China’s market is becoming less appealing for European companies due to unmet reforms and increasing challenges, according to a position paper by the European Chamber of Commerce published on Wednesday.
The annual position paper stated that for some companies, the risks of investing in China were beginning to outweigh the returns.
The chamber, representing over 1,700 members, emphasized the need for concrete action to address companies’ main concerns.
The chamber’s president, Jens Eskelund, said a “tipping point” had been reached, with investors scrutinizing their China operations more closely, as the challenges of doing business were beginning to outweigh the returns.
“While China still holds significant potential, this situation urgently requires more action from the Chinese government, not more action plans.”
The paper provides more than 1,000 recommendations to the Chinese government and a “blueprint” for rebuilding confidence.
Some companies were finding better margins outside of China, Eskelund said. Between a third and a half of EU companies were waiting to see how the economy developed before making further investments in China, he added.
Despite these issues, the EU chamber did not see its members wanting to completely withdraw from China, as it remained an important location for industries such as automotive and chemical manufacturing, according to Eskelund.
