The European Union Chamber of Business in China has released its latest survey, based on 552 European Chamber member companies and produced in partnership with Roland Berger Strategy Consultants.
The survey indicates that business conditions in China are getting tougher and this has led to a further weakening of the financial performance of European companies operating in the local domestic marketplace.
A new sober reality is developing, exemplified by a sense of pessimism that is becoming entrenched within the European business community in China, as persistent market challenges show little sign of abating. The key market dynamics contributing to these results include:
A general slowdown of the Chinese economy; Increasing labour costs; Competition from both privately-owned Chinese companies and resurgent state-owned enterprises (SOEs).
This has left many European companies wondering whether the 'golden age' in China is over. Many firms are in turn setting more modest expectations for revenue and profitability growth and are scaling back their investment plans for the Chinese marketplace.
In addition, market access issues as well as regulatory barriers have led European Chamber member companies to miss out on an estimated EUR 21.3 billion in revenues in 2013.
This is why the implementation of meaningful reforms and, in particular, increased market access, would prompt European companies to scale up their investment plans in China.