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More European companies plan layoff in China
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AN increasing number of European companies in China are pessimistic about China's economic outlook and more of them plan headcount reduction, according to a survey by the European Union Chamber of Commerce in China today.
"The protracted Chinese economic slowdown remains the top business challenge," said the Business Confidence Survey 2015 produced 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 data, 39 percent respondents said they are planning to cut costs, compared with just 24 percent in 2014, with most of them planning employee lay-offs.
Although more than half of European companies remain optimistic about their growth prospects, this number has dropped 10 percentage points year on year.
"China's economy still has room for growth, and it remains a key market," the survey report 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."
The survey also found more than two-thirds of European companies that engage in research and development do not have an R&D center in China, and those with one still tend to use those centers first and foremost for product localization although innovation is now considered one critical drivers to move the Chinese economy up the value chain.
European Chamber President Jorg Wuttke said China needs to have better implementation of the rule of law and deal with issues such as regulatory barriers and difficult market access, while European companies should better engaged in China's growth.
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