SEB's China Financial Index: Sales and Profits down in China - but
Northern European companies are continuing to invest
Top managers at Northern European subsidiaries in China are generally
pessimistic about the short-term business situation on the Chinese
market. The companies see customer demand falling and foresee a
worsening situation in the coming 6 months.
The Chinese economy, which has averaged above 10 percent the last
three years, fell to 6.8 percent in the forth quarter compared to one
year earlier and total exports from China fell by 25.7 percent in
February compared to last year.
"The global economic crisis is currently impacting on business
prospects for Scandinavian and German companies in China. Falling
exports combined with slowing domestic demand make companies negative
in the short-term", says Fredrik Hähnel, Client responsible at SEB in
China.
However, downscaling is not on the agenda. On the contrary, as many
as two thirds of the companies are planning to invest further in
China, indicating expectations that the Chinese economy will recover
in the medium turn.
"Given a much gloomier outlook in other major economies, the global
crisis has not changed the view of China as an attractive investment
destination, comparatively speaking. As Europe, the USA and Japan are
all heading for negative growth through the year, China may very well
be the only major growth market in 2009", Hähnel continues.
Employment plans indicate the same thing. Most companies are not
planning any redundancies and the number of companies planning
lay-offs is equal to the number planning to add staff, according to
the survey.
"Companies are sticking to their long-term strategies and view China
both as a low-cost manufacturing base and a vast growth market",
Hähnel concludes.
As many as 73 percent of the respondents see customer demand as the
greatest concern in China the coming 6 months. Other main concerns
are competition and customers' payment ability.
This is the first publication of SEB's China Financial Index, a
unique survey that will be published semi-annually. The purpose is to
reflect changes of sentiment among Northern European and German
companies in China and facilitate the understanding of economic and
financial trends in the country. The survey comprises a total of 11
questions covering areas such as business climate, investment plans,
employment plans as well as views on currencies and interest rates.
The full report is available on www.sebgroup.com\press.
_____________________________________________
For further information, please contact:
Fredrik Hähnel, Client Responsible, SEB in China, +86 138 1680 99 77
Press contact: Elisabeth Lennhede, +46 70 763 99 16,
Elisabeth.lennhede@seb.se
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.
