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6 White Paper on the Business Environment in China
“Increasing inflation” as in past years, was identified as the appreciation” ranked top on both positive and negative effect,
largest projected negative influence on future operations, fol- with a 33.6 percent of participants saw that it would have a
lowed by “Increasing minimum wage standards”. For the posi- “Somewhat positive effect” or “Significant positive effect” on
tive side, this year again no category achieved a positive rating their business while a slightly higher percentage of participating
by a majority of participants. However, interestingly, “RMB companies indicated that it would affect them in a negative way.
Q: In your opinion, what are the top 5 Q: In your opinion, what will be the top
challenges that hinder or limit your 5 challenges over the coming 3 years
company’s opportunities for growth that will hinder or limit your com-
in South China? pany’s opportunities for growth in
South China?
1. Local competition
2. Regulatory issues (Chinese government) 1. Local competition
3. Rising labor costs 2. Rising labor costs
4. Lack of qualifiable general personnel 3. Regulatory issues (Chinese government)
5. Foreign competition 4. Lack of qualifiable general personnel
5. Difficulty in market penetration
First year ever, when asked to identify their top business The second and third most common concerns are “Regulato-
challenges from a list of 14 common issues, participants listed ry issues (Chinese government)” and “Rising labor costs” in 1–
“Local competition” over “Regulatory issues (Chinese govern- year timeframe while their rank exchanged in a longer timeframe
ment, for example: tax, customs, or regulations of industries)” of 3-year. The fourth most common concern “Lack of qualifiable
as their primary concern in both 1-year and 3-year timeframes. general personnel” is identical in both timelines. “Foreign com-
petition”, same as last year, ranked fifth in the 1-year timeframe,
This somewhat indicated that China’s overall regulatory sys- while “Difficulty in market penetration” this year took the place
tem is improving but still needs more, and the local market to- of “Lack of qualifiable general personnel” last year to rank fifth
day is more sophisticated and mature as companies feel they are in the most common concerns in 3-year timeframes, which indi-
facing more competition in the local market for better products cates companies are paying more attention to the market devel-
or services. opment and future expansion.
Q: Has your company made specific preparations for emergency situations, such as a po-
tential outbreak of Avian Influenza (“Bird flu”) or an earthquake or other natural
disaster?
No No The proportion of participants reporting some sort of pro-
(21%) (38%) grammatic emergency response preparation has grown for the
fifth consecutive year, reaching 79 percent, up from 48 percent
Yes Yes in 2012 and 35 pNeorcent in 2011.
(79%) (62%) Yes Similar to l(a4s1t%y)ear, descriptions of response schemes provid-
(5e9d%b) y study participants included alternate supply chains, back-
2016 2015 up product lines, earthquake drills, insurance policies, as well as
preventative measures such as in-time forecast, hygiene training,
20a14nd remote work procedures.
314
“Increasing inflation” as in past years, was identified as the appreciation” ranked top on both positive and negative effect,
largest projected negative influence on future operations, fol- with a 33.6 percent of participants saw that it would have a
lowed by “Increasing minimum wage standards”. For the posi- “Somewhat positive effect” or “Significant positive effect” on
tive side, this year again no category achieved a positive rating their business while a slightly higher percentage of participating
by a majority of participants. However, interestingly, “RMB companies indicated that it would affect them in a negative way.
Q: In your opinion, what are the top 5 Q: In your opinion, what will be the top
challenges that hinder or limit your 5 challenges over the coming 3 years
company’s opportunities for growth that will hinder or limit your com-
in South China? pany’s opportunities for growth in
South China?
1. Local competition
2. Regulatory issues (Chinese government) 1. Local competition
3. Rising labor costs 2. Rising labor costs
4. Lack of qualifiable general personnel 3. Regulatory issues (Chinese government)
5. Foreign competition 4. Lack of qualifiable general personnel
5. Difficulty in market penetration
First year ever, when asked to identify their top business The second and third most common concerns are “Regulato-
challenges from a list of 14 common issues, participants listed ry issues (Chinese government)” and “Rising labor costs” in 1–
“Local competition” over “Regulatory issues (Chinese govern- year timeframe while their rank exchanged in a longer timeframe
ment, for example: tax, customs, or regulations of industries)” of 3-year. The fourth most common concern “Lack of qualifiable
as their primary concern in both 1-year and 3-year timeframes. general personnel” is identical in both timelines. “Foreign com-
petition”, same as last year, ranked fifth in the 1-year timeframe,
This somewhat indicated that China’s overall regulatory sys- while “Difficulty in market penetration” this year took the place
tem is improving but still needs more, and the local market to- of “Lack of qualifiable general personnel” last year to rank fifth
day is more sophisticated and mature as companies feel they are in the most common concerns in 3-year timeframes, which indi-
facing more competition in the local market for better products cates companies are paying more attention to the market devel-
or services. opment and future expansion.
Q: Has your company made specific preparations for emergency situations, such as a po-
tential outbreak of Avian Influenza (“Bird flu”) or an earthquake or other natural
disaster?
No No The proportion of participants reporting some sort of pro-
(21%) (38%) grammatic emergency response preparation has grown for the
fifth consecutive year, reaching 79 percent, up from 48 percent
Yes Yes in 2012 and 35 pNeorcent in 2011.
(79%) (62%) Yes Similar to l(a4s1t%y)ear, descriptions of response schemes provid-
(5e9d%b) y study participants included alternate supply chains, back-
2016 2015 up product lines, earthquake drills, insurance policies, as well as
preventative measures such as in-time forecast, hygiene training,
20a14nd remote work procedures.
314
