European firms eye bigger presence in South China

More European firms are willing to strengthen their footprint in South China compared to last year, a survey by an industry chamber showed on Monday.

This, according to a report by the European Chamber South China Chapter, demonstrates confidence of foreign businesses on investments in China.

Seventy-seven percent of the companies polled by the chamber said they were interested in expanding their business in South China, where the Guangdong-Hong Kong-Macao Greater Bay Area is located. This is a slight rise from 75 percent in 2022.

The report also showed an increase in the percentage of companies that are committed to remaining in the region — 97 percent, compared with 94 percent last year.

The respondents said doing business was easier with respect to construction permits, accessing utilities and facilitating trade across borders.

"South China's business environment has always been quite open and interesting for European companies ... and the region has been attractive with a good ecosystem," said Francine Hadjisotiriou, general manager of the European Chamber South China Chapter.

She said decarbonization was one of the fields that have great potential for cooperation between European and Chinese companies in the Greater Bay Area.

"With clear measures and good regulations in South China regarding decarbonization, it will help entities in South China implement what they are good at," Hadjisotiriou said.

However, the major challenge for European businesses operating in the Greater Bay Area, she pointed out, comes from a lack of coordination among various government departments.

Klaus Zenkel, vice-president of the European Union Chamber of Commerce in China and chair of its South China Chapter, said coordination among government departments, communication with industry, and the effective implementation of local policies and regulations are key areas where local governments need to improve.

Aaron Finley, director of business development at Deloitte South China, called for more efforts to promote integrated standards in tax systems between the mainland and Hong Kong. He said people could have to file two sets of tax returns in both locations given the differences in tax systems.

The report also showed that European businesses in South China are facing rising costs as well as revenue losses, with 72 percent of those surveyed striving to address the matter by increasing automation and 78 percent by improving efficiency.

The findings of the report were based on a survey of 570 European companies during February and March. Most of the companies are from sectors related to industrial goods and services and have been running businesses in China for more than a decade.