European companies operating in China: From digging in to rethinking their presence
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| Format: | Recurso digital |
| Sprache: | Englisch |
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2025
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| _version_ | 1866901651934150656 |
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| author | Garcia Herrero, Alicia Storella, Theo Xu, Jianwei |
| author_facet | Garcia Herrero, Alicia Storella, Theo Xu, Jianwei |
| contents | <p>We use nearly a decade’s worth of panel data from European Union Chamber of Commerce in China business confidence surveys to analyse the deteriorating outlooks of EU firms in China from 2017 to 2025.<br>All firms in China currently face challenges including slow profit growth and deflation. These circumstances have contributed to a rare drop of foreign direct investment into China over the last two years. However, certain challenges are particularly acute for foreign firms, including those from the EU.<br>According to survey results, business sentiment among EU firms operating in China has never been bleaker. Respondents view their profitability, growth opportunities and competitiveness negatively, while fewer respondents than ever plan to expand their Chinese operations. Moreover, significant shares of respondents report recent increases in political pressure from the Chinese state and media, while nearly a third of respondents say they are siloing their Chinese operations, meaning separating them from other global activities.<br>Disaggregated by size, sector, and years of operation in China, insightful differences emerge between the business strategies of EU firms. We broadly classify these into four categories: doubling-down, hedging, hibernating and ready to exit.<br>EU policymakers should consider how to address the challenges EU firms in China face, such as asset-heavy sectors being ‘stuck’ in China and smaller firms lacking the capacity to operate at a loss in China’s market. The EU might need to facilitate transitions forthese companies, helping them to reduce exposure to China and diversify into other emerging markets.</p> |
| format | Recurso digital |
| id | zenodo_https___doi_org_10_5281_zenodo_17496053 |
| institution | Zenodo |
| language | eng |
| publishDate | 2025 |
| publisher | Zenodo |
| record_format | zenodo |
| spellingShingle | European companies operating in China: From digging in to rethinking their presence Garcia Herrero, Alicia Storella, Theo Xu, Jianwei China European Union Trade Business Sentiment Companies <p>We use nearly a decade’s worth of panel data from European Union Chamber of Commerce in China business confidence surveys to analyse the deteriorating outlooks of EU firms in China from 2017 to 2025.<br>All firms in China currently face challenges including slow profit growth and deflation. These circumstances have contributed to a rare drop of foreign direct investment into China over the last two years. However, certain challenges are particularly acute for foreign firms, including those from the EU.<br>According to survey results, business sentiment among EU firms operating in China has never been bleaker. Respondents view their profitability, growth opportunities and competitiveness negatively, while fewer respondents than ever plan to expand their Chinese operations. Moreover, significant shares of respondents report recent increases in political pressure from the Chinese state and media, while nearly a third of respondents say they are siloing their Chinese operations, meaning separating them from other global activities.<br>Disaggregated by size, sector, and years of operation in China, insightful differences emerge between the business strategies of EU firms. We broadly classify these into four categories: doubling-down, hedging, hibernating and ready to exit.<br>EU policymakers should consider how to address the challenges EU firms in China face, such as asset-heavy sectors being ‘stuck’ in China and smaller firms lacking the capacity to operate at a loss in China’s market. The EU might need to facilitate transitions forthese companies, helping them to reduce exposure to China and diversify into other emerging markets.</p> |
| title | European companies operating in China: From digging in to rethinking their presence |
| topic | China European Union Trade Business Sentiment Companies |
| url | https://doi.org/10.5281/zenodo.17496053 |