EU firms in China optimistic, slam discrimination

By Chen Chen
0 CommentsPrint E-mail, May 26, 2011
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European companies in China saw significant growth in 2010 and see the Chinese market as strategically more important than ever, according to a business confidence survey released today in Beijing.

Davide Cucino, President of European Chamber in China []

Strong financial results in 2010 mean most European companies are optimistic about 2011. Of the companies surveyed, 65 percent said China’s 12th Five Year Plan will positively impact the business environment. 70 percent said they benefited from China’s economic recovery from the financial crisis, and 79 percent are optimistic about the growth outlook. Companies reporting positive net profit margins increased from 58 percent in 2009 to 74 percent in 2011.

But EU firms also say they are facing increasing competition from their Chinese counterparts. Chinese companies are catching up in terms of product quality, design, technology, and brand recognition.

And they complain of preferential treatment given to Chinese firms. They say government policies increasingly discriminate against foreign invested enterprises. Companies complaining about discrimination increased from 33 percent in 2010 to 43 percent this year.

"That is the biggest concern for me," Davide Cucino, president of the European Chamber in China, said.

European companies are also increasingly worried about the regulatory environment. Discretionary enforcement of broadly drafted laws and regulations is their top concern (42 percent). They also complain about a lack of coordination between regulators (40 percent) and lack of harmonization with global standards (39 percent).

Rising labor costs and raw materials prices are also issues but labor shortages have not affected European as much as local companies since wages and conditions they offer are above average. "The biggest challenge they are facing is the high bonuses and wages required by a few high end talents," Cucino said.

The China Business Confidence Survey 2011 was conducted by EU Chamber of Commerce in China in conjunction with Roland Berger consultants. A total of 598 companies took part in the survey.

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