compressed, more subsidised, more localised, and more brutally competitive than most incumbents in Europe or Japan would comfortably tolerate.

That has obvious risks.

It also creates speed.

This is why “premium” no longer means what it used to mean

For years, German premium brands benefited from a simple asymmetry.

China made many things.

Germany made the aspirational car.

That asymmetry is weaker now.

The new Chinese rivals are not just cheaper. They are increasingly software-rich, fast-moving, and in some segments more aligned with what younger buyers want: digital interfaces, rapid refresh cycles, ambitious charging, strong in-cabin experience, and a less nostalgic view of what a car should be. Reuters put it plainly last week: Volkswagen has lost ground in China to local rivals that have been quicker to roll out software-rich, lower-cost electric cars. (Reuters)

And the competitive pressure is no longer contained within China. Reuters reported in February that Chinese automakers doubled their share of European car sales to 6% in 2025, even though penetration differs sharply by country. That number is still small enough to dismiss if you want comfort. It is already large enough to demand attention if you care about direction. (Reuters)

So what is actually being revived?

Not Germany’s exact institutions.

Not its exact labour model.

Not its exact premium aesthetic.

What China is reviving is something deeper.

A belief that industrial power matters.

A willingness to align supply chains, policy, infrastructure, technology, and manufacturing around strategic sectors.

A seriousness about export scale.

An acceptance that speed is itself a weapon.

And a refusal to assume that old incumbency deserves permanent reward.

In that sense, China is not simply defeating Germany.

It is reviving, under different political and economic conditions, some of the old industrial virtues that Europe once embodied more confidently than it does today.

That is what makes this moment uncomfortable.

And interesting.

Germany is not finished. But the burden of proof has flipped.

I am not arguing that Germany is over.

That is lazy and ahistorical.

German carmakers still have world-class brands, engineering depth, supplier relationships, global footprints, and serious talent. Volkswagen is adapting. BMW remains formidable. Mercedes still owns parts of the premium narrative. Audi is retooling. Porsche will not disappear because one bad year made the market emotional. (Reuters)

But the burden of proof has changed.

It is no longer enough for Germany to say: we are premium, we are precise, we are engineering-led.

The world is now asking harder questions:

• Can you move fast enough?

• Can you localise fast enough?

• Can you ship software that feels current?

• Can you manage energy economics that are no longer friendly?

• Can you build EVs that do not merely comply, but excite?

• Can you compete when the home market of your rival is also the largest industrial training ground on earth?

Those are not rhetorical questions anymore.

They are operating questions.

What serious operators should watch next?

The first thing to watch is not headline sales.

It is development time.

If China-based design, software, sourcing and vehicle development loops keep compressing while Europe keeps debating, that matters more than one quarter of deliveries.

The second is energy and industrial cost asymmetry.

If Germany remains structurally more expensive to manufacture in, the premium cushion will only stretch so far.

The third is whether Western carmakers become more Chinese in China, and more selective everywhere else. Volkswagen’s Xpeng partnership and “in China, for China” push suggest that the answer is already yes. (Reuters)

The fourth is whether Europe can rebuild industrial confidence without simply copying China.

That is the bigger civilisational question underneath the car story.

Not whether Europe can ban, tariff, or complain its way back into safety.

But whether it can relearn speed, seriousness, and industrial coordination without losing its own strengths in the process.

That is the real contest.

And cars are simply where it is easiest to see.

Why this matters beyond cars

If you work in sourcing, industrial strategy, advanced materials, supplier discovery, manufacturing partnerships, or China-Europe industrial flows, this is not a niche automotive story.

It is a leading indicator.

It tells you where the new industrial clock is being set.

And if you are still reading it as a conventional “German decline versus Chinese rise” story, you are missing the more interesting part.

The more interesting part is that one side is defending an inheritance.

The other is rebuilding a machine.

And machines, when they are well-tuned, are very hard to beat.

- Leon Ge, on behalf of the Tocco team

Private invitation: FutureMade China

A small group of founders, investors, and senior operators will join us in 2026 for a closed-door immersion into China’s industrial frontier - from advanced manufacturing and robotics to AI, biomanufacturing, and the ecosystems shaping the next decade. If you want to see the China that most executives never get access to, apply for an invitation here.

Good morning, afternoon, and evening,

This week, a few more signals appeared among the noise.

1. Let’s talk money first. On March 11, the European Commission approved €260 million in additional state aid from Belgium to support the Kairos@C CCS project, led by Air Liquide and BASF at the Antwerp industrial cluster.

   Over 15 years, the project aims to prevent a…

Read more

It has since turned into something else entirely.

Clearly, it’s about energy. But it is also about shipping, about air freight, about insurance, about plastics, about timing, and, increasingly, about management. What looks like war on television is already entering the physical economy as a kind of tax - not a formal tax, of course, but a tax all the same: on movement, on certainty, on margin, and on time.

That is what this first issue of Shockwatch is about.

We are not going to predict where missiles land next, nor tell our readers who is morally right, nor compete with war correspondents. There are already enough people doing those things. Our take is much narrower and, we think, more useful for busy operators: when a conflict starts pushing on chokepoints, prices, routes, insurance, and industrial inputs, what does that actually mean for the people trying to source, design, price, ship, and plan? That is the question.

And as of Friday, 13 March 2026, it is no longer a theoretical one. (IEA)

From war to throughput

A useful mistake to avoid is to think of the Strait of Hormuz as a dramatic geography lesson, while it isn’t. It is a story on infrastructure. The kind of infrastructure that we have long taken for granted, because it usually just works.

According to the U.S. Energy Information Administration, around 20.9 million barrels of oil, per day, moved through Hormuz in the first half of 2025, equal to roughly 20% of global petroleum liquids consumption. On top of that, about 11.4 billion cubic feet per day of LNG transited the strait, which was more than 20% of global LNG trade. The same analysis says 89% of the crude oil and condensate moving through Hormuz went to Asian markets, with China, India, Japan, and South Korea accounting for 74% of those flows. This is why the strait matters so much: not because it is famous, but because the physical economy is still routed through a very small number of critical passages. (IEA)

That kind of concentration is easy to forget in calmer periods. The world economy often gets described as a giant web, while in reality, it is much less web-like, being closer to a relay race with a surprisingly small number of critical handoff points. And when one of those handoff points becomes unreliable, the damage does not stay politely at the chokepoint. It spreads like wildfire.

Already historic

The International Energy Agency said on 11 March 2026 that its 32 member countries had agreed to make 400 million barrels of oil from emergency reserves available to the market, describing the move as the largest collective stock release in the agency’s history. The IEA also said oil flows through Hormuz had been so badly disrupted that exports of crude and refined products were running at less than 10% of pre-conflict levels. (IEA)

A day later, Reuters reported that the IEA now sees the conflict as the largest oil supply disruption in the history of oil markets, with global oil supply in March expected to fall by 8 million barrels per day. Reuters also reported that Brent, which had spiked earlier in the week to $119.50, was still hovering near $97 on 12 March. (Reuters)

Those are not normal numbers. While they do not mean the world is ending, they do mean this situation is no longer something that can be filed away mentally under “news to skim later”. A record reserve release is the kind of signal that tells you the market has already moved past anxiety into intervention. (IEA)

The Re-pricing of Movement

The easiest version of the story is: war in the Middle East, increasing oil prices.

This is true, no doubt. But it’s also grossly insufficient.

By diving deeper, you’ll see that once a strategic corridor becomes militarily risky, the cost of moving things through the system starts being repriced, all at once. That repricing shows itself through several channels:

• fuel

• marine insurance

• tanker and container availability

• route reliability

• air cargo spillover

• inventory and working-capital stress

Reuters reported today that air-freight rates have risen by as much as 70% on some routes, driven by a mix of airspace closures, ocean shipping blockages, and much higher jet-fuel costs. In the same report, they also said more than 100 container ships have been stranded near Hormuz. It also pointed to disruptions on South Asia-Europe lanes and pressure on hub airports in the Gulf, such as Dubai and Doha, with a butterfly effect for cargo moving far beyond the Gulf itself. (Reuters)

This is the part many executives miss at first. They assume the impact is localized, which cannot be further from reality for impacts of this scale. If sea lanes are delayed or restricted, some cargo shifts to air. If airspace is disrupted, air capacity tightens and prices jump. If insurance and war-risk premiums rise, schedules become less trustworthy even before routes formally close. The result is that a geopolitical event very quickly snowballs into a systematic event.

And it’s in systematic events that costs start hiding in plain sight.

Maritime Risk is Real

Reuters reported on 12 March that Iran said ships must coordinate with its navy when passing through the Strait of Hormuz. Reuters also published a tracker the same day saying 16 civilian ships had been attacked since the beginning of the conflict, citing data from the Institute for the Study of War and AEI’s Critical Threats Project. (Reuters)

It’s one thing to worry about physical danger, but for logistics networks, perception holds as much water as reality. Once shipowners, insurers, freight forwarders, and cargo owners begin treating a route as unpredictable, the route is effectively damaged even before it is fully closed. Capacity becomes harder to secure. Surcharges appear. Alternatives become crowded. Lead times become softer. Contracts that looked acceptable under normal assumptions start looking thin.

This is why we think the best frame for what is happening is not “oil shock” alone. It is an industrial risk premium. The physical economy is being asked to pay more, and plan harder, for the same act of moving goods through the system. (Reuters)

Asia is first. Europe is next.

The EIA data makes the first part very clear: Asia is more directly exposed because most crude and condensate moving through Hormuz heads there, and China is the largest LNG destination among countries supplied through the strait. (IEA)

That should not lead European teams to relax. Europe does not need to be the first-order buyer to feel the consequences. It only needs to live in the same market for:

• energy

• freight

• synthetic feedstocks

• petrochemicals

• plastics

• insurance

• industrial sentiment

That is the point. In a fragmented but still connected world economy, disruptions do not need to touch you directly to become your problem. They can arrive through benchmark prices, rerouted cargo, constrained capacity, nervous suppliers, and cautious customers. The more energy-intensive, time-sensitive, or shipping-dependent your operations are, the more quickly the shock becomes visible. (IEA)

An Uneven Tax

This is where the story becomes more managerial than geopolitical.

The firms most exposed are not necessarily those with the highest headline energy bill, but very often the firms that are brittle in less obvious ways:

• firms with long or fragile lead times

• firms over-reliant on one sourcing region

• firms dependent on petrochemical-linked inputs

• firms that still model landed cost using last quarter’s freight assumptions

• firms with poor visibility into second-order supplier exposure

Those second-order effects matter because the market rarely punishes everyone equally. It punishes the unprepared first. One company will absorb higher shipping or air costs and move on. Another will miss a delivery window, switch transport mode at the worst possible moment, and discover too late that the “cheapest” supplier on paper came with no resilience built in.

This is why the new industrial tax is not just about crude prices. It is about the cost of uncertainty entering systems that were optimised for smoothness rather than stress. (Reuters)

Questions for Serious Operators

The right response is not panic, but discipline.

A few questions are worth asking this week:

Where do we have direct or indirect exposure to Gulf-linked energy, LNG, petrochemicals, plastics, or shipping lanes?

Which suppliers become fragile if ocean transit remains disrupted for another two to six weeks?

Which landed-cost assumptions are now stale?

Where would we be forced into air freight, and what would that do to margin?

Which categories deserve dual-sourcing, tighter monitoring, or more inventory buffer than they had a month ago?

These are not dramatic questions. That is precisely why they matter. In times like this, the operational edge usually comes from asking the unglamorous questions faster than everyone else.

What we are watching next

There are four things we would watch from here.

First, whether commercial movement through Hormuz meaningfully normalises, or remains technically open but commercially impaired. The difference matters.

Second, whether air-freight rates continue climbing or start to stabilise. Reuters did note early signs that rates may be levelling as carriers add capacity and some Gulf operations resume. (Reuters)

Third, whether the shock spreads more visibly into chemicals, plastics, and manufacturing feedstocks, that would broaden the story from energy and logistics into direct material-cost pressure.

Fourth, whether executive behaviour changes. Because these moments tend to accelerate trends that were already underway: dual-sourcing, regionalisation, more appetite for redundancy, and a greater willingness to pay for visibility rather than simply chasing the lowest cost.

That may be the longer-term consequence of this episode. Not the end of globalisation, not the end of trade, not some lazy “deglobalisation” cliché. Something more practical than that: a world in which resilience keeps getting repriced upwards, one shock at a time.

And that is why this should not be filed as “just another foreign-policy crisis”.

It is already a business story.

It is already a systems story.

And for more teams than they realise, it is already a cost story.

- By Leon Ge, on behalf of the Tocco team

Friday 13 March 2026

Private invitation: FutureMade China

A small group of founders, investors, and senior operators will join us in 2026 for a closed-door immersion into China’s industrial frontier - from advanced manufacturing and robotics to AI, biomanufacturing, and the ecosystems shaping the next decade. If you want to see the China that most executives never get access to, apply for an invitation here.