CCCEU Flagship Report Unveiled

Liu Jiandong, Chairman of the CCCEU, opened the launch event by highlighting the strong economic ties between China and the EU, with daily trade exceeding €2 billion in 2024. He emphasized Europe’s strategic importance for Chinese companies, which have established research, design, and production facilities across the region. These companies contribute to EU tax revenue, job creation, and innovation. The CCCEU’s report, addressing issues like market access and trade barriers, aims to support deeper China-EU trade ties. With the 50th anniversary of diplomatic relations approaching, Liu expressed hope for continued collaboration.

Denis Depoux, Global Managing Director at Roland Berger, extended congratulations on the publication of this year’s flagship report. He said that “amidst geopolitical shockwaves, the EU and China remain important for each other. The symmetry that we can increasingly observe between the challenges that Chinese enterprises facing in the EU and the ones that European companies facing in China is striking. This is also a strong encouragement to work across both sides to resolve or mitigate issues and move forward. We hope that this report is useful for corporate leaders, as well as policymakers on both sides, to understand concerns and will drive the resolution of some issues through new strategies and rebalanced environments.”

Despite ongoing trade frictions, the report shows that Chinese enterprises in the EU have largely remained stable, although the proportion of companies reporting revenue growth has significantly dropped. 

Approximately 75% of surveyed businesses reported stable or improving conditions in 2023. However, only 50% experienced revenue growth, a sharp decline from 94% in the previous year. In contrast, 23% reported a revenue decline, marking a notable increase compared to previous surveys. On profitability, 44% of businesses recorded an increase in profits, while 30% reported a decrease.

Looking ahead to 2024, Chinese enterprises expect business conditions to remain largely stable. About 35% forecast that both operating revenue and profits will remain on par with 2023 levels, while approximately 40% expect operating revenue to grow, and 34% predict an increase in profitability. However, caution lingers, as 20% of firms project a decline in operating revenue, and 30% foresee shrinking profits.

Most Chinese enterprises see significant potential in the European market but remain cautiously optimistic due to ongoing political and economic uncertainties. About 40% of surveyed companies plan to increase investments in the EU in 2024, while 43% expect to maintain current investment levels. Around 20% plan to reduce their investments, marking the lowest level in recent years.

Uncertainty has emerged as the primary challenge, with 78% of respondents identifying it as a key characteristic of their operations. Rising compliance costs and growing anti-China sentiment are also significant factors affecting Chinese enterprises in the EU.

Political factors stand out as major hurdles, with market barriers driven by political issues being the most pressing challenge. Non-political obstacles include high labor costs and limited understanding of Chinese businesses from their peers, customers, and even among employees. In addition, global inflation and the EU’s slowing economic growth have added to the operational pressure faced by companies.

Over half of the respondents reported experiencing “differentiated treatment.” Despite the EU's commitment to fair market principles, 64% of Chinese enterprises felt they were being treated differently due to their Chinese origin. These companies cited difficulties such as restricted access to public procurement, challenges in market entry and competition, reduced eligibility for subsidies and incentives, prolonged approval processes, and limited communication channels with local governments.

New EU regulations, such as the Corporate Sustainability Due Diligence Directive (CSDDD) and the Forced Labor Regulation (FLR), are increasing compliance costs. 68% of surveyed companies reported that the CSDDD impacts their operations, while 35% are concerned about the future impact of the FLR.

Despite these challenges, Chinese enterprises remain optimistic about the EU's long-term market potential. About 21% of respondents consider the EU their most important market outside China, with 66% expecting its strategic importance to grow in the next 1-3 years. Over 40% plan to expand their European workforce, and 30% aim to grow their operations or open new outlets in the EU.

The survey also reveals that 55% of Chinese enterprises remain optimistic about the medium- to long-term prospects for China-EU trade and economic relations, particularly in areas such as green cooperation and digital transformation. More than half believe that enhanced China-EU collaboration could accelerate the EU's digital transition, explore AI applications, and promote complementarities within the industrial supply chain.

In the face of complex geopolitical and economic challenges, the report stresses the importance of avoiding the politicization of trade and economic issues, urging both China and the EU to uphold a fair, open, and predictable business environment. It calls for more inclusive EU policies, respect for global supply chain roles, and a reduction in the emphasis on “economic security.” Chinese companies are encouraged to adapt to EU market rules and strengthen partnerships with local businesses for sustainable development.

As China and the EU approach the 50th anniversary of diplomatic relations, Chinese enterprises hope for strengthened exchanges in trade, technology, culture, and tourism, calling for increased political trust and deeper cooperation in addressing global challenges.