More investments in China will help European companies
October 1, 2019 Category Foreign investment, Weekly
European Union in China Chamber of Commerce President Joerg Wuttke
Higher investments in China will help European companies to offset tariff impacts arising from trade tensions and evade downside risks from global economic headwinds, Joerg Wuttke, President of the European Union Chamber of Commerce in China, told China Daily in an exclusive interview. European businesses continued to be bullish on prospects in China and 22% of the respondents in a recent survey remained confident on sustained profitability, he said. As the Chinese market continues to open up, European companies will be more than keen to pursue growth opportunities, especially in areas where they have the same opportunities as their Chinese counterparts, even though some sectors are still being restricted, said Wuttke.
“There will be many opportunities in China’s future development for the European companies that are already here and we see a generally open market in which they can operate.” To strengthen the resilience of the Chinese economy, Wuttke emphasized the necessity for the private sector to develop faster and have a larger market share in some areas that are now dominated by state-owned enterprises (SOEs). He stated that European companies are ready to deepen their presence in China, if they get a more level playing field and equal treatment. The China-U.S. trade tensions have posed several challenges to the global economy, and so also to European companies in China, with many seeing supply chains disrupted and others being forced to raise the prices of goods sold both in China and the United States.
Some member companies of the European Union Chamber of Commerce have managed to mitigate effects by adapting strategies and supply chains, or by leveraging either their own global operations or highly diverse supply chains across other markets to shift production, Wuttke said. While some European companies have shifted investments out of the U.S. or China, several have begun the process of changing suppliers. “Interestingly, some of our member companies have mentioned that they were considering increasing their investment into China, essentially adopting the strategy of further onshoring to avoid tariffs altogether,” he said. Wuttke added that the recent revisions to China’s negative lists for foreign investment are an additional step in the country’s ongoing opening up process.
In the Chamber’s Business Confidence Survey 2019, 26% of respondents said they felt more welcome than when they first entered the Chinese market, up 4 percentage points on a yearly basis. The companies said the most significant reason for their optimism was greater market access. During the first five months of this year, investment from the European Union in China increased by 29.5% from a year earlier, the China Daily reports.
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