Business climate index for China moderately optimistic

The EU´s Chamber of Commerce and Industry in China has published its annual business climate index in co-operation with Roland Berger Strategy Consultants. This index is based on the interviewing of more than 200 European companies operating in China. More than 80% are active in China in order to gain market entry and to win customers there. 69% of European companies are planning to increase their investments in China over the next two years. These are also ready to invest in centres of research and development.

In order to carry out their plans in China, German companies preferably operate via affiliated companies which they own at 100 percent.

When asked about their business situation 76% of companies said that they make profit or have at least reached the break-even point. 82% of those companies not making profit said that they expect to be profitable within the next three years. Another finding is that companies relocate their sales and service centres from big cities to smaller centres. 73% of those interviewed said that they are optimistic about their growth prospects.

Many companies, however, are worried about a lack of specialists as well as environmental problems and the insufficient protection of intellectual property. They expect from the Chinese government to take more resolute action in order to solve these problems. These factors are among the most important obstacles to investment in China.

In addition, labour costs increase by 10% each year and the top management is not being handed over to Chinese people as rapidly as expected. More than 50% of European companies doubt that the WTO´s stipulations such as the dismantling of import and export barriers and the easing of restrictions imposed on foreign companies operating in China will be met.

Nevertheless, those companies interviewed are relatively optimistic and believe that the negative developments will be compensated for by the strong increase in consumption by the Chinese which would also have a positive effect for European manufacturers. This expectation is supported by a growth forecast of 11.5% for the Chinese economy which was recently unofficially made by the director of the Chinese Statistical Office, Xie Fuzhan.

A powerpoint presentation on the study in question containing detailed figures is available in English language for free-of-charge download. GERMAN