China has seduced companies around the world for decades. Now her appeal is wearing thin

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China is becoming less and less attractive to foreign companies. To such an extent that, in a recent survey carried out by the European Union Chamber of Commerce in the Asian country to 372 companies from the Old Continent that operate there, 23% admitted that they were thinking of moving their current or future investments out of China.

Why? The main reason these companies give for wanting to leave the country is that the harsh restrictions imposed by the Chinese authorities to combat the coronavirus pandemic (in April, for example, they re-confined 26 million people in Shanghai, the economic capital of China , for two months) are hurting the performance of their factories and, therefore, increasing their production costs and reducing their profits.

In fact, another report, in this case from the National Bureau of Statistics of China and picked up by Bloombergpoints out that, from January to April 2022, foreign industrial companies operating in the Asian country experienced a 16.2% drop in profits.

Other problems. However, the restrictions associated with the pandemic are not the only reasons why China is losing its attractiveness to foreign investors. 46% of respondents said that rising labor costs were a pressing problem, 42% believed that the slowdown in the Chinese economy was as well, and 30% said that barriers to market access were the biggest obstacle.

Likewise, several European firms have indicated that they view with concern the growing politicization of the Chinese business environment, market inequalities and inefficient regulations, according to the South China Morning Post.

US companies also in trouble. European carriers aren’t the only ones reporting problems. The American Chamber of Commerce in Shanghai also conducted a survey of its companies in China in June and he found that only 31% of them had returned to work at full capacity after the restrictions imposed by the authorities to contain the pandemic.

And similar setbacks are recorded by local companies, which saw their profits fall 8.5% during the month of April 2022, according to the Chinese National Statistics Office, the worst results recorded since April 2020.

Where will they go? Although at the moment they are only studying it, if they left, the companies surveyed have also shared information about the regions in which they would relocate their industries. 16% of them said they would look for a nearby destination in another country in Southeast Asia, and 18% said they were considering relocating to another region in Asia or the Pacific.

Surprisingly, 19% of companies said that if they left China, would bring their industries back to Europe. 12% indicated that the preferred destination would be North America and 11% South Asia.

Image | johndhackensacker3d

China is becoming less and less attractive to foreign companies. To such an extent that, in a recent survey carried…

China is becoming less and less attractive to foreign companies. To such an extent that, in a recent survey carried…

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