China seen as most attractive region, but Western Europe continues to attract most foreign direct investment. - Foreign investors view China as the most attractive region, ahead of Europe and India, say Ernst & Young in their annual survey which consulted 834 international decision-makers from across the world and from all sectors. The fifth European attractiveness survey, “An Open World”, presented a the World Investment Conference in La Baule, France (4-6 June) showed that competition between the world's regions has become much more even, with international decision-makers now paying much more attention to the way things are developing and to the risks in each destination. However, investors' perceptions are at odds with the reality of investment flows: while 47% of survey respondents said China was the most attractive destination for foreign direct investment (FDI), the latest figures from UNCTAD (United Nations Commission for Trade and Development) show that China (including Hong Kong) draws less than 8%. Conversely, only 33% of respondents ranked Western Europe as the top investment location, yet, according to UNCTAD, the region still accounts for 37 per cent of global FDI inflows. Marc Lhermitte of Ernst & Young says that international investors take into account all the opportunities to be seized. “While, for their growth, companies move into the Asian or Russian markets with their strong purchasing power, they aren't turning their backs on Europe's or the United States' diversified and strong economies,” he pointed out. International development, with 3,712 projects in Europe in 2007, rose by 5% on the previous year (3,531 projects in 2006). However, job creation related to this international development fell by 18%, with 176,551 jobs created (compared with 214,987 in 2006). The survey highlights that: 1) Western Europe is slowly moving to a knowledge and services economy: tertiary development (R&D centres, headquarters, back offices and call centres) created most jobs, with 60% of jobs resulting from international development, while industrial activities created 30,000 fewer jobs compared with 2006 (a fall of 51%); 2) in terms of the number of projects, the top three countries remained unchanged, with the United Kingdom (713 projects), France (541) and Germany (305); the United kingdom also topped the job-creation list (24,186); 3) Central and Eastern Europe is resisting - it took 58% of all job creations in Europe from only 28% of international development, but it did not manage to repeat its performance of 2006 in labour-intensive service activities (back office, shared service centres, call centres); 4) Poland took second place in Europe in terms of job creation from international development (18,399), a fall of 41% from 2006; the Czech Republic came third with 15,102 jobs created (down 14% on 2006); 5) Russia leapt into fourth position for jobs created (+85%) and took eighth position for the number of projects, with an increase of 60% from the previous survey when it occupied the thirteenth spot; 6) Slovenia, Turkey and Ukraine also forced their way into these strong growth “new frontiers”, increasing the number of jobs created by international development in 2007 by between 3 and 5 times. Europe continues to enjoy the strong confidence of almost half of investors: 47% said that they had projects there over the next three years. Lasting quality wins the day over short-term competiveness. Political and legal stability are the first criteria to be set when considering development, followed by the quality of logistic and telecoms infrastructure. Elsewhere, Russia, which in previous years was considered risky for investment, is moving quickly up the attractiveness scale. And finally, on the question of how to make Europe more attractive, investors call for greater flexibility on the labour markets (42%) and an updated and simplified legal environment (39%). (I.L./transl. rt)