Economy

EU firms say China becoming 'strategic market'

(Xinhua)
Updated: 2011-05-25 22:51

BEIJING - European companies said China is an increasingly important "strategic market," according to an annual business confidence survey released by the European Union Chamber of Commerce in China on Wednesday.

More European companies are planning for increased long-term investment in China, with 59 percent of surveyed companies planning on staying and growing in China in 2011, compared with 39 percent in 2009, according to the survey, which sampled 598 European companies in China.

Up to 78 percent of the companies surveyed registered significant revenue increases last year, while 71 percent reported a rise in net profits, said a report of the survey.

Davide Cucino, president of the EU Chamber of Commerce in China, said European companies are "well-positioned to contribute to China's aim to switch to a more balanced economic growth model."

According to the survey results, 70 percent of the respondents said they had benefited from China's economic recovery, while 65 percent are confident that the 12th Five-Year Plan, which focuses on promoting domestic consumption, will improve China's business environment and create further growth opportunities.

European companies are looking forward to more opportunities in China's budding clean energy industry, as well as its service industry, Cucino said. Both of these industries will receive boosts this year as the result of new policies included in the Five-Year Plan.

However, the report also pointed out that European firms are facing growing competition from domestic companies, which are catching up with their overseas counterparts.

Vast improvements have been seen from local competitors in brand recognition, marketing and sales capability, and product quality, said Charles-Edouard Bouee, Asia President of Roland Berger Strategy Consultants, which worked with the EU chamber on the survey.

"In order for European companies to stay competitive in China, they need to seek to understand what local clients and consumers demand and continue to differentiate their products and services," he said.

The report noted that such competitive environments required more "transparency and well-regulated markets" than ever before.

European companies expressed greater optimism regarding regulators' willingness to make changes in the spirit of the World Trade Organization Agreement, although many companies felt that actual implementation of policies continued to lag, it said.