EU Chamber of Commerce Warns China About Growing Concerns Among European Firms

European companies are finding China’s market increasingly less appealing due to unmet reforms and rising challenges, according to a position paper released by the European Chamber of Commerce on Wednesday.

The annual report highlighted that for some firms, the risks of continuing to invest in China are starting to outweigh the potential returns. The European Chamber of Commerce, which represents over 1,700 members, emphasized the need for immediate and concrete action from the Chinese government to address these growing concerns.

Jens Eskelund, the chamber's president, described the situation as reaching a "tipping point," with many European investors now reevaluating their operations in China. "The challenges of doing business in China are starting to outweigh the returns," Eskelund said. "While China still holds significant potential, this situation urgently requires more action from the Chinese government—not just more action plans."

The position paper includes over 1,000 recommendations for the Chinese government and lays out a "blueprint" aimed at restoring confidence among European investors.

Eskelund pointed out that some companies are now finding better profit margins outside of China. He added that between a third and a half of European companies are holding off on making further investments in the Chinese market, choosing instead to wait and see how the country's economy develops.

Despite these growing concerns, the chamber does not foresee a complete withdrawal of European businesses from China. According to Eskelund, China remains an essential location for key industries like automotive and chemical manufacturing, which continue to benefit from China's vast market and industrial capabilities. However, for sustained engagement, European firms are urging China to implement the necessary reforms to maintain their investment appeal.