European Chamber President Jörg Wuttke (Photo/Newsgd.com)
"Though Chinese economic slowdown is the top challenge for European companies, we don't see companies leaving China. China is too important in size and potential, there is no second China in the world," said European Chamber President Jörg Wuttke at the press conference for Business Confidence Survey 2015 in Beijing on Wednesday.
The European Chamber Business Confidence Survey 2015 was produced in partnership with Roland Berger Strategy Consultant and was complied with inputs from over 540 European companies operating in China. The results of the survey indicate that even though European companies are influenced by the Chinese economic slowdown, and many of them have shown a pressing demand for regulatory framework, China remains a key market for European companies.
In this year's survey, the percentage of European companies that ranked concerns over the Chinese economic slowdown as one of their top challenges is almost double that of any other challenge. However, as China's economy still has room for growth, more than half of European companies remain optimistic about their growth prospects. Some have taken cut-back countermeasures like laying off employees to meet this heightened challenge.
Mr. Wuttke stresses that better implementation of the rule of law is the top drive European companies view as for China's economic development in the coming years. And yet the legislative environment, administrative issues and enforcement of regulations in China still have a lot to improve. Like in the survey, 55 percent of European companies perceive that foreign-invested enterprises (FIEs) tend to receive unfavorable treatment compared to domestic Chinese firms in their respective industries.
Chinese government is well aware that innovation will be one of the most critical drivers of the current economic paradigm. Nevertheless, as showed in the survey that more than two thirds of European companies that engage in research and development (R&D) do not have a R&D center in China, and those with a R&D presence still tend to use their centers heavily for product localization. Mr. Wuttke thinks that European companies would contribute more to the Chinese economy if they feel more secure from threats like import substitution and technology transfer attempts, and were afforded better protection under China’s intellectual property rights (IPR) laws through improved enforcement and better Internet access.
The Chinese economy is facing a shift in growth model, and Chinese new leadership has clearly articulated its reform vision to move the Chinese economy up the value chain. European companies, as Mr. Wuttke puts, are also prepared to embrace the "new normal," an era that will be characterized by a lower, but better quality economic growth.