Survey: EU enterprises in China optimistic

16:10, June 29, 2010      

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European Union Chamber of Commerce in China (EUCCC) today released its annual business confidence survey showing that survey respondents are generally optimistic about growth in their respective business sectors in China.

The European business community remains optimistic about surging economic growth in China. At the same time, many are concerned about uncertainty in the business environment and regulatory unpredictability, according to the survey.

This year's business confidence survey, which was conducted from March 3 to March 17, covered 514 respondents from various industries all over China.

Around 78 percent of the respondents are optimistic about the market growth outlook in China, 13 percentage points higher than 2009. However, only 34 percent of them showed optimism toward their profitability outlook.

In the past couple of years, E.U. enterprises found that their perceived competitive advantages against domestic companies as well as their net profit outlook are contracting.

"This reveals increasing pressure from China's domestic enterprises. And the E.U. companies believe it is a natural evolution," said Jacques de Boisséson, president of the E.U. Chamber of Commerce.

It will be a balanced process if the competition growth accompanies market expansion, he added.

Despite the fierce competition in the Chinese market, as high as 75 percent of E.U. companies in China chose market expansion as the first step to improve profitability.

Roughly 96 percent of the enterprises surveyed believed that China is as important or more important as a market in their global strategy since the financial crisis, while 64 percent regarded China as a top-three investment destination.

Boisséson said this is a very significant result as most companies look highly on their business in the home countries along with the E.U. and the U.S. markets, which are two traditional investment destinations.

Currently, 18 percent of the respondents are planning to expand an existing R&D center or open a new one in China, while the figure was 15 percent last year. At the same time, greater workforce localization is taking place.

The business group also complained about the regulatory obstacles in China, including discretionary enforcement of laws, registration processes and the lack of protection of intellectual property rights.

"European companies' continued commitment to China as an investment location is not unconditional, but would be enhanced by a clearer and more predictable business environment," the report says.

Earlier this year, Chinese premier Wen Jiabao emphasized during talks with a German business group that China will provide a level playing field for foreign-funded enterprises.

In April, the chamber's president at the time, Joerg Wuttke, praised the Chinese governments' quick response to their concerns about the "indigenous innovation" issue.

By People's Daily Online


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