European investors are expected to keep expanding their presence on the mainland, despite disappointing results to date, a survey has found. Many also said they were considering dropping their mainland partners, with most of those answering the survey believing they had learned enough to manage their mainland operations on their own. The survey was conducted by Hong Kong-based management consultancy Fiducia, beginning last September, on 200 European companies in China, 72 per cent of them in manufacturing. Only 14.2 per cent of participants were on track to make profits by the end of 1997. The net profits recorded by 61.4 per cent of companies were worse than planned, while 24.4 per cent had shown better-than-expected results. About 54 per cent of firms surveyed were performing worse than planned, while 21 per cent were meeting their targets. Fiducia consultant Benjamin Kowalski said many factors, such as legislation and tax policies, a lack of transparency in the domestic market, poor quality of local component supplies, and conflict with mainland partners, were hammering the Europeans' performances. Mr Kowalski said: 'They came to China thinking they were going to make a super success, as in other emerging markets.' But all respondents wished to expand. More than 45 per cent of companies surveyed wanted to increase their staff more than twofold by 2000, while only 11 per cent were considering staff cuts. Nearly 40 per cent of the firms expected to more than double mainland revenues by 2000. Michael Wang, China Britain Trade Group's manager in Beijing, said British companies relied too heavily on their Chinese joint-venture partners in marketing products. 'They set up the joint venture before making marketing strategies and later lose control on marketing and sales,' Mr Wang said. 'The Chinese partner uses out-dated marketing methods and old guanxi [connections], making the joint venture prone to failure.' The survey found 67.5 per cent of participants would prefer to manage the business on their own, with only 32.5 per cent keen to maintain the present arrangements. 'Most joint ventures are run by Chinese management with a handful of token foreigners, using the common socialist approach,' Mr Wang said. 'Foreign companies can streamline their modern management and marketing technologies more efficiently if they are wholly-owned.' Many European companies are also considering moving away from Hong Kong - 65 per cent of Hong Kong-based respondents were planning to move to the mainland. By 2000, the survey showed, 45 per cent of the companies asked expected to have headquarters in Beijing and 35 per cent in Shanghai. Mr Kowalski said companies preferred Beijing as the base for their head office in order to develop good connections with the mainland government. He said: 'It is going to be more expensive to pull out of China than staying . . . the mood is not optimistic, but they all want to stay.'