Almost half of the companies surveyed – or 48% – said that they were “missing out on business opportunities” as a result of regulatory and other barriers to China’s markets, “with 64% of these estimating the value of these missed opportunities to represent 10% to 50% of revenue”, the organisation said in a summary of its findings.
In addition to the various barriers the companies say they are encountering in their efforts to reach Chinese markets, the European Chamber’s annual Business Confidence Survey, which surveyed 550 European companies, also found respondents concerned about China’s economy, citing rising labour costs and slowing growth.
The survey, which was carried out in association with Roland Berger Strategy Consultants, noted that China’s importance to European companies has increased “to an unparalleled level”, with revenue generated by Chinese operations now comprising more than 10% of worldwide revenue for half of the respondent companies.
This, it noted, represented an increase of 50% from 2009.
However, the survey found “numerous indicators…pointing to a maturing marketplace”, including the fact that pricing, marketing and sales and brand recognition are the three areas in which private Chinese companies are perceived to be most competitive – “suggesting that competition is becoming fiercer in traditional business areas”.
This maturing marketplace is, however, not mirrored by corresponding developments in the regulatory environment, which continues to be perceived as being discriminatory against foreign companies, the European Chamber said, summarising its findings.
‘Worrying’ lack of reg reform
Davide Cucino, President of the European Chamber, said that although European companies “are continuing to invest and create jobs in China”, the lack of reform of the regulatory environment “is worrying, and has a disproportionate impact on foreign business as well as on the domestic private sector”.
“There are indications from this survey that as reform continues to stall and costs rise, a previously reliable stream of FDI may slow and planned investments may be shifted to other emerging markets,” he added.
Watson Liu, vice president of Roland Berger Strategy Consultants Asia, said that if European businesses were remain competitive in China going forward, they “need to seek to understand what local clients and consumers demand”, while at the same time continuing to differentiate their products and services from those of their rivals.