2019 Sino Benelux Business Survey Executive Summary
June 25, 2019 Category Announcements, Weekly
The 2019 Sino Benelux Business Survey is organized by the Benelux Chamber of Commerce in Beijing, Shanghai and Guangzhou, supported by the official trade-and diplomatic representations of Belgium, The Netherlands and Luxembourg in China and in partnership with MSAdvisory. The organizers have investigated how the Benelux business community in China has performed in 2018, their experiences in the market and what their expectations are for 2019.
Similar to previous years, this survey was conducted so that the Benelux business community and other important stakeholders can better understand the Chinese business climate and how they may improve within its challenging business environment.
This year 139 companies have participated in the Sino-Benelux Business Survey. Most of the respondents come from Industrial Goods and Services (41%). The Industry with the second highest participation is Consumer Goods and Services (27%). On average, the respondents have operated in China for 12.1 years. More than 50% of the respondents are SMEs with revenue from RMB 1 million to RMB 100 million.
The performance of Benelux businesses in China remained fairly positive, with 86% of respondents reporting revenue growth and 85% reporting profits. SMEs (companies with 0-49 employees or up to RMB 10 million in revenue) represent the group with the highest percentage of revenue growth > 20%. The percentage of companies reporting no revenue growth or growth >20% increased for the first time since 2015; we observe a more volatile market with more winners and losers. Companies in the Consumer Goods sector reported the highest revenue growth; 45% of the respondents reported revenue growth over 20%.
Increased Turnover and Economies of Scale (28%) are the most significant positive drivers for Benelux business in China. This year, fewer companies perceive the Chinese Market to be favorable (58%) compared to last year (66%). Only 18% of the respondents came across BRI partnership and business opportunities, of which the majority are SMEs. Salary costs (24%) is the most significant negative driver in 2018, following a similar trend from previous years. The percentage of companies which perceive that the “Level Playing Field” and “Regulatory environment” has become more restrictive has increased. 37% of the respondents said they were affected by the China-U.S. Trade War.
Most participants have good expectations on their revenue and profit growth for 2019, with 89% expecting revenue growth and 93% expecting profits. Both Dutch and Belgian companies are much more optimistic about their profit expectations, with respectively 92% and 96% expect to make profit in 2019. All startups are expecting revenue growth, as well as over 80% of respondents from the Consumers Services industry. The majority of Benelux companies attributed the fact that they were making profits to revenue growth (49%), whereas a further 38% attributed this to both revenue growth and cost savings.
In their conclusion the organizers made following remarks:
• Despite recent reforms, we observe a continuous more negative perception of the Chinese business environment as compared to previous years.
• Salary Costs and Administration Costs are again a major concern for businesses in China.
• Companies from the Benelux actually felt the impact of the China-U.S. Trade War.
• In 2018, again business has been profitable for Benelux companies in China.
• In addition, the respondents have positive expectations for the growth in 2019, which is mostly driven by continuous Use of Technology and Increased Turnover which arises due to a very receptive market.
• More volatile market conditions which result in winners and losers.
• Negative perception but good results!
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