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EUCCC: European Companies’ Confidence in Doing Business in China Has Deteriorated

Major Taiwanese news network Liberty Times Network (LTN) recently reported that the European Union Chamber of Commerce in China (EUCCC) just released its latest survey. The survey showed that, in the face of growing risks and a more unstable business environment, European companies’ confidence in doing business in China has deteriorated. Companies have begun to review their investment and business strategies in China. According to the survey, 64 percent (a record high) of the respondents said that doing business in China has become more difficult in the past year, and 30 percent of the companies said that their revenue shrank compared with the same period last year. This ratio increased by 20 percentage points and reached the highest level in history. Around 75 percent of the companies have reviewed their supply chain strategy in the past two years, with 24 percent saying they plan to relocate some of their supply chains to China and 12 percent who have already moved some of their supply chains out of China. In addition, 10 percent of the respondents said that they have moved or plan to move their Asian headquarters or business unit headquarters out of China. The number of respondents who regard China as the top three investment destinations in the future has dropped by 13 percentage points compared with the same period last year. Surveys point to increased decoupling between headquarters and China operations, mainly to manage risk. Jens Eskelund, president of the EUCCC, said the negative trends seen from this year’s survey were worrying and reflected challenges posed by an uncertain policy environment in China and heightened geopolitical tensions.

Source: LTN, June 21, 2023