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2008-05-01 | All chapters

Cost increase does not frustrate foreign businesses' confidence in China
Zhang Bin, Economic Observer, 1st May 2008

Recently, Economic Observer interviewed the main foreign Chambers of Commerce in China in regard to the increasing business costs. The feedback from the chamber leaders and the chambers' latest reports indicate that currently the cost increase is not affecting foreign businesses' confidence in China.

Michael O'Sullivan, Secretary General of the European Chamber, expressed the Chamber members' opinions regarding this issue, "Of course, businesses never welcome increased costs, but the rising cost of labour goes hand in hand with the rising disposable incomes of consumers. Companies' general optimism is mostly based on the continuing strength of China's economic development and the resulting growth in domestic consumption. Our Business Confidence Survey 2007 reveals that European businesses are generally optimistic about their business performance in China."

Economic Observer's report also pointed out that the biggest concern stems from the implementation of the new Labour Contract Law. Michael O'Sullivan voiced the Chamber’s comment and concern, "Generally speaking, the new labour contract law is in our view a positive step, as its main principles are in line with European norms. However, it is important for the competitiveness of European companies that this and other laws regulating business – such as environmental laws – should be enforced with equal force in relation to all companies, domestic and foreign. We have expressed concern that this does not always happen in practice."

To view the full report (in Chinese only), please click here.