Leaders from many of Nanjing’s top foreign corporations turned out in force at the InterContinental Hotel Monday to receive the European Chamber’s European Business in China Business Confidence Survey 2016, and to hear analysis of the results as to what it could all mean for their future business operations.
Published since 2004 by the European Chamber of Commerce in China (EUCCC), the survey has the purpose of taking an annual snapshot of European companies’ successes and challenges of working in the Middle Kingdom, while also enabling the Chamber to build a rich data set to serve as a broad indicator for how European companies judge the business environment in China, both now and in the future.
Conducted in cooperation with Roland Berger, the 54 question survey drew 506 respondents representing approximately 38 percent of member companies. The survey was grouped under the themes company profile and financial performance, outlook on the Chinese business environment and outlook on company strategy.
Jörg Wuttke, the European Chamber’s President who was in Nanjing especially for the event, gave a fascinating presentation as to the true meanings behind some of the survey’s results, with additional comment coming from Bernhard Weber, Chair of European Chamber Nanjing Board and Denis Depoux, Head of Asia for Roland Berger Strategy Consultants.
Overall, growth is stagnating in China, with 35 percent of respondents reporting that their revenues remained the same in 2015 versus 2014. However, businesses in different regions seem to grow at different speeds, with some driving growth and others seeing significant decreases.
In addition to the divergent growth rates, the Chamber’s chapters also differ in their perceptions of the enforcement of regulations. It is noteworthy that in Nanjing, where respondents feel less discriminated against, growth is consistently the highest in terms of revenue, market share, EBIT (Earnings Before Interest & Tax) and EBIT margin. By contrast, in Beijing and Tianjin, where respondents feel more discriminated against, growth has stagnated considerably.
This trend is also reflected in the loss of business opportunities because of regulatory barriers and market access restrictions; while 43 percent of respondents overall reported missed business opportunities, this number was 56 percent in Beijing, where the feeling of discrimination against foreign companies is the highest. In Nanjing, the corresponding number was only 13 percent.
European companies in different regions of China vary in their outlook on the Chinese business environment. The majority of respondents in Shenyang and Southwest China are convinced that the “golden age” in China for MNCs is over. Respondents in South China are more optimistic, with less than half answering “yes” to the question. This is likely due to favourable policies in South China as well as the industrial composition there.
In terms of how welcome members now feel in China compared to a decade ago, the results are remarkably consistent across all chapters with the exception of Southwest China. This is in part attributable to the fact that the China’s western region began to develop later, and therefore has more room for growth. In addition, the goals that Chengdu set in 2014 and 2015, i.e. to become a major destination for international investment and an international gateway, and Chongqing’s ambitions to develop into an international centre of business, for instance, have led to the implementation of policies that are comparatively more attractive to foreign investment. As a result, Southwest China is now the most popular destination for companies that are considering expansion.
The full version of the survey is available to EUCCC members and non members alike, free of charge, via the following link:- http://www.europeanchamber.com.cn/en/publications-archive/414/Business_Confidence_Survey_2016.
