Financial performance and optimism is waning for European companies in China

Financial performance and optimism is waning for European companies in China, but growth opportunities through reform are identified

Pressures from increasingly challenging market and economic conditions in China, which are exacerbated by a regulatory environment that continues to be demanding and at times discriminatory, have led to a clear downturn in profitability and revenue growth for European companies. While the outlook on profitability has declined to an all-time low, reforms to promote greater rule of law and fairer competition are clearly identified as major potential drivers to stimulate Chinese economic performance in the future. However, companies remain unsure as to whether China’s leaders have the appetite to seriously address these necessary economic reforms, according to the Business Confidence Survey 2013 released today by the European Union Chamber of Commerce in China and Roland Berger Strategy Consultants.

As China’s economy loses some of its steam and its marketplace matures, European companies in China have started to feel a pinch to their bottom lines. The number of EU companies reporting revenue growth shrank to just 62% and those noting profitability growth decreased to 44%, leaving only 64% of European companies in China profitable. The most notable factor negatively affecting net profit margins is rising labour costs, but slower economic growth in both China and Europe, as well as increased competition, also had notable affects. These market dynamics that affect all players in the Chinese marketplace are aggravated by a discriminatory regulatory environment for European companies. Market access is the key concern. Approximately half of European companies noted missed business opportunities due to market access and regulatory concerns, thus challenging the government’s assertion that China has a level playing field.

Despite these serious challenges, China remains a pillar for global revenue generation. Approximately half of European companies note that China now accounts for more than 10% of their global revenues; and, while optimism on growth has decreased, 71% of companies are still optimistic about growth prospects. China is therefore perceived as increasingly important in companies’ global strategies. European companies are committed to serving the Chinese market and 86% are planning further investments to build upon current capabilities and maintain an edge over local competition. Most companies also perceive a number of opportunities for China’s new leadership to further stimulate Chinese economic growth through reforms. Most notable amongst these is the promotion of greater rule of law, which was identified by over three-quarters of European companies as being a potential significant driver of China’s economic performance in the coming years.

Davide Cucino, President of the European Chamber commented, “It is interesting that half of our companies are unsure as to whether the necessary and long-called-for economic reforms will be made. Despite increasing rhetoric from senior Chinese leaders that efforts will be undertaken to transform and level the regulatory environment through allowing greater play to market forces, European companies have so far perceived few concrete changes. Financial performance is worsening and optimism about profitability is at its lowest ebb. Meaningful changes need to be swiftly implemented to mitigate cost escalations through productivity increases, unlock market opportunities and to establish an efficient and well-functioning business environment that has equal competition at its core.”

Charles-Edouard Bouee, President of Roland Berger Strategy Consultants Asia, said, “Local players are continuing to improve in areas where foreign enterprises have long held dominance and this competitive landscape will only get tougher. European companies are reacting by expanding operations and geographical reach to achieve greater economies of scale and by strengthening in areas where they already hold advantages in order to maintain an edge over local competition. The major factor negatively impacting profit margins is a rise in labour costs. In addition, companies regard the talent shortage as the primary HR challenge, with high expectations from local talent in terms of pay and benefits further impacting the outlook. These factors represent significant risks to the competitiveness of the Chinese market that can only be countered if productivity growth can keep pace with wage increases.”

The European Chamber Business Confidence Survey 2013 is again produced in partnership with Roland Berger Strategy Consultants and was compiled with the input from over 550 European companies operating in China.

Source: European Union Chamber of Commerce in China

財務表現欠佳歐洲企業情緒走低但仍對改革充滿期待

各種挑戰日益加劇的中國市場及經濟形勢所帶來的壓力，已導致在華歐洲企業利潤與收入增長明顯放緩。與此同時，愈加嚴苛、且時而帶有歧視性的監管壞境更加劇了上述壓力。今天，中國歐盟商會及羅蘭貝格管理諮詢公司於北京共同發佈《中國歐盟商會商業信心調查2013》。該調查稱，隨著歐洲企業對利潤的展望達到新低，企業們已將進一步促進法治及更為平等競爭的改革視為中國經濟未來表現的主要潛在推動力。然而，對於中國領導人是否有認真地開展這些必要的經濟改革的意願，歐洲企業們仍感不確定。

隨着中國失去經濟增長的部分驅動力，及其市場的日漸成熟，在華歐洲企業開始感到巨大壓力。營業額呈增長態勢的歐洲企業數量收縮至僅有62%，同時，實現利潤增長的企業數量亦下降至44%，僅有64%的在華歐洲企業依然盈利。影響歐洲企業淨利潤率的最顯著因素是攀升的人力成本，同時中國和歐洲經濟增長放緩以及日益增長的競爭壓力也對企業的淨利潤裡造成明顯影響以上種種因素，對身處中國市場的每個參與者都帶來影響。而歐洲企業所面臨的歧視性監管環境，更使問題雪上加霜。市場准入是歐洲企業們最關切的問題。幾乎有半數的歐洲企業指出由於市場准入及監管方面問題而造成商業機會流失，並由此對中國政府所聲稱的公平競爭環境抱有懷疑。

儘管面臨諸多嚴肅挑戰，中國依然是全球營收重要支柱。幾乎達半數的歐洲企業指出中國佔其全球收入10%以上；同時，儘管對於增長的預期下降，71%的企業對於未來增長前景依然保持樂觀。由此可見，中國市場在歐洲企業的全球戰略中地位愈加重要。歐洲企業繼續堅定於服務中國市場，且86%的企業計畫進一步投資中國，以更好鞏固現有地位，並於在華競爭中保持自身優勢。此外，大部分企業在中國新一屆領導層身上看到通過進一步改革刺激中國經濟增長可能帶來的機遇，其中，加強法治的呼聲最為強烈。逾四分之三的歐洲企業認為，法治建設將是中國未來幾年經濟表現重要的潛在動力，並對此進行了明確呼籲。

中國歐盟商會主席大衛（Mr. Davide Cucino）表示：「值得注意的是，對於那些十分必要、且呼籲已久的經濟改革是否會實行，我們半數的企業並不肯定。儘管中國的領導人已多次表示將致力改革、促進更加平等的監管環境，迄今為止，歐洲企業所看到的實質改變卻很少。企業的財務表現每況愈下，對於盈利的信心也屢創新低。應儘快做出切實有益的改變，促進生產力發展以緩和攀升的成本給利潤率造成的負面影響，釋放更多的市場機會，並建立起一個以公平競爭為核心的高效、健全的商業環境。」

羅蘭貝格管理諮詢公司亞洲區總裁常博逸（Mr. Charles-EdouardBouee）表示：「對於那些長期由外國企業相對佔主導地位的領域，國內企業正在持續提高他們的競爭力，而這一競爭態勢今後只會變得更加激烈。作為應對，歐洲企業正力圖擴展業務範圍以及地緣上的拓展，以達到更大規模，同時通過進一步加強自身優勢領域，以求在與本土企業競爭中保有一定優勢。給利潤率帶來最大負面影響的，是人力成本的攀升。此外，企業已將人才短缺視為最主要的人力資源挑戰，而國內人才市場對薪金及福利的高期望進一步加劇了挑戰。這些因素給中國市場的競爭力帶來重大風險，而這一風險，只有在生產率增長與工資水準增長二者同步時，才能被規避。」

《中國歐盟商會商業信心調查2013》再次由中國歐盟商會與羅蘭貝格管理諮詢公司共同撰寫。今年有逾五百五十家在華歐洲企業參與了調查。

資料來源：中國歐盟商會