European firms' 'best era' may be over

By Zheng Yangpeng and Mu Chen (China Daily) Updated: 2014-05-30 06:59

LI YI/CHINA DAILY

Companies' confidence in outlook for China wanes as the nation's economy loses steam, Zheng Yangpeng and Mu Chen report

Nearly half of European businesses fear their "golden times" in China are over, amid tougher business conditions in a slowing economy, according to the 2014 European Business in China Business Confidence Survey. It's conducted by the European Union Chamber of Commerce in China in partnership with Roland Berger Strategy Consultants.

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Of the 552 businesses surveyed, 46 percent said they believe that the "golden age" for multinationals in the country has ended. That's particularly true for large firms with more than 1,000 employees and veteran companies with more than five years in the country. They have started to feel the pinch with 68 percent and 61 percent, respectively, stating that business in China has become more difficult over the past year.

"A Chinese economic slowdown is a game-changer that will fundamentally and necessarily alter corporate business strategies," Jorg Wuttke, president of the chamber, told a press conference on Thursday in Beijing. "With costs rising and regulatory issues continuing, European companies are starting to put expansion plans on hold."

Only 57 percent of companies plan to expand current operations in the world's second-largest economy, down from 86 percent last year. Only one-fifth of companies gave China as their top investment destination compared with one-third two years ago.

Different industries have contrasting outlooks. Healthcare companies, including those dealing in medical devices, were the most optimistic. with 88 percent saying they had a positive outlook for growth in 2014.

At the opposite end of the spectrum, only 49 percent of financial services companies, including insurers, were optimistic about their business outlook along with only 52 percent of legal companies.