European firms' 'best era' may be over

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

"It's not like 'Oh, my God, I'm gonna leave'. Actually I see no rush to leave China," said Gilbert van Kerckhove, president of Beijing Global Strategy Consulting Co.

Van Kerckhove said the survey result should not be interpreted in a completely negative way.

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There are some positives, too, as rising competition means China's local companies are becoming more competitive and rising labor costs mean rising living standards.

"The slowing growth does not mean there is no growth," van Kerckhove said. "It is not growing as rapidly as before, and that, in a way, is the normal mode."

Wuttke agreed. He said that the global economy is now leaving the unusual situation of the recessionary West and China in double-digit growth, when it was seen as the undisputed top investment destination. The more usual situation of developed economies rebounding and China growing at a more normal rate is emerging.

"The new normal means that people are looking at other investment locations. China's top position as one of the only investment areas is still important, but not as important as a couple of years ago," Wuttke said. "Subsequently, companies are holding back on investment."

What remains a significant concern for European businesses in China are regulatory obstacles. While the majority view Chinese laws and regulations to be adequate, most find the enforcement of laws to be lax.

Companies surveyed identified an "unpredictable legislative environment" and "discretionary enforcement of regulation" as the top two regulatory obstacles. Intellectual property rights protection, a traditionally strong concern, has receded to seventh position.