1. On July 15, China reported a 27% year-over-year export surge in June (hitting $412.4 billion), the fastest growth rate since late 2021. This export boom is timely in the context of a slowing-down domestic economy, where Q2 GDP growth is at 4.3%. This export growth relies on high-tech: semiconductor export surged 122% and auto exports surpassed 1 million units in a single month.

   Exports to ASEAN jumped 34.6%, led by exports to Vietnam ($22.7 billion). This is the “China +1” strategy laid bare: ASEAN in general and Vietnam in particular serves as a pass-through around the tariffs from the U.S. We addressed the “China+1” strategy extensively in our report “The China–Vietnam Industrial Corridor 2026”, as well as in this analysis “Vietnam’s Q1 2026 FDI Numbers: Where the Money Really Went?”. If this is something you’re interested in discussing, write to us anh@tocco.earth.

2. Still on China, Louis Vuitton is taking China’s trademark regulator (CNIPA) to court for not blocking a competitor from registering floral patterns. This move follows hot on the heels of last week’s $1.5 million lawsuit LV won against local chain Molly Tea, which sparked massive nationalistic backlash.

   By suing the State Regulator, LV seems to expose a large geopolitical blind spot, especially considering their financial situation. According to LVMH’s 2025 financial report, global revenue fell 5% to €80.8 billion, with the core Fashion & Leather Goods division dropping 8%. Asia (excluding Japan) accounted for 26% of LVMH’s revenue in 2025. In a market where LVMH is trying hard to regain local shoppers, doubling down on legal fights does not look sensible, but perhaps Bernard Arnault’s lawyers know best.

3. Speaking of industrial survival, on July 16, NVIDIA and Noetra Corp. announced a partnership to build Japan’s first national “Physical AI” infrastructure. Backed by $2.4 billion from Japan’s Ministry of Economy, Trade and Industry, the 140MW data center will house 27,500 GPUs and 13,750 CPUs to build foundation models for robotics and digital twins.

   As we previously covered back in May, this development continues Japan’s push for AI and robotics hardware, betting to capture 30% of the global AI robotics market by 2040 (a $133 billion opportunity). If you are in this space, read on our report “Industrial Robotics - Executive Outlook 2030”.

4. On the other side of the planet, the U.S is in the middle of a large, multistate cyclosporiasis outbreak, a parasitic infection causing severe gastrointestinal distress. There are nearly 7,000 potential cases nationwide, with over 3,300 in Michigan alone.

   Public health agencies have identified shredded iceberg lettuce from central Mexico (Taylor Farms de Mexico) as a likely source in at least one multistate outbreak, leading to a recall across 27 states. FDA and CDC note that cyclospora infections often occur via fresh produce exposed to contaminated irrigation water, wash water, or other environmental sources; contamination generally occurs when food or water contacts human fecal material.

   As these water-borne outbreaks become more frequent (443% increase in infections comparing 2016–2018 to 2021, though CDC cautioned this might reflect better detection as well as a true rise), agriculture as industry will face pressure from regulators in upcoming years. We will monitor this space to assess the implications for industrial equipment markets - particularly in cold chain logistics, food processing, and water treatment sectors.

Enjoy your weekend. Stay sharp, and keep building.

Anh & Tri

On behalf of the Tocco team

Further Readings · Material & Manufacturing News · 07.2026

• (China 🇨🇳) Xi Jinping warns against creating ‘new historical injustices’ in AI era. Speaking at the 2026 World AI Conference on July 17th, President Xi Jinping warned against “new historical injustices” in global tech access. To move past technological blockades, China is attracting the Global South, pledging 5,000 AI training programs over the next five years and establishing joint AI centers across ASEAN, the African Union, and Latin America. China’s domestic smart economy now valued at over 1 trillion yuan ($147.6 billion), bringing open-source models and hardware alternatives as the default AI infrastructure for emerging markets is a sensible move.

• (France 🇫🇷) Lululemon backed a $30 million Series A for French deep-tech startup Syntetica to build a commercial nylon recycling facility. While global nylon production reached 7 million tons in 2024, only 2% is recycled because traditional methods require separating complex mixed fibers. Syntetica’s patented chemical process breaks down both Nylon 6 and Nylon 6,6 simultaneously without pre-separation. We’ll keep track on the next development from Syntetica, as the road to scale for manufacturing facility of this type in Europe is long and windy (we wrote about this in our piece “Europe’s True Reindustrialisation: First, Look Into the Abyss”').

• (India 🇮🇳 & UK 🇬🇧) The India-UK Comprehensive Economic and Trade Agreement (CETA) officially entered into force on July 15, 2026, eliminating UK import tariffs on 99% of Indian goods. The pact aims to double India’s textile market share in the UK to 12% within five years and push total bilateral trade past $100 billion by 2030, while a companion social security agreement will save 75,000 Indian professionals in the UK from double taxation.

• (United States 🇺🇸) From Field to Fabric: Hemp Traders on the future of hemp textiles: LA-based Hemp Traders notes that new mobile decortication technology, which separates bast fiber and hurd directly in the field, is solving the cost issues that have historically kept hemp textile prices high. Hear it straight from Lawrence Serbin, the owner, on how fibre uniformity is the real barrier to scaling hemp textiles in the U.S.

Four stories that matter the past week:

1. The Suzhou Intermediate People's Court ordered Chinese milk tea chain Molly Tea to pay 10.3 million yuan ($1.5 million) to Louis Vuitton for trademark infringement, ruling that the chain’s four-petal flower logo directly copied LV’s registered monogram design.

   It might be too early to say how this story will turn out. The ruling drew over 400 million views on Weibo, with massive public support for Molly Tea. The brand’s American branch updated its logo to a question mark that became quite viral on social media. Molly Tea’s founder and the company have said they will appeal the first‑instance judgment, so the case is not final. After all, $1.5 million to be the center of attention doesn’t seem too high a price for a brand with over 2,300 global outlets.

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2. Speaking of disputes, President Trump ordered an immediate trade embargo on Spain during the NATO summit in Ankara. In his words: “[we] cut off all trade with Spain, including visits.” This stems from Spain’s refusal to commit to a 5% GDP defence spending target by 2035, along with its decisions during the Iran war to deny US forces access to joint military bases and close their airspace to American aircraft.

   Total two-way goods and services trade between the US and Spain is valued at $74.5 billion annually. Spanish companies have invested €97.2 billion ($111 billion) in the US, making it their largest investment destination worldwide, while US productive capital investment in Spain exceeds €116 billion, employing around 200,000 people. This can escalate quickly, as the EU sets trade policy for its member states and requires common treatment across the bloc, meaning any targeted action against Spain could trigger a broader EU response.

3. Still on Europe, we covered Volkswagen‘s initial job-cut plans last week. This week, the story sprang further. IG Metall, Germany’s most powerful industrial trade union, is staging nationwide protests across VW manufacturing sites after CEO Oliver Blume proposed expanding global job cuts to 100,000 along with closing three German VW plants and an Audi factory. The cuts would amount to a roughly 15% reduction in VW‘s global workforce of 630,000, eclipsing General Motors‘ 50,000 layoffs during its 2009 bankruptcy as the largest restructuring in automotive history.

   VW is not alone, though. The German Association of the Automotive Industry (VDA) issued a statement warning that Europe’s car production capacity now exceeds demand by more than 5 million vehicles a year, equivalent to 35 redundant production sites. VDA president Hildegard Müller went as far as suggesting that handing some German car plants over to foreign ownership could be a way to save jobs. The automotive sector is the backbone of the German economy, with an estimated 3 million people directly and indirectly employed across VW, Mercedes, BMW, and their suppliers.

4. Still on automotive, the tariffs on Chinese EVs in Western markets have somehow cemented Morocco’s position as Africa's leading manufacturing economy. Chinese manufacturers deployed over $6 billion in Morocco to build integrated EV supply chains. Morocco controls roughly 72% of the world's phosphate rock reserves, the core input for lithium iron phosphate batteries that the global EV industry is moving towards. Its investments in solar and wind generation give manufacturers a way to lower embedded emissions for compliance with the EU's Carbon Border Adjustment Mechanism. Labour costs in Moroccan automotive manufacturing average just $106 per vehicle, placing it among the world's lowest-cost production centres. Morocco also has FTA access to both the EU and the US, meaning it is not dependent on any single foreign market, or at all - it can export to Africa just as well. For more on the global automotive and EV landscape, read our Automotive and EV Design 2030 report.

Have a nice weekend. Stay sharp, and keep building.

Tri & Anh

On behalf of the Tocco team

Further Readings · Materials & Manufacturing News · 07.2026

(Europe 🇪🇺) Europe is ramping up their datacenter development. In southern France, the city of Pau is spending €3 million ($3.4 million) on a municipal 1 MW facility to keep data hosting under regional control. Meanwhile, Finland’s data center market is undergoing a multi-gigawatt expansion, with total pipelines exceeding 3.4 GW driven by its cold climate and reliable power grid. However, the country is still in two minds - grid operator Fingrid has capped new connections over 10 MW around Helsinki until 2027 to deploy a €7.2 billion infrastructure upgrade, while a proposed 40x jump in national data center electricity taxes has halted tech firms’ buildout efforts.

(Global 🌐) Bio-Based Plasticizers in 2026: Where the Market Is Going? The global bio-based plasticizer market is expanding at an 8.1% CAGR, nearly twice the rate of conventional plasticizers. This growth is made possible due to global regulatory crackdowns regarding plasticizer content in human-contact items, such as REACH Annex XVII and the US Consumer Product Safety Improvement Act (CPSIA). Read the complete bio-based plasticizer deep dive and find verified suppliers here.

(Global 🌐) Biocomposites in 2026: Definition, Materials, Applications, and Market Explained: The global biocomposites market is expanding at a CAGR of 16.5%, roughly double the 7% growth rate of the broader fiber-reinforced composites market. Driven by incoming mandates such as the EU’s End-of-Life Vehicles Regulation (ELVR) and the US USDA BioPreferred Program, biocomposites are fast becoming the default option for reducing vehicle carbon footprints. You can find top supplier profiles here, or the deep-dive report on next-gen biocomposites here.

(Global 🌐) Bio-Based Adhesives: Why the Market Is Moving Fast? As the August deadline is fast approaching, the bio-based adhesives market is valued at $6.8 billion in 2026 and is growing at roughly double the rate of the conventional chemical market. Adhesives are integral to global manufacturing, making the EU’s double whammy of regulations that much more impactful on the bio-based transition. Again, the top suppliers list is here, as well as the deep-dive report on this industry.

Five stories that matter this week:

1. Paris Fashion Week Men’s ran through a historic heatwave from June 24th to 28th, 2026, revealing a lot about luxury fashion as a whole. Louis Vuitton’s models emerged from a giant artificial wave in wetsuits made of neoprene and coats of cashmere and fur. Saint Laurent ran models through fog clouds in leather briefs and choker scarves. Timing is impeccable.

   According to experts, the luxury fashion world operates on the assumption that affluent consumers live in climate-controlled microclimates year-round, making a wool coat in June a desired purchase. However, Europe is a continent built to retain heat and still largely considers air conditioning wasteful or unecological amid a heat wave that has killed 1,500 so far.

2. Still on Europe, the UK fusion sector is entering what several industry leaders described as the “pre-deployment phase” as they plan a £2.5 billion investment in fusion over 5 years, a record-breaking figure for the nation.

   The UK is also seeing fusion’s commercial role differently. Compact fusion systems - onsite small-scale nuclear fusion reactors designed to generate 10 to 20 MW of power - are now being evaluated for sectors requiring continuous 24/7 power: data centres, maritime operations, and water treatment. The UK’s decision to regulate fusion under the Environment Agency and Health and Safety Executive and treat fusion as comparable to established chemical plants rather than fission also decouples them from nuclear site licenses and removes significant regulatory barriers for investors and operators.

3. Speaking of infrastructure, China’s Yarlung Tsangpo project in Tibet, which broke ground last July, has an estimated 60 GW of installed capacity and projected annual output of 300,000 gigawatt-hours - roughly three times as much electricity as the Three Gorges Dam, the world’s biggest hydropower project.

   Pumped storage is an important note here, as pumped hydro systems operate as closed-loop water batteries, storing and releasing electricity on demand without disrupting natural river flows. China has over 217.5 GW of pumped storage capacity under construction and an installed base of over 69 GW, a massive difference from Japan in the second spot (at 21GW). For context: India has made plans for 100 GW of pumped storage by 2035, while the United States has plans to double its current installed capacity of 19 GW.

4. Still on East Asia, Suzhou-based autonomous driving company Momenta opened investor orders for its Hong Kong IPO this week, aiming to raise HK$5.9 billion ($752 million). Backed by General Motors and Tencent, the company would be valued at nearly $9 billion at the offering price - comparable to Uber’s $8.1 billion valuation when it first went public.

   The capital going into autonomous driving platforms confirms that the sector has moved into commercialisation for mass-produced vehicles and robotaxi networks. For industrial operators in semiconductors, this accelerates demand for sensor arrays, edge-computing hardware, and specialised automotive chips. Dive deeper into navigating the current EV landscape with our report here.

5. Speaking of key industries, we published two deep dives this week on sectors where the August 2026 deadlines are now weeks away. Bio-based adhesives are growing at roughly twice the rate of the conventional adhesives market, reaching $6.8 billion in 2026 with a forecast of $15.26 billion by 2035. You can read the full analysis of this market here.

   Separately, the moulded pulp market has reached $6.7 billion, already equivalent to roughly half the size of the EPS packaging market it is replacing, and growing at nearly twice the rate. The cellulose foam market is growing at 18.5% annually, nearly three times the rate of conventional packaging foam. For a full analysis of these markets, it is over here.

Further Readings · Material & Manufacturing News · 06.2026

(Vietnam 🇻🇳) Nasdaq-listed AMC Robotics signed a lease for a 6,150 sqm facility in Bac Ninh, committing $3.5 million to produce its “NovaArm” robotic arm for warehouse sorting and industrial automation. Production targets the second half of 2026. Vietnam’s manufacturing base continues expanding beyond consumer electronics into advanced robotics.

(United States 🇺🇸) A $1.7 million “ozone nanobubbler” system has been permanently installed at the Lincoln Memorial Reflecting Pool to combat algae blooms. The technology injects 500 million microscopic ozone bubbles per teaspoon of water, with Ohio State and NOAA studies showing 90th-percentile effectiveness in open waterways. Long-term success depends on the National Park Service repairing decades-old underground distribution pipes.

(United States 🇺🇸) An unnamed tech firm is proposing an 800-acre, $1 billion data center campus in Solon Township, Michigan, negotiated through a shell company under an NDA. Some said it could be Microsoft, but the possibility has been ruled out. The township previously enacted a six-month moratorium on data center proposals in February 2026, highlighting growing animosity between hyperscale infrastructure expansion and local municipalities.

(Brazil 🇧🇷) Elea and AXIA Energia Announce Amazon’s First AI Data Center: Elea Data Centers, in partnership with renewable energy provider AXIA Energia, is developing “BEL1,” the first AI-neutral data center in the Brazilian Amazon powered 100% by renewable energy. Scheduled to begin operations in the second quarter of 2027, BEL1 will serve as a resilient network alternative to Fortaleza (Brazil’s primary submarine cable gateway), utilizing the “Connected North” infoways program to reduce digital inequality and establish a new strategic connectivity hub in the North.

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Five stories that matter last week:

1. Lululemon apologized in China after its Great Wall yoga festival sparked backlash. A drum performance with brand ambassador Zhu Yilong and the HiiKo Drum Group was criticised for using what users called a Japanese taiko drum at an event celebrating Chinese culture. Against tense China-Japan relations, the criticism spread fast, and Lululemon pulled all related promotional materials.

   From a business perspective, the stakes are high. China Mainland revenue rose 30% year-on-year in Q1 2026 to $478 million, with the region now accounting for 19% of total global revenue, up from 16% a year ago. Meanwhile, North American comparable sales fell 5% for the fifth straight quarter.
   China is increasingly the market keeping Lululemon’s top line moving. The company still expects roughly 20% growth in China for the full year, but a consumer boycott triggered by this cultural misstep could put that trajectory at risk. Previously, we discussed Lululemon’s PFAS lawsuit in the U.S.

2. Still on brands, BYD is preparing to bring its all-electric Great Tang SUV to Europe by late 2026 or early 2027, with over 150,000 orders secured in China since its April debut. To bypass European trade barriers, BYD is accelerating investment in its Hungarian factory and evaluating additional regional manufacturing sites. Chinese carmakers accounted for 15% of Europe’s EV sales in April and nearly 10% of overall unit volume.

   In a different mood, BMW issued a profit warning forecasting a “significant” decrease in pre-tax profit, slashing its automotive EBIT margin guidance from 4-6% down to 1-3%. Shares dropped over 7%. The company cited a sharp demand contraction in China and the economic fallout from the Middle East conflict, keeping energy costs elevated and consumer sentiment weak. Reuters reported that BMW’s positive sales trends in Europe and the US have not been enough to offset the decline in Asia. Meanwhile, Volkswagen plans to cut 50,000 jobs and reduce production by 3 million units by 2030.

3. Still in Asia, the OECD upgraded South Korea’s 2026 GDP growth projection to 2.6%, the only upward revision among G20 economies. Semiconductor exports surged 169.4% year-on-year in May, with chips now accounting for roughly 42.3% of total exports. Traditional manufacturing contracted in the same month: automobiles down 5.9%, general machinery down 6.3%, home appliances down 21.7%, and steel down 2.1%. South Korea also holds the highest reliance on Persian Gulf intermediate energy imports in the OECD, at 5% of gross output. Inflation has risen to 3.1%, temporarily buffered by a $17.7 billion stimulus package and fuel tax cuts. More to follow on South Korea’s economic growth towards the end of the year 2026, with perhaps more collaborations with China on major technologies to watch.

4. Things go south for Indonesia’s stock market, as global index provider MSCI is deciding this month whether to downgrade Indonesia’s stock market from emerging market to frontier market status. Analysts project that reclassification could trigger up to $13 billion in foreign capital outflows. The Jakarta Composite Index has already dropped nearly 31% this year, pressured by high oil prices, a widening budget deficit, and political uncertainty around state interventions in commodity exports.

   For Indonesia’s industrial and manufacturing sectors, a capital flight of this scale will weaken the rupiah, which increases the cost of importing essential industrial machinery, capital equipment, and raw materials, compressing manufacturing margins across the board. To stabilise the domestic economy, the Indonesian government may accelerate state intervention and enforce stricter export controls on critical commodities such as nickel and palm oil. Supply chain operators relying on Indonesian resources should prepare for a highly volatile pricing environment and unpredictable regulatory barriers in the coming months. Indonesia’s fiscal trajectory has been pretty bleak recently: interest payments consuming 19% of government revenue, the rupiah at an all-time low, and $6 billion in foreign capital already departed under Prabowo.

5. NOAA places an 82% probability on a strong El Niño emerging between May and July 2026, with CNN reporting it could become the strongest in 140 years. The WMO confirmed that the peak would land directly on Q4 procurement and Q1 production planning cycles.

   Agricultural raw materials are already under strain. The World Bank projects fertiliser prices to rise 31% in 2026, with urea hitting $725.6 per tonne in March. Farmers are already changing to less fertiliser-intensive crops, meaning yields will be lower before El Niño arrives. The energy situation makes it even worse: when El Niño reduces river flows, hydropower-reliant manufacturers must either save power or rely on expensive diesel backup. We’ll report more on this in next coming months.

Enjoy your week. Stay sharp, and keep building.

Tri & Anh
On behalf of the Tocco team

Leon’s Thoughts on Nantong (南通)’s Rise

Exploring Nantong (南通), the quiet $184 billion powerhouse that pioneered China’s modernization and is now poised to become Shanghai’s massive northern gateway.

This episode is also available on Spotify and Apple.

Further Readings · Material & Manufacturing News · 06.2026

(United States 🇺🇸) Algenesis: Replacing Polyurethane with Plants: Algenesis has developed Soleic, a plant-based polyurethane system where both material durability and the exact biodegradation rate are mechanically governed by a single variable: the precise ratio of hard-to-soft segments within the polymer chain. This material shift arrives ahead of the EU Extended Producer Responsibility (EPR) eco-modulation fee scheme, which is scheduled for implementation to penalize conventional petroleum-based polyurethanes while financially rewarding biodegradable alternatives. Material specification teams and footwear procurement leads should watch these tunable bio-polyurethanes to hedge against looming regulatory penalties.

(Europe 🇪🇺) CEFLEX Identifies 440,000-Ton Annual Deficit in Recycled Flexible Plastics. A new report by CEFLEX reveals that EU Member States must source an additional 440,000 tonnes of post-consumer recyclate (PCR) from flexible polyolefins annually to meet incoming PPWR mandates. According to the analysis, Europe requires a total of 2.5 million tonnes of PCR derived from flexible plastics by 2030 to satisfy mandatory recycled content targets, a figure projected to climb to 5.9 million tonnes by 2035 to meet comprehensive plastic packaging recycling rates. CEFLEX warns that packaging applications alone cannot absorb this volume. To prevent a market collapse, the value chain must develop non-legislated, open-loop secondary markets, which elevate total potential demand to 4.3 million tonnes by 2030.

(Global 🌐) What Digital Sovereignty Actually Means for Industrial Operators? In her interview with Tocco, Dr. Olga Ustyuzhantseva, Senior Researcher from the University of Johannesburg, outlines how the enforcement of the EU Carbon Border Adjustment Mechanism (CBAM) has officially transformed product emissions data from voluntary ESG paperwork into regulated trade infrastructure.

(Vietnam 🇻🇳) Vietnam’s Economic Boom, Explained. Vietnam's GDP expanded 7.83% year-on-year in Q1 2026, with registered FDI hitting $15.2 billion and disbursed FDI reaching $5.41 billion, the strongest first quarter since 2022. Electronics and component exports jumped 45.5% to $30.7 billion, anchored by Samsung's cumulative $24 billion footprint (including a new $4 billion semiconductor project in Thai Nguyen), Foxconn's $383 million printed circuit board plant, and LEGO's $1.3 billion automated clean energy factory. Total exports rose 19.1% to $122.93 billion, though surging demand for production inputs created a $3.64 billion trade deficit driven by imported machinery, raw materials, and electronic components. Vietnam is upgrading fast, but not equally across the regions. To navigate this, check out our report here.

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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, Eur…

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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 …

Read more

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 …

Read more

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…

Read more

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 d…

Read more

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 …

Read more

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…

Read more

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.

Read more

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.