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Growth slowed costs increased by 20% European enterprises considering divestment China

With the growth slowing and cost rising, foreign enterprises began to consider transfer.
On May 29, the European Chamber of Commerce of China and the Roland Berger Management Consulting Company jointly released the China European Chamber of Commerce Business Confidence Survey 2012. 22% of EU companies surveyed said they were considering diverting their investment to markets outside China. Most of these enterprises serve the Chinese market.
"It's not that these companies have withdrawn their capital from China, but that they will withdraw their capital from China if the operating environment in China does not meet the basic requirements of corporate profitability, such as textile and other industries." David, chairman of the China EU Chamber of Commerce, said.
According to the report, the problems encountered by EU companies in China before were largely offset by China's low-cost advantages. At present, China is moving up the entire industrial chain, and the demand for labor wages is rising. In contrast, the investment environment in Southeast Asia and South America has become more attractive.
China's market revenue accounts for 10% of the world's total.
Liu Wenbo, vice president of Greater China at Roland Berger, said: "European enterprises in China are facing more and more intense competition from domestic enterprises because of the maturity of the Chinese market. The brand promotion, marketing and product quality of domestic enterprises have been greatly improved."
But last year the Chinese market still contributed 10% of the EU's total global revenue, up 50% from 2009.
From the perspective of industry and scale, foreign enterprises with a tendency to withdraw capital mainly focus on consumer goods and service enterprises, while long-term, large-scale enterprises in China are still inclined to increase investment in China.
"The survey is based on expectations and opinions about China. Many of the companies surveyed are large enterprises with more than five years'experience in China and stable Chinese business. They are willing to stay in China if they are treated fairly." David said.
The idea of divestment from China is not just in foreign companies. Last year, the Ministry of Industry and Information Technology (MIIT) conducted a survey on small and micro labor-intensive manufacturing enterprises. Wang Jianxiang, deputy director of the MIIT Small and Medium-sized Enterprises Department, told this newspaper that many SMEs have begun to transfer their industries to Southeast Asia during their research, which is the result of China's industrial upgrading and transformation.
David said many foreign companies in the survey said they were also considering shifting their investment operations to central and Western regions, such as Chongqing, where the growing market for foreign investment could expand business in central and other regions. Data from the Ministry of Commerce show that in January-April this year, the central region actually used $3.05 billion in foreign capital, an increase of 12.6% over the same period last year.
Foreign-funded enterprises say that investing in the middle of the country has a more tangible advantage in reducing operating costs. The reason for choosing Anhui, Hubei, Gansu, Hainan and other provinces to invest is that foreign enterprises can obtain government loans and there are government incentives for development in these areas.
FDI growth rate decline
Prior to this, most foreign enterprises in the interpretation of the "12th Five-Year Plan" in some areas of foreign capital opening, are optimistic, but this year, more enterprises interviewed said that the "12th Five-Year Plan" has no impact on its business, the proportion from 11% last year rose sharply to 30%.
"There are very few opportunities for foreign companies in the 2008 stimulus package, and the new stimulus will be the same result." David said. Recently, China introduced a new policy catalogue to encourage foreign enterprises to set up R&D centers in China, and some key and sensitive areas also encourage foreign enterprises to enter.
"Foreign companies are willing to set up R&D centers in China, because the salaries of domestic R&D personnel are more reasonable, and the key is to put forward policies to promote the sharing of results between Chinese enterprises and foreign enterprises." David said that as long as the conditions are reasonable, foreign enterprises are willing to set up R & D centers in China.
In the first 4 months of this year, the actual use of foreign capital amounted to US $37 billion 881 million, down 2.38% from the same period last year. Some analysts believe that due to the impact of the European debt crisis recently, EU investment in China has continued to decline, and EU exports to China are not ideal.
"The willingness of 63% of EU companies to invest more in China shows that the debt crisis has no direct bearing on these European companies, of course, companies will bear some losses in the debt crisis environment." David insisted that the decrease in investment is related to problems encountered in China.

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