Almost half EU firms in
China say 'golden age' is over
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[May 29, 2014]
BEIJING (Reuters) - Foreign firms in China
face a "sobering" business climate, a European lobby
said on Thursday, as concerns over weaker profits and
government support for domestic competitors have almost
half EU companies saying the "golden age" is over.
EU Chamber of Commerce in China member firms lost out on 21.3
billion euros ($29 billion) in revenue in 2013 due to market access
and regulatory barriers, the group said in an report on business
conditions in the world's second-largest economy.
"An abiding sense of pessimism for future performance is setting in,
which is leading many to question whether the good times have
ended," it said.
"...Almost half (46 percent) of European companies believe that the
'golden age' for multinational companies in China has already
At a plenum of the Communist Party last November, China announced
ambitious reform plans that signaled the shift of China's economy
from infrastructure- and export-fueled growth towards a slower, more
balanced and sustained expansion.
But growth expectations for companies are at their lowest levels
since the peak of the financial crisis, the report said, drawing on
responses from 552 firms.
Despite optimism about policy developments that emerged from the
plenum intended to reduce the government's intervention in the
economy, companies are skeptical about real reform. About half of
respondents said they were not confident meaningful reforms would be
implemented in the next two years.
Economists say China must make fundamental changes if it is to
succeed in its transformation from a bureaucratically run,
pollution-spewing industrial powerhouse to a more balanced,
However, reforms such as freeing up bank interest rates or
dismantling state monopolies will cause much short-term pain and
provide gains only in the long-term, which may make China's leaders
eschew high-risk steps in favor of incremental reform.
China's economic slowdown and rising labor costs were cited as the
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"Two-thirds of large companies stated that business in China has
become more complicated and difficult and that more companies view
state-owned enterprises as their main competitors," European Chamber
President Joerg Wuttke told reporters at a press briefing.
Foreign corporate executives often gripe bitterly in private about
market access and other business challenges in China, but typically
let chambers of commerce publicly voice their complaints for fear of
Foreign firms have long argued that they face unreasonable
discrimination for government procurement in China and that they
have been forced into intellectual property concessions in turn for
market access in some sectors.
China and the European Union are negotiating a bilateral investment
pact, but Europe says it has no interest in the deal if it omits
measures to prise open sectors that have long been off limits to
(Reporting by Michael Martina; Editing by Nick Macfie)
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