Businesses still bullish on China

China Information News
Businesses still bullish on China
26 November 2008

European firms in China are still optimistic in spite of the global economic turmoil and remain firmly committed to the country, according to a survey released yesterday.

The survey, conducted by the European Union Chamber of Commerce in China, shows that most of the European companies in the country are still profitable. Over 70 percent of the firms said profitability for 2007 was positive, while 62 percent of those surveyed said they expect to stay profitable in 2008.

"This year's survey re-confirms that the Chinese market is the most important emerging market for European businesses, and given the global slowdown it might actually rise in significance," said Joerg Wuttke, president of the European Chamber.

The survey pointed out that China's growing domestic demand, rather than exports, will be the mainstay for European companies to set up businesses. This year over 70 percent of the respondents said the main focus is to produce goods or services for domestic consumption, compared with 49 percent two years ago.

Two-thirds of the firms generate less than 10 percent of their current global revenue in China, indicating the huge growth potential that still exists.

The survey was conducted in July-September but could show some changes over the last two months as the global economy saw a sharp downturn.

Wuttke, however, said that the 62 percent profitability figure is the lowest they have until now, largely due to the strong performance in the first three quarters of the year.

According to Wuttke the Chamber members are now anticipating slowdown in the car and services sectors. Like enterprises elsewhere, European companies are also experiencing an "unpredictable situation" here, but they are generally optimistic.

"Considering China's continued growth and the underlying confidence of European businesses in China, we hope to see positive developments in the year to come," said Marianne Friese, secretary general of the European Chamber.

Over 70 percent of the respondents are SMEs with less than 200 employees in China. Compared with large companies, SMEs are more upbeat than their bigger counterparts when it comes to future profitability, the survey said.

(China Daily November 26, 2008)