A quarter of European companies plan to leave China due to strict ‘zero-COVID’ policy: report

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A recent survey of European companies shows that almost a quarter of companies are considering leaving China due to Beijing’s strict measures against COVID-19.

On June 20, the European Union Chamber of Commerce in China (European Chamber) released its “Business Confidence Survey 2022” (BCS).

The report showed a significant drop in European business confidence.

In the press release, Bettina Schoen-Behanzin, Vice-President of the European Chamber, said: “A growing number of European companies are suspending their investments in China and reassessing their market positions while waiting to see how long this uncertainty will last. continue, and many are looking to other destinations for future projects.

“COVID-19 is wreaking havoc on business operations”

BCS data revealed that the pandemic and economic slowdown were the top two issues facing European businesses in 2021. The pandemic ranked first among the top three challenges for 49% of respondents, while China’s economic slowdown was the second most difficult for 24% of respondents. respondents.

The report said China’s strict COVID-19 containment policies are making it harder to attract and retain foreign talent.

A worker works on a steel rim production line for bicycles at a factory as the country is hit by the COVID-19 outbreak in Hangzhou, Zhejiang province, China, March 2, 2020. (China Daily via Reuters )

“Market access and regulatory barriers persist”

More than 40% of respondents said they missed business opportunities in 2021 due to market access restrictions or regulatory hurdles, a continuation of a trend that has changed little over the past seven years, according to the report.

According to BCS, 54% of respondents expect “an increase in regulatory hurdles in China over the next five years, the highest level since 2018. Nearly a third do not expect any improvement in the status what”.

The BCS also revealed that the majority of forced technology transfers continued to occur after “the Foreign Investment Act (FIL) – which prohibits technology transfers by administrative means – came into force on January 1 2020”.

The trend at the start

Last week, the American Chamber of Commerce in Shanghai released its June COVID Impact Survey.

The report indicates that 26% of manufacturers are accelerating the localization of their supply chains in China while moving production of global products out of the country.

Among manufacturers, 35% are operating at full capacity. For those unable to operate at full capacity, the majority (71%) experienced difficulty moving between facilities and home, according to the June 7-9 survey.

Among respondents, 87% reported the negative impact of COVID-related lockdowns on business revenue.

Wu Wei contributed to this report.

Mary Hong

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Mary Hong has been a contributor to The Epoch Times since 2020. She has reported on human rights issues and Chinese politics.

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