Increasing uncertainty hinders Chinese enterprises' invest in EU

A latest report shows that Chinese enterprises' EU business environment rating has declined for the fifth year in a row, as increasing uncertainty permeates.

In 2024, Chinese companies rated the EU's business environment at 62 points, a sharp decline from 73 points in 2019, according to a report published by the China Chamber of Commerce to the EU (CCCEU) in cooperation with global consultancy Roland Berger, which focuses on the challenges and opportunities for Chinese enterprises operating in the EU.

Based on a four-month survey and in-depth interviews with around 200 Chinese businesses in the EU, the report shows that the growing uncertainty in the EU business climate has become the main hindrance for Chinese companies to make further investment.

The report shows that 68 percent of respondents believe the business environment has worsened over the past year, with over half claiming the EU market is no longer "fair and open."

At least 78 percent of the surveyed businesses identified "uncertainty" as a key challenging factor of their operations. Rising compliance costs and growing anti-China sentiment are also among the affecting elements.

Political factors are believed to be major hurdles, as well as market barriers driven by the political issues. Besides, high labor costs, limited understanding of Chinese businesses, as well as global inflation and the EU's slowing economic growth, have added to the pressure faced by the Chinese companies.

At least 64 percent of the Chinese companies are saying that they were "being treated differently due to their Chinese origin," the report says.

Meanwhile, there are some optimistic factors as well.

Most Chinese enterprises still see significant potential in the European market, despite the fact that they remain cautious while making investment decisions. About 40 percent of surveyed companies plan to increase investments in the EU in 2024, while 43 percent expect to maintain current investment levels.

In 2023, Chinese investments in the EU mostly flowed to Luxembourg, the Netherlands, and Sweden. By the end of 2023, China's direct investment stock in the EU reached USD 102.4 billion, representing 33 percent of China's total investment in developed countries. Chinese FDI has set up more than 2,800 companies in the EU, hiring more than 270,000 local employees, China's official data showed.

2025 marks the 50th anniversary of diplomatic relations between China and the EU, and the Chinese businesses are looking forward to "strengthened exchanges in trade, technology, culture, and tourism," calling for "increased political trust and deeper cooperation" as per the report.