Results Sino Benelux Business Survey 2018

Does China remain still an important market for Benelux businesses?

Results of Sino Benelux Business Survey 2018

How have Benelux (Belgium, the Netherlands and Luxembourg) companies active in China performed in 2017 and what their expectations for 2018? Are Benelux companies more impacted by new rules and regulations in China and have Benelux companies experienced any business opportunities due to governmental policies such as the Belt and Road Initiative (BRI)? What do companies consider about the current business climate in China? Does China remain still an important market for Benelux businesses?

This year's Sino Benelux Business Survey addresses these questions and has been organized by the Benelux Chamber of Commerce across China (Beijing, Shanghai and Pearl River Delta), supported by the official representations of Belgium, the Netherlands and Luxembourg in China and in partnership with MS Advisory in China.

Starting from early March 2018 until mid-April, we have distributed an online questionnaire to approximately 2000+ Benelux companies whom are active across China and which answered 61 questions on various themes such as their business performance, onward expectations and opinions about the business climate within China. This year the questions from the Sino Benelux Business Survey and the Sino-Dutch Business Survey from the Dutch embassy in China has been merged together.

Results of Sino Benelux Business Survey2018
Approximately 166 companies have participated in our survey, of which 93% are directly coming from the Benelux-countries. The other companies (7%) have either strong ties with the Benelux or management from the Benelux countries. Most companies within our survey are based in East China (43%), however also many companies are based in the North (30%) and the South of China (19%). Based on revenue and employees within China, we can categorize most companies as SMEs within our survey; approximately 2/3 of the respondents have less than 100 million RMB revenue (approx. 13 million EUR) within China and 2/3 have less than 50 employees within China. The companies are mostly coming from industrial services & goods sector (44%), also consumer goods & services are well represented with 26%.

The profit margin and revenue growth of Benelux companies in 2017 has been better compared to the results of previous years. Total of 69% of the respondents achieved 5% or higher revenue growth in 2017, which is similar and currently beating the economic growth rate within China. Compared to 2015 and 2016 results, approximately 15% more respondents have grown in 2017 with 5% or higher revenue growth. Furthermore, compared to previous years’ business survey, 10% less of the respondents have indicated to be loss-making China. In addition, approximately 14% of respondents have indicated that their profit margin is higher between 5% to 10% in China than in 2016.

Following the satisfactory results, the expectations on revenue growth and profit margin for 2018 are also higher than in 2017. Total of 72% of the respondents expect their revenue to grow with more than 5%. Total of 68% of the respondents mostly expect their profitability to be influenced by revenue growth in 2018. Only 12% indicate this would mostly be due to cost savings. Compared to business survey 2016 and 2017 expectations, revenue growth expectations above 5% and higher have increased with approximately 10% and with 5%. Overall, respondents believe that their business in China will further grow in the future. 

Still some challenges remain for Benelux businesses within China. Rising salary costs has remained as one of the major negative drivers of their business in 2017 and also remain one of the most prominent challenges in 2018. A major concern for the Benelux companies is the “unlevelled playing field” within China and the overall level of restrictiveness for their business. Total of 62% of the respondents of the survey feel various levels of restrictions on their business within China; only 8% have indicated a decrease. Furthermore, managing sales volumes within China remains a continuing challenge for Benelux businesses. 

In terms of the Belt & Road Initiative (BRI), only 20% of the companies came across BRI partnerships and business opportunities. Mostly these projects were focused on providing support in infrastructure projects and advisory services. Companies with or without experience with the Belt & Road Initiative indicated to have little knowledge about the BRI, as well about the advantages for their business because of the BRI.

The respondents have indicated that there is an increased attention for corporate social responsibility (CSR) within China. Most of the companies have indicated that they believe that CSR is important for clients and suppliers in China.

Overall, companies are very positive about the Chinese market, they have had satisfactory results in 2017 and they are expecting to grow even better compared to last year in China. However, they do still take existing challenges into account which they have indicated to have a negative impact, whereas salary costs, restrictiveness and unlevelled playing field remains key concerns for Benelux businesses within China.