European firms cooling on China

According to report by the Euro Chamber of Commerce in China, reasons include slowing economy and lack of adherence to existing laws.


China


European companies doing business in China are finding the market less attractive due to rising labour costs, a slowing economy and lack of adherence to the rule of law, the European Union Chamber of Commerce in China said. Other factors hurting the business climate, according to the latest survey of 552 Europe-based companies operating in China, include difficulties attracting and retaining staff, market access barriers and “discretionary enforcement of regulations.”

“The economic slowdown is a real game-changer for European companies in China,” said Jörg Wuttke, president of the European Chamber at a news conference. “For multinationals, China is still important but not as important as it was a few years ago.” Despite Beijing’s promise to enact far-reaching economic reforms, only 53 per cent of the companies polled said they expected to see changes implemented in a meaningful way. “A new sober reality is developing,” the report said. “An abiding sense of pessimism for future performance is setting in.”

Some European companies appear to be voting with their feet, or at least thinking of doing so. While the world’s second-largest economy remains a hugely important market, many said they were scaling back investment plans. Only one in five ranked China as their top destination for new investments, down from a third in last year’s survey.