Report: Half of EU firms in China say 'golden age' is over

By Steve Toloken
Staff Reporter / Asia Bureau Chief

Published: May 29, 2014 9:13 am ET
Updated: May 29, 2014 9:15 am ET

Related to this story

Topics China

The leading European business group in China said in a May 29 report that its companies are scaling back investment plans as China’s economy slows and challenges like rising labor costs, regulatory issues and market access become more entrenched.

“The Chinese economic slowdown and tougher business conditions are starting to bite and financial performances are getting much tighter,” said Jörg Wuttke, president of the Beijing-based European Union Chamber of Commerce in China. “Half of European companies already believe that the ‘golden age’ for multinational companies in China is over.”

The chamber released its annual business confidence survey, based on input from 550 EU chamber companies, on May 29.

The report said the huge size of China’s market will still offer substantial opportunities and keep it as a strategic location for most of its member companies, but the trade association pointed to a “new sober reality” among executives.

For the first time in the survey’s 11-year history, companies reported that profit margins in China were lower than their global average, the chamber said.

Implementation of meaningful reforms like better market access and stronger rule of law could lead European firms to increase their investments, the report said.

“Most European companies feel that domestic Chinese companies continue to receive favorable treatment,” the chamber said. “Two analogous issues — the unpredictable legislative environment and the discretionary enforcement of regulations — are identified as the two most significant regulatory challenges.”

There was a sharp drop in the percentage of European firms considering mergers and acquisitions in China in short term, dropping from 41 percent last year to 17 percent this year. And it said that 21 percent of companies consider China their top investment destination, down from 33 percent in 2012.

But some sectors reported much better results.

The auto industry and automotive component manufacturing industry reported the highest growth, with 79 percent of companies seeing revenues increase. Likewise, the medical device and machinery sectors reported better results, with 76 percent and 64 percent of companies reporting higher revenues.

Chemical companies and manufacturers in the auto industry were most likely to expand their operations, with more than 78 percent saying they would do so. By contrast, 57 percent of all companies planned to expand, down from 86 percent in 2013, the chamber said.


Comments

Report: Half of EU firms in China say 'golden age' is over

By Steve Toloken
Staff Reporter / Asia Bureau Chief

Published: May 29, 2014 9:13 am ET
Updated: May 29, 2014 9:15 am ET

Post Your Comments


Back to story


More stories

Image

Super typhoon ravages South China

July 21, 2014 3:58 pm ET

Super Typhoon Rammasun, the most powerful typhoon that has landed in China in four decades, has left parts of South China devastated, and the local...    More

Image

Windmöller & Hölscher looking to continued growth in China

July 21, 2014 3:40 pm ET

With 2013 global sales of 600 million euros, China has grown into an important export market for Windmöller & Hölscher KG, second only to the United...    More

China launches investments in Belarus

July 21, 2014 10:10 am ET

China is preparing to invest in a major bottle grade PET production project planned by the Belarus PET and polyester fibers producer...    More

Image

Polynt, CCP create composite resins giant

July 18, 2014 10:13 am ET

France's Total SA has agreed to sell CCP Composites to Polynt Group SpA, based in Italy, for an undisclosed price.    More

Image

Finding the picture-perfect use of scrap PS

July 17, 2014 12:26 pm ET

Shanghai Intco Industries Co. Ltd. was established 20 years ago in the United States as a trading company, but now based in China, the firm claims to ...    More

Market Reports

Injection Molders Market Report & Ranking 2014

This special package contains our 132-page 2014 Market Report on the Injection Molding segment and our exclusive 2014 RANKINGS database of 500+ Injection Molders for a discounted package price.

Learn more

Plastics Recycling Market Review & Outlook 2014

This special report from Plastics News examines the North American plastics recycling industry and provides insight into indicators that impact market viability, including Resin pricing trends for virgin and recycled market material and historical Resin production trends for post- consumer and industrial waste.

Learn more

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Upcoming Plastics News Events

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events