European companies in China are facing “less predictable” business conditions in the world’s second-largest economy, a report said yesterday, forcing them to allocate more resources to risk management.
The study, published by the EU Chamber of Commerce in China, sheds light on the increasing challenges for foreign firms with operations in the country.
More than half of those polled — 55 percent — reported a business climate that is “more political over the past year,” according to a recent survey conducted by the chamber, which represents more than 1,700 companies in China.
Photo: AP
This “general sentiment of uncertainty” has pushed three-quarters of European companies to review their exposure to China and diversify supply chains over the past two years, the survey found.
However, only 12 percent have decided to establish completely new supply chains outside China, while just 1 percent are severing all links with the country.
The report’s highlighting of uncertainty echoes sentiments expressed in an American Chamber of Commerce (AmCham) report last month, which noted an uptick in its members’ optimism about the Chinese market, but added that US-China tensions and regulatory inconsistency were among the main challenges reported.
Most of AmCham’s members planned limited or no new investments in China this year, it said.
“Despite significant improvement compared to last year, a majority (57 percent) of companies lack confidence that China will further open its markets to foreign firms,” it said.
“With the complexity and severity of the risks that businesses face having grown exponentially in recent years, companies are now having to allocate more resources to risk management and compliance activities than ever before,” the EU report said.
To navigate those risks, investing in due diligence services and detailed supplied chain reviews could become a competitive advantage, the chamber said.
However, a recent crackdown on consulting firms operating in China has spooked foreign investors, and recent changes to an anti-espionage law give Beijing more power than ever to determine what information falls under the national security umbrella.
“Derisking” has emerged as a core pillar of the EU’s economic policy toward China, after the COVID-19 pandemic and Russia’s invasion of Ukraine, the report said.
The term contrasts with the more drastic approach known as “decoupling,” pursued by some policymakers in the US who aim to isolate China or cut all commercial ties with the country.
The EU views China as a “partner,” but also as “an economic competitor and systemic rival,” the report said.
Ryanair, Transavia, Volotea and other low-cost airlines are feeling the financial pain from high jet fuel prices as a result of the Middle East war and are cutting flights. The closure of the Strait of Hormuz has taken a huge chunk of oil supplies off the market, sending the price of jet fuel soaring and triggering fears of shortages that could force airlines to cancel flights. Airlines are not waiting for a lack of supplies to react. “Travel alert: Airlines are cutting thousands of flights right now,” Travel Therapy host Karen Schaler said in an Instagram reel this past weekend.
MANAGING RISKS: Taiwan has secured LNG sufficient to cover 95 percent of electricity demand for next month, UBS said, describing the government’s approach as proactive UBS Group AG has raised its forecast for Taiwan’s economic growth this year to 8 percent, up from 6.9 percent previously, and said expansion could reach as high as 8.6 percent if external energy shocks are avoided. The upgrade reflects a stronger-than-expected first-quarter performance and sustained momentum in artificial intelligence (AI)-driven exports, which UBS said are providing a firm foundation for growth despite geopolitical and energy risks. Taiwan’s GDP expanded 13.69 percent year-on-year in the first quarter, the fastest growth since the second quarter of 1987, the Directorate-General of Budget, Accounting and Statistics (DGBAS) reported on Thursday. On a seasonally
The Fair Trade Commission’s (FTC) ongoing review of Grab Holdings Ltd’s US$600 million acquisition of Foodpanda Taiwan’s operations, announced on March 23, has taken on fresh urgency as industry experts warn that the transaction could embed significant Chinese cybersecurity vulnerabilities into Taiwan’s digital infrastructure through Grab’s deep ties to autonomous-driving firm WeRide (文遠知行). Less than 16 months after the FTC blocked Uber Eats’ direct attempt to acquire Foodpanda Taiwan — citing potential combined market shares of 80 to 90 percent — the emergence of Grab as the buyer has prompted questions about whether the same competitive harm is simply being rerouted
The list of Asian stocks that benefit from business partnership with Nvidia Corp is getting longer, as the region further integrates into the artificial intelligence (AI) chip giant’s business ecosystem. Just in the past week, South Korea’s LG Electronics Inc, Taiwan’s Nanya Technology Corp (南亞科技), as well as China’s Huizhou Desay SV Automotive Co (德賽西威) and Pateo Connect Technology Shanghai Corp (博泰車聯) have become the latest to rally on news of tie-ups, supply-chain participation or product collaboration with the US chip designer. Asian suppliers account for about 90 percent of Nvidia’s production costs, up from about 65 percent last year, data compiled
RSS