Business Climate Confidence in China 2018. My takeaways and notes

This is an invited article by Laura Blanco Puebla, whose Linkedin profile can be found aquí.

Just a few days ago, in June this year the European Chamber released their yearly China Business Confidence Survey, offering valuable insight into trends of global business confidence in this country. China remains positive territory for European companies with some challenges ahead.

Here are my notes of the 66 page report:

  • China’s market is increasing in sophistication. Chinese firms are seen as equally or more innovative particularly in professional services and consumer goods. More about the subject here: https://www.linkedin.com/pulse/proudly-made-china-how-country-dragon-paving-solid-path-blanco/ ).
  • As domestic R&D capacity increases so does IPR protection, and as Chinese companies strive to expand globally pressure on the government to provide effective IPR protection increases. There are a lot of changes still to be made.
  • Government environmental protection measures perceived as stronger: new environment-linked targets and increased authority given last year to the Ministry of Environmental Protection.
  • Doing business in China is becoming more challenging overall, particularly in Tianjin and Shanghai. Nanjing and South West China are perceived as friendlier. Regulatory obstacles are expected to worsen in the next 5 years.
  • Unfair treatment of foreign invested enterprises (FIEs) vs local firms is still a concern. Perceptions are the most positive in Nanjing, Shenyang and Southwest China and the most unfavourable in Beijing and Shanghai.
  • Internet access, restrictions on the usage of VPNs and lack of transparency over the implementation of Cybersecurity law create persistent business concerns, damaging R&D activities and communication with their Western subsidiaries.
  • Increasing issues in retaining talent: high expectations on salary/package and talent being snapped up by competitors are two of the main challenges to hiring local talent. Air quality and career opportunities are relevant to attract foreign talent. Changing work permit procedures are also a barrier to attract foreign talent.
  • Belt and Road Initiative (BRI): civil engineering and construction sectors see strong opportunities, as do financing and legal firms. Amongst the top concerns are transparency, lack of suitable projects and insufficient information.
  • A large share of small – medium enterprises (SMEs) still receive unfavourable treatment compared to multinationals (MNCs). As a result, there is untapped potential in SMEs in innovation and access to opportunities.
  • Market access and regulatory barriers are important concerns especially in the pharma, legal, and financial services. Restricted market access sometimes limits foreign investment in China. Expanded market access has however been pledged at the World Economic Forum in Jan 2017. Implementation is perceived as slow.
  • The CAI (EU-China Comprehensive Agreement on Investment) needs to be completed to give EU more confidence in their investment plans.

 

This post expresses my own opinions based on European Chamber Business Confidence Survey 2018 (www.europeanchamber.com.cn). I’m not receiving compensation for this post.

I work at Höganäs AB (www.hoganas.com).

You can download the report here: http://www.europeanchamber.com.cn/en/publications-archive/568/European_Business_in_China_Business_Confidence_Survey_2018

Pictures by Emily Ji and Yannick Benichou.

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