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6 Special Report on the State of Business in South China
“Increasing inflation” as in past years, was identified as the appreciation” ranked top on both positive and negative effect,
largest projected negative influence on future operations, fol- with a 33.6 percent of participants saw that it would have a
lowed by “Increasing minimum wage standards”. For the posi- “Somewhat positive effect” or “Significant positive effect” on
tive side, this year again no category achieved a positive rating their business while a slightly higher percentage of participating
by a majority of participants. However, interestingly, “RMB companies indicated that it would affect them in a negative way.
Q: In your opinion, what are the top 5 Q: In your opinion, what will be the top
challenges that hinder or limit your 5 challenges over the coming 3 years
company’s opportunities for growth that will hinder or limit your com-
in South China? pany’s opportunities for growth in
South China?
1. Local competition
2. Regulatory issues (Chinese government) 1. Local competition
3. Rising labor costs 2. Rising labor costs
4. Lack of qualifiable general personnel 3. Regulatory issues (Chinese government)
5. Foreign competition 4. Lack of qualifiable general personnel
5. Difficulty in market penetration
First year ever, when asked to identify their top business The second and third most common concerns are “Regu-
challenges from a list of 14 common issues, participants listed latory issues (Chinese government)” and “Rising labor costs”
“Local competition” over “Regulatory issues (Chinese govern- in 1–year timeframe while their rank exchanged in a longer
ment, for example: tax, customs, or regulations of industries)” timeframe of 3-year. The fourth most common concern “Lack
as their primary concern in both 1-year and 3-year timeframes. of qualifiable general personnel” is identical in both timelines.
“Foreign competition”, same as last year, ranked fifth in the
This somewhat indicated that China’s overall regulatory sys- 1-year timeframe, while “Difficulty in market penetration” this
tem is improving but still needs more, and the local market to- year took the place of “Lack of qualifiable general personnel” last
day is more sophisticated and mature as companies feel they are year to rank fifth in the most common concerns in 3-year time-
facing more competition in the local market for better products frames, which indicates companies are paying more attention to
or services. the market development and future expansion.
Q: Has your company made specific preparations for emergency situations, such as a po-
tential outbreak of Avian Influenza (“Bird flu”) or an earthquake or other natural
disaster?
No No The proportion of participants reporting some sort of pro-
(21%) (38%) grammatic emergency response preparation has grown for the
fifth consecutive year, reaching 79 percent, up from 48 percent
Yes Yes in 2012 and 35 pNeorcent in 2011.
(79%) (62%) Yes Similar to (l4a1s%t)year, descriptions of response schemes pro-
(5v9i%de)d by study participants included alternate supply chains,
2016 2015 backup product lines, earthquake drills, insurance policies, as
well as preventative measures such as in-time forecast, hygiene
20t1r4aining, and remote work procedures.
40
“Increasing inflation” as in past years, was identified as the appreciation” ranked top on both positive and negative effect,
largest projected negative influence on future operations, fol- with a 33.6 percent of participants saw that it would have a
lowed by “Increasing minimum wage standards”. For the posi- “Somewhat positive effect” or “Significant positive effect” on
tive side, this year again no category achieved a positive rating their business while a slightly higher percentage of participating
by a majority of participants. However, interestingly, “RMB companies indicated that it would affect them in a negative way.
Q: In your opinion, what are the top 5 Q: In your opinion, what will be the top
challenges that hinder or limit your 5 challenges over the coming 3 years
company’s opportunities for growth that will hinder or limit your com-
in South China? pany’s opportunities for growth in
South China?
1. Local competition
2. Regulatory issues (Chinese government) 1. Local competition
3. Rising labor costs 2. Rising labor costs
4. Lack of qualifiable general personnel 3. Regulatory issues (Chinese government)
5. Foreign competition 4. Lack of qualifiable general personnel
5. Difficulty in market penetration
First year ever, when asked to identify their top business The second and third most common concerns are “Regu-
challenges from a list of 14 common issues, participants listed latory issues (Chinese government)” and “Rising labor costs”
“Local competition” over “Regulatory issues (Chinese govern- in 1–year timeframe while their rank exchanged in a longer
ment, for example: tax, customs, or regulations of industries)” timeframe of 3-year. The fourth most common concern “Lack
as their primary concern in both 1-year and 3-year timeframes. of qualifiable general personnel” is identical in both timelines.
“Foreign competition”, same as last year, ranked fifth in the
This somewhat indicated that China’s overall regulatory sys- 1-year timeframe, while “Difficulty in market penetration” this
tem is improving but still needs more, and the local market to- year took the place of “Lack of qualifiable general personnel” last
day is more sophisticated and mature as companies feel they are year to rank fifth in the most common concerns in 3-year time-
facing more competition in the local market for better products frames, which indicates companies are paying more attention to
or services. the market development and future expansion.
Q: Has your company made specific preparations for emergency situations, such as a po-
tential outbreak of Avian Influenza (“Bird flu”) or an earthquake or other natural
disaster?
No No The proportion of participants reporting some sort of pro-
(21%) (38%) grammatic emergency response preparation has grown for the
fifth consecutive year, reaching 79 percent, up from 48 percent
Yes Yes in 2012 and 35 pNeorcent in 2011.
(79%) (62%) Yes Similar to (l4a1s%t)year, descriptions of response schemes pro-
(5v9i%de)d by study participants included alternate supply chains,
2016 2015 backup product lines, earthquake drills, insurance policies, as
well as preventative measures such as in-time forecast, hygiene
20t1r4aining, and remote work procedures.
40
