European firms in southern China have less confidence than in any other region: survey
- Annual findings by EU Chamber of Commerce in China flag worrisome drops in revenue and profitability, with a sharp rise in economic-slowdown concerns
Sentiment among European companies in southern China is lower than elsewhere in the country, according to recent survey results, and analysts expect that the disparity is a direct result of production-capacity shifts and Hong Kong’s falling re-export role.
The European Union Chamber of Commerce in China, which conducted its annual survey earlier this year with consulting firm Roland Berger, found that its members in southern China experienced a more obvious decline in their revenues and profitability.
Nearly 40 per cent of respondents in the south reported obvious revenue declines for 2023 compared with 2022, and 17 per cent saw a substantial decrease of more than 20 per cent, according to the findings released last week. Elsewhere in the country, the regional percentages of respondents who saw their revenue plunge by that much ranged from only zero to 10 per cent.
Around 32 per cent of respondents in southern China reported that their 2023 earnings before interest and taxes decreased compared with 2022, while only 26 per cent described their business outlook as being optimistic for the coming two years - both worse than firms in the rest of China.
“In recent years, many EU enterprises in south China have shifted production capacity to northwest and north China, and even more to [Southeast Asia],” said Liu Kaiming, founder of the Shenzhen-based Institute of Contemporary Observation, a think tank monitoring supply-chain conditions in hundreds of Chinese contract manufacturers.
“In addition, the significant shrinkage of Hong Kong’s re-export function has also affected the business of foreign enterprises in south China.”
Members expected that 2023 would be a good year, as it was right after the Covid opening
