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European Businesses in China Keen to Seek Greener Pastures

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European Businesses in China Keen to Seek Greener Pastures Powered By Docstoc
					European Businesses in China Keen to
Seek Greener Pastures

According to a recently-published report by the European Union Chamber of
Commerce in China, regulatory restrictions are hurting multinational companies. In
the report titled European Business in China Business Confidence Survey 2012,
approximately 22% of respondents have said that they will move their projects away
from China as a result.


Additional taxes on expatriate salaries, penalties on foreign businesses and policies
that favor local labels were quoted as push factors. In addition, after decades of
being courted by the Chinese government and amidst an economic slowdown, the
window is closing rapidly for those who are not in China. Although 78% of companies
expressed optimism for revenue growth over the next two years, it is not echoed in
their profit projections. European companies are also pumping in 40% less capital
compared to a year ago.


According to the survey, some of the following factors may be responsible for the
phenomenon:

    a general maturation of the Chinese marketplace,
    regulatory reforms that stymie growth opportunities and
    barriers to opportunities.




A GENERAL MATURATION OF THE CHINESE MARKETPLACE
As the Chinese economy matures, it brings with it a number of factors that hurt
European businesses including:

    increased competition from Chinese private enterprises in terms of pricing,
     branding and sales,
    improved relations between government and Chinese state-owned
     companies,
    increased pricing pressures and higher investments in branding, marketing
     and sales, and human resources to retain their market share and
    rising labor costs.
REGULATORY REFORMS THAT STYMIE GROWTH OPPORTUNITIES
In the study, European firms say that regulatory environment is not developing in
accordance with the needs of the market. 40% report that Chinese government
policies towards foreign companies are less fair than they were two years ago.
Furthermore, the lack of transparency and discretionary enforcement of regulations
are impediments to doing business in China.




BARRIERS TO OPPORTUNITIES
European companies say that they continue to miss out on business opportunities in
China because of market access and regulatory barriers. However, Liu Weimin, a
representative of China’s Foreign Ministry reported that foreigners are not treated
unfairly in China and have instead been conferred preferential treatment. They,
however, must now adapt to more even playing field with Chinese companies as the
economy matures and wages rise.


Mr. Satish Bakhda, Head of Rikvin’s Operations said, “We understand China’s
position amidst the current economic climate. However, in the very near future,
European businesses that have indicated their interest to seek greener pastures may
actually pack up and go to emerging economies in Asia or an established business
epicenter such as Singapore to form a company.”


“Singapore’s esteemed reputation as a global business hub in the heart of Asia is
well known. No doubt that Singapore is facing its own set of challenges as well.
However, the republic remains open for business – and this includes company setup,
investments and trade across barriers. Singapore’s vast network of trade agreements
and pragmatic manpower policies are designed to attract and retain businesses and
professionals that add value the economy,” added Mr. Bakhda.


About the Publisher:

Rikvin is a Singapore-based consultancy that offers business solutions for both
local and foreign professionals, investors and entrepreneurs. Rikvin’s areas of
expertise include assistance to start a Singapore company or setup a Singapore
company, incorporation of Singapore representative office , offshore company
setup, accounting, taxation, Singapore work visa and other related corporate
services. Rikvin also provides immigration services for foreign professionals
wishing to relocate to Singapore.

Rikvin PTE LTD
20 Cecil Street, #14-01, Equity Plaza, Singapore 049705
Main Lines: (65) 6438 8887
Fax (65) 6438 2436
http://www.rikvin.com

				
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