In its annual report, the European Chamber of Commerce in the country believes that “ideology prevails over the economy”. Investors are worried, even suspicious.
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The about-face is spectacular. Considered for twenty years by Western investors as an unparalleled boon, China has been perceived, for a few years, as a risk. To the point that in 2022, the situation turned around and it is now this risk that predominates in the eyes of many entrepreneurs. This is the main teaching of the last annual “position document” published by the European Chamber of Commerce in China, Wednesday September 21.
The reason is due in a formula that appears at the top of the report: “Ideology prevails over the economy.” Maintaining zero covid policy and the closure of borders, the accent put by Beijing on Self -sufficiency, the support given to Russia against Ukraine – which makes an aggression against Taiwan even more likely, with geostrategic but also unpredictable consequences -, public opinion and therefore more and more nationalist consumers … All this Makes European investors worried, even suspicious. China is a country “less predictable, less reliable and less effective”, sums up the report.
If the vast majority of European companies present there do not consider leaving this country, which remains an incomparable market and industrial base, rare are those which intend to increase their investments. On the contrary. Reducing his dependence on Chinese risk has become a priority for European firms. Despite additional costs and a momentary disorganization of production channels, the industrialists of the old continent envisage, for safety, to multiply investments in third countries rather than betting exclusively on the Chinese market.
Moreover, European investments in the Middle Empire are increasingly concentrated, reveals a study published by the Rhodium Group, a research organization, in mid-September. In 2013, the ten main European investors represented 40 % of the continent’s investments in China. In 2019, this percentage reached 88 %. It would be fell to 70 % in 2021.
Difficulty attracting talents
Four countries are doing well. First and especially Germany (almost 50 % of European investments), followed from afar by the United Kingdom, the Netherlands, then France. The concentration is also sectoral, with five main sectors: the automobile, far ahead of food, pharmacy, chemicals and consumer products.
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