Wei Jie

claudiamente@hotmail.com

MORE than 60% of companies based in the European Union that participated in a survey said that doing business in South China was smoother in 2023, a 4-percentage-point increase from the previous year’s findings, according to the European Business in China Business Confidence Survey 2024.

Results from the survey were released in Shenzhen yesterday by the European Union Chamber of Commerce in China, which conducted the survey earlier this year with consulting firm Roland Berger.

The report attributes the increase to local authorities’ endeavors to optimize the business environment in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) and measures introduced to attract foreign investment.

The Shenzhen Municipal Government has been swift to address issues faced by market entities, said Francine Hadjisotiriou, general manager of the South China Chapter.

There were miscommunications between various government departments regarding the implementation of the IIT (individual income tax) policy for top-level foreign talent working in the GBA, said Hadjisotiriou. “Instead of having three various bureaus in charge of this issue, now it is managed by the Shenzhen finance bureau. This is an example of a leaner management in governance, which avoids creating miscommunications, hence making it easier to do business,” she said.

More specifically, 82% of the respondents found it easy to register a business in South China, 7% more than the previous year. Some 73% of them reported that it was easy to pay taxes in South China. Cross-border trade was easy for 55% of survey respondents.

Klaus Zenkel, vice president of the European Chamber of Commerce in China and chair of the European Chamber South China Chapter, said that for many European firms that have been doing business in South China for 10 or more years, business environment optimization and infrastructure improvements are two of the most important factors for them.

Zenkel said that the Shenzhong Link, which is scheduled to open by the end of this month, will be “good for the traveling of goods.”

As many as 55% of respondents said that China is one of their top three investment destinations. However, European companies still face challenges when doing business in South China, such as a shortage of low-skilled workers and retaining international talent.

“Better university/vocational education initiatives (47%), and more policy support (47%) will be needed to address the shortage of labor urgently needed in the South China market,” said Zenkel.