• Fri
  • Dec 19, 2014
  • Updated: 12:00am

EU firms pessimistic over China growth prospects, says survey

Economic slowdown and tougher operating conditions, including 'unfair' competition from SOEs, contribute to shift in business sentiment

PUBLISHED : Friday, 30 May, 2014, 1:10am
UPDATED : Friday, 30 May, 2014, 8:10am

Nearly half of European companies believe that the "golden age" for multinationals in China is over, the European Chamber's annual survey on business confidence found.

Slowing economic growth on the mainland became a "game changer", causing the financial performance of European companies to deteriorate in the past year and fuelling a major shift in business sentiment, according to the survey, which was released in Beijing yesterday.

"A new sober reality is developing. An abiding sense of pessimism for future performance is setting in, which is leading many to question whether the good times have ended," the executive summary of the report said.

Growth in the world's second-largest economy eased to an 18-month low in the first quarter, up 7.4 per cent from a year earlier, compared with the 7.7 per cent growth in the fourth quarter of last year.

"The Chinese economic slowdown and tougher business conditions are starting to bite and financial performances are getting much tighter," Joerg Wuttke, president of the chamber, told reporters.

President Xi Jinping recently urged people to adapt to the "new normal" of economic growth, suggesting the era of double-digit growth fuelled by cheap labour and massive credit supply is over for good.

The share of European companies reporting year-on-year increases in revenues declined for at least three years in a row, dropping to 59 per cent in 2013 from 78 per cent in 2010, according to the survey.

For the first time in the history of the survey, more companies noted that their profit margins in China were lower than their global averages, the report said.

Business confidence dropped because lingering regulatory hurdles put companies at a disadvantage, especially compared with China's privileged state-owned enterprises, the report said.

The Shanghai free trade zone was a step towards opening up the Chinese market and creating a level playing field, said Wuttke. But only half of companies are confident Beijing will begin implementation of a series of economic and social reforms in the next one to two years, he said.

Despite Beijing's commitment to liberalise the market further, the SOEs were "perceived to have increased their strengths" relative to their competitors over the last year in areas such as government relations, access to subsidies and tax incentives, and access to finance, the report said.

The chamber estimated that market access and regulatory barriers may have caused the chamber's member companies to miss out on €21.3 billion (HK$229 billion) in revenue in the financial year of 2013, equivalent of 15 per cent of the EU's annual exports to China.

While the mainland market remains critical for these companies' global revenue growth, fewer companies identified China as their top investment destination, Wuttke said. About 57 per cent of those surveyed stated that they plan to expand their China operations.

That was down considerably from 86 per cent who had expansion plans in the previous year. However, he said the sentiment varied significantly between industry sectors.

Chemicals and vehicle companies showed stronger willingness to expand, while only 24 per cent of those in the legal industry plan to expand their business on the mainland, according to the report.


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Formerly ******
Plus the fact, that without trade, China will wither from lack of arable land, potable water, breathable air, and any significant source of energy, along with a corrupt and thieving ruling party that is trying to wring out China the last bit of wealth before these leaders and their princelings flee to the West.
This is why China wants hegemony over all of Asia. It's following the same path as Japan, because China today has the same problems as 1920 - 1930's Japan - lack of any significant natural resources. China even over-played its hand with its one source of significant natural resources - the rare, precious metals. Now the West is developing synthetic ones, finding other locations for such metals (Bolivia for one example), including outer space.
China is a dying society, especially considering its demographics. In 2020, China will have the oldest average-aged population in the history of the world and a decidedly gender-lopsided one at that. Considering this and all of the above, better to look to normal countries such as Indonesia, the Philippines, etc. for future growth.
再加上的事實沒有貿易,中國將會枯萎缺乏可耕地、 飲用的水、 呼吸的空氣和任何重大來源的能源,再加一個腐敗和行竊的執政黨是試圖擠掉中國財富的最後一位之前這些領導人和他們的太子逃到西方。
這就是為什麼中國在亞洲的所有希望霸權。因為中國今天有 1920年-1930 年日本-缺乏任何重要的天然資源相同的問題,它是繼日本,相同的路徑。中國甚至過度發揮其手以其一個重要的自然資源-稀有、 貴重金屬的來源。現在西方開發合成的 (玻利維亞的一個例子),尋找這種金屬其他地點包括外太空。
中國是一個垂死的社會,尤其考慮到其人口統計資料。到 2020 年,中國將有最古老的平均年齡人口在世界和一種斷然性別不平衡的歷史。考慮到這和上述一切,更好地為未來增長看起來到正常的國家,如印尼、 菲律賓等。


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