Doing business in China growing tougher, uncertain

Beijing: Uncertainty and ‘draconian regulations’ have drastically raised risks for foreign businesses in China, a report by a European business group said on Wednesday.

The lengthy paper by the European Union Chamber of Commerce in China urges China’s leaders to do more to address concerns that it says have ‘grown exponentially’ in recent years. “This report comes at a time when the global business environment is becoming increasingly politicised, and companies are having to make some very tough decisions about how, or in some cases if, they can continue to engage with the Chinese market,” it says. The study, compiled by the chamber and the China Macro Group consultancy, echoes concerns that have been raised by European and American companies operating in China. Foreign investment fell 8 per cent last year from a year earlier as companies recalibrated their commitments in the world’s second largest economy.

EU Chamber officials said China’s changing business environment partly reflects moves by Beijing to minimise risks due to trade friction and dependence on imports of key commodities or industrial products. That’s especially the case given trade friction with Washington and discussions about “decoupling” supply chains from China after the disruptions that occurred during the Covid-19 pandemic.

But they said European companies also must manage their own risks. China has sought to emphasise its openness to foreign companies and investment. Its commerce ministry spokesperson said the country was working to ensure 100 per cent access to manufacturing by eliminating remaining trade barriers.