According to a study, the business climate in China is more unfavorable than ever for European companies. A record 64 percent of companies said it was becoming more difficult to do business in the People’s Republic.
China is in a difficult position with European companies – too much trust was lost during the corona pandemic. Numerous companies have already begun to draw conclusions from this and have reorganized their supply chains. The fear of geopolitical tensions is also driving European companies out of the Middle Kingdom.
European companies in China on the retreat
According to a survey by the European Chamber of Commerce in China published today in Beijing, one in ten companies surveyed has already withdrawn its investments from the People’s Republic. In addition, every tenth European company operating in China is relocating its Asia headquarters to another country, or at least planning to do so.
“Increased challenges for doing business in China, geopolitical tensions and weakness in the Chinese and global economy have undermined China’s attractiveness as an investment destination,” the European Chamber of Commerce said. “Because business runs in cycles, these investments will probably not come back so quickly,” according to the chamber, which has evaluated responses from 570 companies in collaboration with management consultants Roland Berger over the past few months.
forced technology transfers
In view of growing risks and an unpredictable environment, 64 percent of the companies surveyed said that doing business in China had become more difficult – a negative record. Limited market access was cited as a problem, as were government restrictions. More than every fourth company complained about forced technology transfers.
Other results of the survey: 53 percent of the companies have no plans to expand their activities in China. That is 15 percentage points more than in the survey a year earlier. In addition, in the aerospace sector, one in five companies has no future investments in China.
Confidence in China at a record low
Entrepreneurs’ confidence in the Chinese market is “roughly at the lowest level on record,” European Chamber of Commerce President Jens Eskelund told reporters before the survey was released.
According to the chamber, dissatisfaction with safety rules, government support for Chinese competitors and failure to implement promises of reform has spread among companies. Slow Chinese economic growth and rising costs are also affecting European companies.