The European Union Chamber of Commerce in China’s South China Chapter, in cooperation with the independent consultancy firm Roland Berger, has released the European Business in China Business Confidence Survey 2019 . It shows that while European businesses operating in South China face challenges unique to the region, they also share the concerns of those in other parts of China regarding the Chinese economic slowdown and the US-China trade dispute.
Transparent and effective implementation of local policies is highlighted as the area where improvement is most required, as well the need for unclear regulations to be clarified. However, although South China members expect the number of regulatory obstacles in the region to increase over the next five years, they reported facing less market access restrictions compared to the national average.
Respondents in South China are less concerned about state-owned enterprises (SOEs), as the market share held by SOEs in many sectors in the region is comparatively smaller than in other parts of China. Cases of compelled technology transfers as a condition for market access are also least reported by European companies in South China. However, they are most affected by US tariffs on exports from China.
Although the cost of manufacturing in South China is increasing, the region remains the preferred location for European enterprises to expand business activities. Costs are being closely monitored, with some firms mitigating the impact by increasing automation. The upgrading of local manufacturing in general is considered to be progressing at the right pace by more than half of European members, but there is a need for the local government to communicate its expectations in this respect more clearly. Despite being in its early phase, 43 percent of respondents report having already benefitted in some way from the development of the Greater Bay Area.
“South China remains an attractive destination for European companies, despite the macroeconomic challenges,” said George Lau (pictured above), chair of the European Chamber’s South China Chapter. “If a fair, transparent and predictable business environment can be established, European businesses are prepared to commit even more to the region.”
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