Third of big European companies in China planning to expand

PUBLISHED : Wednesday, 31 July, 2013, 12:00am
UPDATED : Wednesday, 31 July, 2013, 6:35am

Almost a third of the large European companies operating in China plan to expand their operations in the country over the next two years, according to a survey.

The survey, conducted by property consultancy Colliers International, polled companies predominantly based in Europe with more than 1,000 staff. It also found that Asia was seen as the best place for enterprises to expand their business in the next two years.

Thirty per cent of the respondents plan to expand in China and 25 per cent in India, the survey found.

"The expansion appetite of major corporations is focused on high-growth regions, especially Asia. Better market access, cheaper labour costs, and improved availability of skills are the main drivers of cross-border relocation decisions," said Guy Douetil, Colliers' head of corporate solutions for Europe, the Middle East, and Africa.

About 40 per cent of those polled said they would be drawn to other emerging Asian countries, particularly Thailand, Malaysia, Indonesia, Vietnam, and the Philippines, to grow their businesses as economies there develop and open up to foreign investment while labour costs in other countries rise, the survey found.

In sharp contrast, over 45 per cent of respondents anticipated a reduction in operations in western Europe, although 23 per cent were still weighing expansion plans.

"The economic malaise in the old continent is making it a less attractive place for multinational businesses. Downgrades … coupled with concerns over the ability of European leaders to develop a plan to kick-start growth across the continent, are factors which have undermined confidence levels," Douetil noted.

The survey also found that 70 per cent of respondents plan to move some of their operations abroad in the coming two years.