According to an annual survey by the Chamber of Commerce of the European Union (EU) in China, it is thus even more difficult to do business in China than in 2020 for 60% of the companies surveyed.
Many European companies are reconsidering their investments in China due to “the huge uncertaintylinked to the restrictions of the zero Covid policy, according to a study published on Monday. China is the last major economy to maintain a strict health strategy in the face of the coronavirus: quarantine of people who test positive, targeted confinements or generalized and compulsory PCR tests.
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But this policy has serious repercussions on the economy, with many businesses closed, tourism at half mast, factories operating at idle and very disrupted production chains. As a result, anti-Covid-19 measures were still the main obstacle to doing business in China for European companies in 2021, according to an annual survey by the European Union (EU) Chamber of Commerce in China.
This reason tops the list of concerns for the second year in a row. For 60% of the companies surveyed, it is thus even more difficult to do business in China than in 2020, the initial year of the pandemic which had paralyzed the economy of the Asian giant. The study was conducted among 600 companies in February and March. A period during which began the Russian invasion of Ukraine and the confinement of Shanghai, two events which further penalized world trade.
The repercussions of the lockdowns and the war in Ukraine
The two-month shutdown of Shanghai from the end of March has exacerbated the economic difficulties. To assess the impact of the lockdowns and war in Ukraine, the Chamber of Commerce conducted a follow-up survey in April. In this second survey, 23% of companies surveyed plan to transfer investments out of China due to health restrictions. This is the highest proportion for 10 years.
“Harmful» for investments
In total, 92% of companies say they have been affected by supply problems and three quarters indicate that their activity has been disrupted by controls linked to Covid-19. The zero Covid strategy causes “enormous uncertaintyfor businesses, which is “harmfulfor investments, the vice-president of the Chamber of Commerce, Bettina Schoen-Behanzin, told AFP. “We really hope China wakes up, reopens its borders and finds a way out.of this health strategy that is harmful to the economy, she insists.
Yet, despite frustrations, European companies “do not leave China, because the market is too big“, with “many growth opportunities ahead“, notes Ms. Schoen-Behanzin. They “reconsiderhowever the extent of their presence in China andredirecttheir future investments, she warns. “The world is not waiting for China. If there is no change, it is certain that companies will start thinking about backup plans and go to other markets.“, she assures.
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