Newsgd: The global macro-economic situation is still unstable in the first half of 2015. What are the main pressures Guangdong-based EU companies suffered in H1?
(Graphic from South China Position Paper 2015/2016, published by European Chamber of Commerce of China on July 2, 2015)
Vettoretti: Labor cost was No.1 concern, and was No.5 last year. So it shot up right to the top. Labor is indeed the main concern.
Second concern is the status of Chinese economy, which is quite interesting, because all of our members down here (South China) are always export-oriented. But we've seen a switch happening recently. Most of our members are also targeting local markets. So if the Chinese economy is not doing as well as it used to be, then it starts to be a concern, because they're moving from export-oriented to be about local selves as well.
Last but not least, the competition by local players.
Newsgd: What had your members done to handle this situation?
Vettoretti: Some of them (European Companies in south China) have been better in efficiency. Some of them invested in heavy automation. Some of them are investing in retention. Some of them are implementing more flexible paying terms for the staffs.
I think they've been quite good, compared to the national European average. Raising cost has been happening here in South China in the export and manufacturing bases earlier than elsewhere in the country. And they have managed to go through this situation quite well.
If we look at the bottom line, in terms of net revenue of the companies, European companies in South China have done much better than the national average. This means they've been prepared, or ready to face this raising cost issue.