Brussels, 31/05/2012 (Agence Europe) - More than one in five European firms operating in China is considering moving to other destinations because of the increase in labour costs, stronger competition from Chinese companies and a legal framework they feel is discriminatory.
China may be an increasingly import strategic market for EU companies but 22% of European firms active in the country are thinking of shifting investment to other markets, according to a survey by the EU Chamber of Commerce in China published at the start of the week. While 78% of the 557 companies which responded to the survey said they were optimistic about the growth prospects of their operations in China over the next two years, only 36% of them are expecting a rise in profitability. To grow in China, 52% of companies are planning to expand into the regions further inland, where wages are lower and incentives are offered to foreign firms.
The increase in labour costs in China is one of the main causes for concern among the European companies, along with the country's economic slowdown. Almost 60% of firms say they are not hopeful for the short- and medium-terms, and this percentage increases to 75% among exporting companies operating in the Canton-Hong Kong-Macao triangle. Excluding inflation, wages in the private sector in, China increased by 12.3% in 2011, national statistics revealed last week. European firms are also facing sterner competition from Chinese companies, in terms of pricing, marketing and reputation of their trademarks. EU companies are also continuing to bear the brunt of a discriminatory legal and regulatory framework and lack of reform guaranteeing them better access to the Chinese market. (EH/transl.rt)