China’s unpredictability is “toxic” to its business environment, EU chamber says – Low Calorie Diets Tips

The unpredictability in China at a time when much of the world is moving beyond the Covid pandemic is now “toxic” for companies doing business in the country, according to a new report from the European Union Chamber of Commerce in China

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“The only thing predictable in China today is its unpredictability, and that is poison for the business environment,” said Bettina Schoen-Behanzin, vice president of the European Union Chamber of Commerce in China.

“More European companies are shelving investments in China and reassessing their positions in the market while waiting to see how long this uncertainty will last, and many are looking for other targets for future projects,” Schoen-Behanzin said.

While most European companies in China posted positive sales and were profitable in 2021, operations became more difficult for the majority, according to the re-release European Business in China Business Confidence Survey 2022 produced in cooperation with Roland Berger.

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“China remains crucial for most European companies, both as an outlet for products with a strong competitive advantage and as a strong industrial manufacturing base. It is too big and important to downsize, but a holistic and stable framework is needed,” said Denis Depoux, Roland Berger’s global managing director, who co-authored the report with the chamber. “The deterioration in internal and external business conditions, with 13% more survey respondents finding China to be more difficult to do business in 2022, ahead of the Covid resurgence, contrasts with the crucial role China is playing for them.”

“As the rest of the world returns to pre-pandemic normalcy and China’s tough Covid-19 policy exacerbates the challenges of doing business, many members of the European Chamber are wondering how many eggs they are willing to keep in their China basket” , the chamber announced today in a press release.

“In response to rising uncertainty – stemming from both China’s COVID-19 strategy and Russia’s invasion of Ukraine – and to minimize their exposure to potential geopolitical shocks, European companies’ operations in China are becoming increasingly isolated,” it said the chamber. “Eight times as many respondents reported plans for onshore supply chains to China as those planning offshore.”

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Two-thirds of European companies saw sales increase in 2021; However, the survey found that 60% found doing business more difficult each year.

Covid-19 was the top issue facing businesses in 2021, ranked as one of the top three challenges by 49%; China’s economic slowdown, a top three issue for 24%, ranked second, according to the survey. Half said the business environment has become more politicized in 2021; 42% of companies said regulatory barriers resulted in missed business opportunities.

The European Chamber has more than 1,700 members in nine cities: Beijing, Nanjing, Shanghai, Shenyang, Guangzhou, Shenzhen, Chengdu, Chongqing and Tianjin. Members include BNP Paribas, BASF, Ikea, Maersk and Lufthansa.

Similar to European companies reporting difficulties in China, the vast majority of US firms in Shanghai are trimming their 2022 sales forecasts amid the “zero Covid” policy that locked down much of the international business hub of 26 million people in April and May, according to a survey by the American Chamber of Commerce in Shanghai released earlier this month.

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About 93% of respondents have lowered their sales forecasts for the year. A quarter of respondents expect revenue to be more than 20% lower than initially expected, AmCham Shanghai said. A quarter of consumer and service companies have scaled back their investment plans, as have 20% of manufacturers, AmCham said. “Only one respondent plans to increase investment in China,” it said.

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@rflannerychina

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