European businesses are more pessimistic about China than ever, with confidence plunging to record lows — even worse than during the pandemic. The latest survey by the EU Chamber of Commerce in China reveals that 73% of companies say doing business in the country has become harder, marking a fourth consecutive year of worsening sentiment. The study covered 503 respondents in January and February.
Key concerns include China’s slowing economy, regulatory hurdles, and rising geopolitical tensions. Despite these challenges, companies remain tied to China due to its strong supply chains.
“We haven’t reached a turning point,” said Chamber President Jens Eskelund. “Uncertainty remains the core issue.”
Foreign businesses have struggled since the 2022 lockdown disrupted supply chains. Domestic brands are growing stronger, but consumer demand is weak amid a real estate crisis and job market instability. The cosmetics industry reported a 45% revenue drop in 2024 — only its second decline in a decade.
Only 12% of businesses remain optimistic about profits in China over the next two years, and just 38% plan to expand operations — both record lows. Regulatory barriers continue to block opportunities, with 63% of companies citing missed chances due to limited market access. Medical device firms reported favoritism toward domestic suppliers.
Despite Beijing’s pledges to improve the business climate, European companies are increasingly cautious. Some are diversifying supply chains, while others are relocating operations. However, China’s low-cost, high-quality manufacturing keeps many firms rooted.
Over a quarter of businesses are expanding local operations to meet localization rules, while just 10% are building alternative supply chains abroad. Nearly half said Chinese suppliers are also shifting parts of their operations to other countries.