Page 420 - 2017 White Paper

7 White Paper on the Business Environment in China

4.5 Advantages of Business Environment in South China
Business
Environment & Amajority of respondents have established their
Challenges companies in South China because of access to
growing local markets. Meanwhile, approximately one
third of responding companies stated that they stay
in South China because of its advantages in human
resources, better infrastructure, and proximity to
Hong Kong, Macau, and Taiwan. The research result is
identical with last year’s.

Potential growth of 33% 40 60%
South China market 28%
Advantages of human resources 28% 50 60
26%
Better infrastructure than other places in China 21%
19%
Proximity to Hong Kong, Macau & Taiwan 15%

Policy advantages in South China 10 20 30

Transportation & logistical advantages

Availability of raw materials & other inputs

Relatively low production costs
Others 3%

0

Challenges in South China

For most respondents, fierce local competition, rising labor costs, and shortage
of qualified personnel were identified as the top three challenges of operating
in South China. Interestingly, while most of the respondents stated advantages in
human resources as one of the top three strategic reasons for establishing a business in
South China, they also cited a shortage of qualified personnel in the region as a major
concern. These suggest a need for human resources development in South China.

Fierce local competition 0 10 20 30 40 50 60
10%
36% 19% 18%

Rising labor costs 24% 23%

Shortage of quali ed personnel 18% 15% 14%

Fierce foreign competition 8% 9% 8%

Industry overcapacity 7% 10%

Unfavorable regulatory environment 6% 7% 4%

Lack of government transparency 8% 3% 4%

Excessive bureaucr0acy 15%0 3% 20 30 40 50 60 70 80
Fierce lRoicsainlgc0olDambopomertcieot1isos0ttnsic pr2o0tec24t%io3n306i%sm 3% 19% 10%
235%0 No. 1 Challenge
40 60 178%0 80
%%ynen3lete6og0bcrcdn%avooulvnea8pmmri%srebrecUpoppaoraasnnue1erpo4r5tmcftLceaia%in1rtaot2ncvaeiniScoso0ioccn0htektnnyyyrstloaorbftFla2g65ei83ge8o%%%%Dr%2e7rvec%oeE0g3oe1I1rxm%nuf48nfc73%dqo%le%%mea2urusst49eets1osa4%%1iit9in%clgrv0r4i%3yty%ne%p3ete0orbcr6donav%outvnepmre8isrere%ccpopart1aasniue8o1po4rtm%c5enainr%t0nca1ieinso0iccnmte%nyyytl 18% 19% 15%10% No. 1 Challenge No. 2 Challenge
8% 7180% 14%
2853%%0 9%60 80 30 No. 24Ch0allenge50
7%14% 10% 0 No. 3 Challenge N6o.03 Challe7ng0e 80
6% 7% 4% 1N0o. 1 Cha2lle0nge Fierce local comp
8% 3% 4% No. 2 Challenge
5% 3%
3% No. 3 Challenge Rising labo