More European businesses see lower growth and profitability
Print Edition
AN increasing number of European companies in China are pessimistic about China’s economic outlook and more of them plan to cut staff, a survey by the European Union Chamber of Commerce in China said yesterday.
“The protracted Chinese economic slowdown remains the top business challenge,” said the Business Confidence Survey 2015 conducted by the European Chamber and Roland Berger Strategy Consultants.
“Pessimism about growth and profitability has forced European businesses to cut back significantly, particularly through headcount reduction.”
According to the survey, 39 percent of the respondents said they are planning to cut costs such as laying off employees, up from 24 percent in 2014.
Although more than half of European companies continued to be optimistic about their growth prospects, this figure fell 10 percentage points year on year. Also, nearly a quarter of the respondents were pessimistic about their profit outlook in the next two years.
As a result, only 56 percent plan to expand their China business, a sharp drop from the 86 percent one year ago.
“China’s economy still has room for growth, and the country remains a key market,” the survey said. “But the regulatory framework has yet to come into place. In particular, a better implementation of the rule of law is seen as the top driver for China’s economic development going forward.”
European Chamber President Jorg Wuttke said China needs to implement better the rule of law and deal with regulatory barriers and difficult market access, while European firms should get more engaged in China’s growth.
Roland Berger’s CEO Charles-Edouard Bouee called for more market opening.
“Only through more uniform, strict and transparent enforcement of laws and regulations, increased market opening and support for higher value-added activities can China remain attractive to European companies,” the report said.
China has said it is striving to create a level playing field for all businesses.
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