European businesses wish to invest more in China

European businesses wish to invest more in China

2009/7/2

China remains a bright spot amid the global downturn and European enterprises in China still see a bullish long-term outlook of the country, said the European Chamber Business Confidence Survey 2009 released in Beijing today.

Their concerns still focus on the implementation of the laws governing the environmental protection and intellectual property rights (IPR) and the restrictions on foreign capital share in some sectors.

This year's survey covers 313 European enterprises in different fields in China. Among them, 98 percent say that their business in China has been affected by the global financial crisis, while 30 percent are severely affected. However, to most of these enterprises, their markets in China were not impacted so strongly as in their home countries.

In 2008, the majority of enterprises surveyed have see growth in both revenue and profit. Over one fifths of them say that their profit margin grew significantly.

Even affected by the financial crisis, the European enterprises in China are working hard to establish their presence to serve Chinese market. They are also making efforts in localization, despite the shortage of qualified employees and rising HR costs.

"European enterprises wish to invest more and act more in this market," said Joerg Wuttke, President of the European Chamber of Commerce in China (EUCCC).

The survey also revealed that large companies with over 5,000 employees in China and over 1 billion euro revenue were affected stronger. Meanwhile, different industries are facing different situation. Manufacturer of consumer products and enterprises in relevant service sectors are not hit as hard as industrial products makers.

The report says that only 34 percent of the companies surveyed are optimistic about their profit margin in 2009 and 2010, with the professional service sector recording the biggest drop in optimism.

China's 4-trillion-yuan stimulus package is not enough, noted the report. China should push industrial restructuring and create a free and fair market to obtain a sustainable growth.

Many European companies complained about the discretionary enforcement of laws in environmental protection as well as IPR, which make their costs relevantly higher than local companies. They also expressed their dissatisfaction with China's restriction on restrictions of foreign shares in joint-venture enterprises.

European enterprises believe that China's economy can recover earlier in the global downturn. They will continue to invest in China and seek opportunities here. As to the question how China will achieve its long-term growth, they believe that domestic demand will be a key factor but worry that protectionism may hinder China's further growth.

Although not enough, China's 4-trillion-yuan stimulus package is important and effective. The European enterprises are looking forward to the modernization of China's economy and its further reform, concluded the report.

                                                                                      Source:  People's Daily Online




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