Business Confidence Survey 2022

Beijing, 20 June 2022 – The European Union Chamber of Commerce in China, in partnership with Roland Berger, released its European Business in China Business Confidence Survey 2022 (BCS).

The annual survey shows that while most European companies in China posted positive revenues and were profitable in 2021, doing business became more difficult for the majority.

As the rest of the world returns to a pre-pandemic level of normality, and China’s stringent COVID-19 policy exacerbates the challenges of doing business, many European Chamber members are questioning just how many eggs they are willing to keep in their China basket.

.  Two thirds of European businesses saw revenue increases during 2021, however doing business also became more difficult year-on-year (y-o-y) for 60%.

.  Covid-19 was the top issue faced by business in 2021, ranking as a top-three challenge for 49%; China’s economic slowdown, a top three issue for 24%, ranked second.

.  50% reported that the business environment became more politicised in 2021.

.  Regulatory barriers are still resulting in missed business opportunities, with 42% of firms reporting this to be the case.

In response to mounting uncertainty - resulting from both China’s Covid-19 strategy and Russia’s invasion of Ukraine - and to minimise their exposure to potential geopolitical shocks, European companies’ China operations are being increasingly siloed. Eight times as many respondents reported plans to onshore supply chains into China as those looking to offshore.

Significant localisation of staff has taken place over the last half decade all the way from junior recruits to board members. IT and data storage infrastructure has also been localised by 74% and 75% of respondents respectively, with this driven by ‘secure and controllable’ technology guidelines and increasingly stringent data governance regulations.

"The only thing predictable about China today is its unpredictability, and that is poisonous for the business environment", said Bettina Schoen-Behanzin (Vice president of the European Union Chamber of Commerce in China). "Increasing numbers of European businesses are putting China investments on hold and re-evaluating their positions in the market as they wait to see how long this uncertainty will continue, and many are looking towards other destinations for future projects."

"China remains crucial for most European businesses, both as an outlet for products with strong competitive advantage, and as a powerful industrial production base. It is too big and too important to scale down, but a holistic and stable framework is needed", said Denis Depoux (Global managing director of Roland Berger). "The deterioration of internal and external business conditions, with 13% more survey respondents finding business in China more difficult in 2022, even before the Covid resurgence, contrasts with the crucial role of China for them."

Significant localisation of staff has taken place over the last half decade all the way from junior recruits to board members. IT and data storage infrastructure has also been localised by 74% and 75% of respondents respectively, with this driven by ‘secure and controllable’ technology guidelines and increasingly stringent data governance regulations.

Report / Download: here
Website European Union Chamber of Commerce in China: here