Page 416 - 2017 White Paper

7 White Paper on the Business Environment in China

Reasons for Lowered or Shifted Reinvestment in China in 2016

Roughly 30% of participating companies reported rising operation costs in China
as the main reason for lowering their annual reinvestments in China or shifting
reinvestments to other markets in 2016. The next most commonly reported driving
forces were the perceived uncertainty of the market prospects in China, emergence
of faster-growing markets other than China, and fierce local competition in China,
suggesting an uneven playing field.

Uncertainty of market prospect in China 4.5% 17.8% 30%
Existencmeaorfkoettsheorthfaesrttehr-agnroCwhiinnag 5.5% 16.8% 65%
Rising operation costs in China 7%
25% Have expansion plan
Fierce local competition in China in China
Have no expansion
Appreciation of RMB
iMnvaerksetmt aecnctersessbtraicrrtiieorn&s 15.8% plan in China
Lack of preferential policy
10%

Not applicable

Others 2%

0 5 10 15 20 25 30

Expansion Plan in China for the Next Three Years

Despite the economic downturn, most of the respondents reported expansion
plans in China for the next three years. The regions where the respondents
are most likely to expand in the future are identified as South China, followed by the
Yangtze River Delta and Western China.

25% 50 45%

Have no expansion 65% 40
plan in China
Have expansion plan 30 28% 28% e
10% in China Yangtze River
Not ap6p5l%icable Delta
45% 20 d
Have expansion plan South China
in China 45% 45% 11% 11% c
10 South China 5%
41560
40 45% 0 b
Yangtze
River DNeolrttahern CWheinsta5Oer%tnhCehrinRSaoeugtihonChina aOther

11.5% 10.5%
Western ChinaNorthern China
10.5%
Northern China