As China flexes its economic muscles, European firms there are optimistic about the market but have growing concerns about “discretionary” enforcement of laws and a less fair business environment, according to the top European business group in China.
In its June 29 annual survey of European companies in China, the European Union Chamber of Commerce in China said its companies are benefiting from the country's rapid growth, creating opportunities for their industries and making China more important in their global strategies.
But the chamber noted pointedly that the picture in China is becoming more complex, in which “optimism in the overall economic climate has been dampened dramatically by concerns about regulatory interference and unpredictability in the market.”
“Our members are confident about market growth in China and are backing this up with strategies based on investment and market-share expansion,” EUCC President Jacques de Boisséson said in a statement.
“However, they are concerned about an unpredictable regulatory environment that constrains their ability to compete,” he said. “The discretionary enforcement of laws and regulations, opaque and burdensome registration processes as well as concerns regarding the protection of intellectual property rights continue to be top concerns for European business in China.”
About 78 percent of the 500 companies that responded to the survey were optimistic about growth prospects in the next two years, but only 34 percent were optimistic about their profitability, the chamber said.
Those profitability concerns reflect the rising domestic competition from Chinese firms, so Europeans should “raise their game” to differentiate their products and services, said Charles-Edouard Bouée, Asia president of Roland Berger Strategy Consultants of Munich, which conducted the survey for the EUCC.
The companies were surveyed in March and April.
The survey said 49 percent of the companies said China has become a more important market, while only 4 percent rate it less important. And it said that about two-thirds of the companies view China as one of their top three investment choices, with 30 percent making it their top investment locale.
But the report cautioned that the “vast majority” of firms surveyed believe regulatory decisions for foreign-invested companies “will not become fairer in the near future.”
“Our member companies' continued commitment to China as an investment location is not unconditional and would be further bolstered by a clearer and more predictable business environment,” de Boisséson said.
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