Forbes’ Post

The European Chamber survey found that 55 per cent of the 529 companies that responded to its survey cited China’s economic slowdown as a top three business challenge, with a large number saying a lack of demand affected net profit margins last year. On the positive side, 45 per cent reported some market opening, up from 36 per cent in 2023. But only 15 per cent of respondents ranked China as the top destination for their company’s present investments and 13 per cent for future investments, both record lows. A record low 39 per cent reported revenue increases, while 15 per cent reported negative earnings in China before interest and tax — the same level as 2023, which was the highest since 2015. Despite calls by European politicians and corporate leaders to create a better commercial environment — and efforts by Beijing to improve the treatment of foreign firms — a record 68 per cent said business had become more difficult.

NEW: A report by the CSIS Trustee Chair analyzes a formal survey of over 600 Taiwanese companies, finding that although worries about the risks of doing business with China remain high, Taiwanese companies are engaging in a variety of diversification strategies rather than decoupling from China. Read here: https://lnkd.in/eFa5k-wp The views and actions of Taiwanese companies provide invaluable insights into both cross-strait relations and trends in the geoeconomic environment. In November 2023, the Trustee Chair in Chinese Business and Economics conducted a second formal survey of Taiwanese firms to assess how companies’ views and behavior may have shifted since an initial survey in July 2022. In addition to remeasuring their assessment of risks and coping strategies, a second survey could also evaluate whether steps by China to normalize inward and outward international travel and by Beijing and Washington to stabilize ties had any effect on firms’ intentions to move business operations. This report, by Scott Kennedy and Andrea Leonard Palazzi, presents the key findings of the survey with regard to how Taiwanese companies evaluate the various geostrategic risks they face and how best to respond, both in terms of government policies as well as their own behavior. It then delves further into Taiwanese firms’ decision to move operations from the Mainland and explores why they are more prone to move than their counterparts from elsewhere. The final chapter evaluates the policy implications for the various actors with a stake in these geopolitical challenges.

Another article with a misleading headline and that totally misses the point; foreign business need to step up their efforts in China. Chinese companies are getting seriously competitive in almost all industries. That is the real story and something all foreign companies need to relate to.

Uncover the future of China’s policies at the annual “Two Sessions” and how they impact European businesses. China’s “Two Sessions” are key annual political meetings revealing future government goals. The Belgian-Chinese Chamber of Commerce is hosting a webinar to explore how the outcomes of the 2024 Two Sessions could affect European businesses. In this webinar, Riccardo Benussi, Partner at Dezan Shira & Associates, will talk about China’s strategies for achieving 5% GDP growth, focusing on attracting foreign investment and boosting business confidence during economic challenges - like the COVID-19 recovery. Subsequent to Riccardo’s presentation, there will be a brief question and answer session moderated by the Belgian-Chinese Chamber of Commerce - BCECC Chairman, BERNARD DEWIT. Additionally, Mr. Dewit will deliver both the opening and closing remarks for the event. Interested in gaining insights into China’s policies for the year ahead? 📌 Save your seat and register now: https://lnkd.in/ganpi3YZ #DezanShira #ChinaPolicies #TwoSessions2024 #EuropeanBusiness #ForeignInvestment #GDPGrowth

“The GBA(Greater Bay Area) represents the future of China. Here it's a place that will be focused, where American companies are going to continue to invest in research and development.” Dr. Harley S., president of the American Chamber of Commerce in South China, told us during the press conference for the "2024 Special Report on the State of Business in South China" held on February 27.   This year, the American Chamber of Commerce in South China has released the " Special Report on the State of Business in South China" for the 20th consecutive year. The 2024 research report includes insights from 183 participating companies. The report indicates that companies surveyed are maintaining a cautious attitude towards future investments in China. As much as 76% companies plan reinvestment in China in 2024, 77% plan to reinvest with a low quota (less than US$10 million). Only 3% will reinvest in projects involving US$250 million or more.   The report also indicates that in 2023, 62% of the surveyed companies opted not to relocate their investments from China. 66% of American companies asserted their continued dedication to the Chinese market, representing the highest percentage among all businesses surveyed. Moreover, 76% companies intend plan to reinvest in China in 2024. Notably, none of the surveyed companies announced a complete withdrawal from the Chinese market. Read: https://lnkd.in/gs79VeTG EY AmCham South China

The proportion of German firms exiting the Chinese market or considering doing so has more than doubled to 9 per cent in the past four years, according to a survey by the German Chamber of Commerce in China. The survey highlights the challenges faced by German companies operating in China, including increased competition from local companies, unequal market access, economic headwinds and geopolitical risks, the chamber said. https://lnkd.in/g9nYhA9E

Latest findings from the European Union Chamber of Commerce in China:

Okay, this is generally comes at an odd time. Most indicators show that Chinese economic activity is back. I have no idea the specifics (ie. happy family all the same, unhappy families have unique problems), but it seems the European companies (at least EU) are concerned about the business environment in China. So if economic activity is up, why the gloom? "China is “no longer the obvious choice for all”, said the annual report, which cited responses from 529 member companies in January and February. “What is happening now is that companies are beginning to realise that some pressures seen in the global market, as well as the competition with us, have really taken on a more permanent danger,” Jens Eskelund, the chamber president, was quoted as saying in the report. “That is something that is beginning to impact investments and decisions and the way they think about development of the local markets.” Concerns about China and the global economic slowdown; US-China tensions; risks from geopolitical conflicts; and competition with the Chinese private sector were the main challenges flagged by companies in the survey." I guess that they find it 1. tough to compete IN CHINA and 2. tough to export OUT of China. This is not necessarily something that China can do - I mean India and Vietnam is also rising as viable alternatives; and Chian cannot stop them. And if EU companies cannot compete in China with Chinese firms - what should Beijing do? Not all the deals lost were down to unfair playing field. But this is what somehow the CCP does not WANT to understand - foreign firms invest in China for their ROI for their companies, and if China booms and the ROI is anaemic - they are not going to put in more money. There is a connection between 5.3% economic growth and EU company profits - but maybe the correlation is very weak. So here's an idea: if the GDP grew by 10% (not saying it should) then China will have enough projects for everyone - US firms, EU firms, local private firms and SOEs. With 5.3%, and a focus on self-reliance - there is a chance that more foreign companies in China will refocus their efforts elsewhere. And money that is in China will be used for in-China capital upgrades; but less new money is directed to China. And more companies will exit or reduce headcount.

#News - As Canada seeks to deepen its ties with Southeast Asia, Ottawa is confronted by a region that is divided between the rival superpowers: China and the United States. According to the State of Southeast Asia 2024 survey, compiled by the ISEAS-Yusof Ishak Institute, 50.5% of respondents opted for China and 49.5% preferred the U.S. if ASEAN had to pick sides, marking the first time Beijing edged past Washington since the annual survey started asking the question in 2020. https://lnkd.in/datwR2uM

Great and astute observations by Ethan Tan. Thought I’ll share a few more contributing factors based on my own observations: 1. In the past, foreign firms in #China had few to no competition (降维打击), but as local firms grow and become competitive, it becomes harder for them to continue extracting a premium price and supernormal profits. 2. Consumption downgrade is real in China, especially post-Covid. This means consumers are now more willing to trade-down for less well-known but equally well-produced local brands. 3. Finally, the US-China trade tensions has spilled over to other countries as the US adopts a “if you’re not on the table, you’re on the menu” approach. Strong nationalistic sentiment then further compounds and amplifies the earlier 2 points. #Chinaeconomy #economics #economicdevelopment #consumptiondowngrade