European firms' 'best era' may be over

By Zheng Yangpeng and Mu Chen (China Daily) Updated: 2014-05-30 06:59

The economic slowdown has drawn fewer foreign businesses to China, said Sara Marchetta, a partner at Italian legal firm Chiomenti Studio Legale and vice-president of the chamber. However, a trend that started in 2012 has seen her firm take up more Chinese clients looking to make mergers and acquisitions overseas.

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For some, it has been a question of whether the costs of a presence in China are worth the money that Chinese companies are willing to pay. Her firm has had operations in China since 2006 and, as it is small in terms of personnel, this question has not come into the decision-making process.

She said her company, and most small and medium-sized ones, have the flexibility to adapt to the market and the ability to find niches. This is a luxury that multinational corporations seldom have.

Despite the dip in optimism, China remains critical to the revenue-generating capacities of European companies. The percentage of firms that generated 10 percent or more of their global revenue from China has increased on an annual basis for the past five years.

"European companies will continue to regard the Chinese marketplace as strategically important because the sheer size of the marketplace means that they will continue to generate a high proportion of their global revenues in China," said the survey report. "However, it is clear that they are starting to reappraise China's role."

Nearly half the European companies surveyed are reviewing investment opportunities in other parts of Asia, but so far only one-tenth of the companies have shifted plans from China to elsewhere in the past two years.