MIC ENGLISH

China's Business Environment and Investment Climate for Foreign Companies: Key Indicator Analysis

April 27, 2016 / TEEMA

244 Page, BOOK

US$6,000 (Single User License)

Abstract

After decades of economic reform, China has become a great economic power in the world, thanks to low-cost labors and materials. Now with intensified competition, rising production and labor costs, and excess production capacity, China's economy is facing a strong headwind, posing severe challenges to local and foreign businesses alike. This report, serving as a reference for foreign companies when making investment decisions in China, is the aggregated results of China's investment climate surveyed by TEEMA (Taiwan Electrical and Electronic Manufacturers' Association). Key indicators in the economic and political aspects are addressed and examined, with corresponding strategies to help business owners overcome the difficulties in China's changing business environment.

Table of Contents
1. Changes in China's Business Environment and Vendors' Corresponding Strategies 11
1.1 Challenges Faced by Chinese Companies in China 11
1.1.1 CESS Survey 12
1.1.2 MIIT Survey 13
1.2 Challenges Faced by Taiwanese Companies in China 13
1.2.1 CIER Survey 14
1.3 Challenges Faced by Foreign Companies in China 14
1.3.1 American Chamber of Commerce in China 14
1.3.2 The US-China Business Council 15
1.3.3 AmCham Shanghai 16
1.3.4 GIC 17
1.3.5. European Chamber of Commerce in China 18
1.4 Top Ten Challenges for Businesses Operating in China and Corresponding Strategies 19
1.4.1. Challenge 1: Rising Labor Costs 20
1.4.2 Challenge 2: Human Resource Shortage 21
1.4.3 Challenge 3: Policy Uncertainty 22
1.4.4 Challenge 4: Excessive Burden of Social Insurances and Tax 24
1.4.5 Challenge 5: Rising Production Costs 25
1.4.6 Challenge 6: IP Infringement by Knock-off Products 26
1.4.7 Challenge 7: Need for Business Transformation 27
1.4.8 Challenge 8: Difficulty in Securing Capital Funds 28
1.4.9 Challenge 9: Unclear Laws and Regulations 30
1.4.10 Challenge 10: Environmental Protection 31

2. Structure of 2015 TEEMA Report 33
2.1 Evaluation of Chinese Cities' Comprehensive Competitiveness 33
2.1.1 City Competitiveness 33
2.1.2 Investment Environment 34
2.1.3 Investment Risks 34
2.1.4 Degree of Recommendation by Taiwanese Vendors 34
2.2 TEEMA Survey Sample Collection from 2011 to 2015 35
2.3 Analysis of Taiwanese Vendors' Industries 37
2.4 Analysis of Taiwanese Vendors' Investment Locations 38
2.5 Analysis of Taiwanese Vendors' Future Deployment Plans 39
2.6 Taiwanese Vendors' Business Performance in China 40
2.7 Taiwanese Vendors' Business Disputes in China 41
2.8 Chinese Cities for Taiwanese Vendors' Future Deployment 44
2.9 Chinese Cities for Taiwanese Vendors' Future Deployment by Industry 45
2.9.1 High-Tech Industry 46
2.9.2 Traditional Industry 46
2.9.3 Service Industry 46

3. Evaluation of Chinese City Competitiveness 47
3.1 Grade-A Cities 47
3.2 Grade-B Cities 47
3.3 Grade-C Cities 47
3.4 Grade-D Cities 48

4. Chinese Investment Environment 56
4.1 Indicators of Chinese Investment Environment Evaluation in 2015 69
4.1.1 Ecological Conditions 70
4.1.2 Infrastructure 70
4.1.3 Social Conditions 70
4.1.4 Legal Environment 71
4.1.5 Economic Environment 71
4.1.6 Business Operating Environment 72
4.1.7 Innovation 72
4.1.8 Network Communications 72
4.1.9 Domestic Needs 73
4.1.10 Cultural and Creative Environment 73
4.1.11 Investment Environment as a Whole 73
4.2 Comparison of China's Investment Environment in 2014 and 2015 74
4.2.1 General Performance of the 71 Indicators 74
4.2.2 Difference Analysis of the 71 Indicators 74
4.2.3 Decline Rate Analysis of the 71 Indicators 74
4.2.4 Comparison of the Ten Aspects 75
4.3 China's Investment Environment Evaluation by City in 2015 85
4.3.1 Top Ten Best Cities 86
4.3.2 Top Ten Worst Cities 86
4.4 Changes in China's Investment Environment, 2014 - 2015 100
4.4.1 Top Ten Growing Cities 100
4.4.2 Top Ten Declining Cities 100

5. Investment Risks in China 105
5.1 Chinese Investment Risk Evaluation in 2015 105
5.1.1 Social Risks 105
5.1.2 Legal Risks 105
5.1.3 Economic Risks 106
5.1.4 Business Operating Risks 106
5.1.5 Business Transformation Risks 107
5.1.6. Moral Risks 107
5.1.7 Investment Risks as a Whole 107
5.1.8 Changes in Investment Risk Rankings 108
5.2 Comparison of China's Investment Risks in 2014 and 2015 114
5.2.1 General Performance of the 42 Indicators 114
5.2.2 Difference Analysis of the 42 Indicators 115
5.2.3 Top Ten Best Indicators 115
5.2.4 Top Ten Worst Indicators 115
5.2.5 Comparison of the Six Aspects 115
5.3 China's Investment Risk Evaluation by City in 2015 124
5.3.1 Top Ten Cities with the Lowest Investment Risks 124
5.3.2 Top Ten Cities with the Highest Investment Risks 125
5.4 Changes in China's Investment Risks, 2014 – 2015 141
5.4.1 Top Ten Cities with Growing Investment Risks 141
5.4.2 Top Ten Cities with Declining Investment Risks 141

6. Degree of Recommendation by Taiwanese Vendors in China 146
6.1 Evaluation of Degree of Recommendation by Taiwanese Vendors in 2015 146
6.1.1 Top Ten Recommended Cities 146
6.1.2 Top Ten Least Recommended Cities 147
6.1.3 Top Ten Recommendation Indicators 147
6.2 Changes in Degree of Recommendation of Taiwanese Vendors, 2014 – 2015 166
6.2.1 Top Ten Growing Cities 166
6.2.2 Top Ten Declining Cities 167

7. TEEMA's Survey of the Overall Competitiveness of Chinese Cities 172
7.1 2015 TEEMA Ranking of the Overall Competitiveness of Chinese Cities 172
7.1.1 Suzhou Industrial Park 173
7.1.2 Outer District of Xiamen Island 174
7.1.3 Chengdu 176
7.1.4 Suzhou Downtown 178
7.1.5 Hangzhou Xiaoshan 179
7.2 Analysis of Changes in Recommendation Level Ratings in the 2014 and 2015 TEEMA Survey Reports 208
7.2.1 City Districts Included in 2015 TEEMA Survey 209
7.2.2 Changes in the Investment Environment of the Cities Included for Evaluation in the 2014 and 2015 TEEMA Surveys 210
7.2.3 Changes in the Overall Competitiveness of Investment Environment of the Cities Included for Evaluation in the 2014 and 2015 TEEMA Surveys 210
7.2.4 Changes in the Grade-A (Highly Recommended) Cities in the 2014 and 2015 TEEMA Surveys 211
7.2.5 Changes in the Grade-D (Not Recommended at Present) Cities in the 2014 and 2015 TEEMA Surveys 211
7.3 The 2015 TEEMA Survey Report Ranking of China's 11 Major Economic Zones 211
7.4 Analysis of the Cities that Posted the Biggest Improvement in Ranking in the 2014 – 2015 TEEMA Reports 225
7.5 Analysis of the Cities that Posted the Biggest Fall in Ranking in the 2014 – 2015 TEEMA Reports 226

8. Top Ten Best Cities by Single Indicator in 2015 227

9. China's Regional Development Potential in 2015 235
9.1 Evaluation of China's Regional Development Potential by 2015 TEEMA Report 235
9.2 China's Regional Development Potential Rankings in 2015 236
9.2.1 Political Environment 237
9.2.2 Environmental Conditions: 237
9.2.3 Level of Integration 238
9.2.4 Sustainable development potential 238

Appendix 245
Glossary of Terms 245
List of Companies 246

List of Figures

Figure 1: Highly Recommended Cities, 2014 – 2015 208
Figure 2: Recommended City, 2014 – 2015 208
Figure 3: Recommended with Reservations Cities, 2014 – 2015 209
Figure 4: Not Recommended Cities at Present, 2014 – 2015 209
Figure 5: General Performance Rating for City in Different Economic Zones by TEEMA 2015 Report 216
Figure 6: Western Triangle Economic Zone's General Ranking by District, 2015 216
Figure 7: Yangtze River Delta Economic Zone's General Ranking by City and District, 2015 217
Figure 7: Yangtze River Delta Economic Zone's General Ranking by City and District, 2015 (Continued) 218
Figure 8: Yellow River Delta Economic Zone's General Ranking by City and District, 2015 218
Figure 9: Bohai Economic Rim's General Ranking by City and District, 2015 219
Figure 10: Central Triangle Economic Zone's General Ranking by City and District, 2015 220
Figure 11: Western China Economic Zone's General Ranking by City and District, 2015 220
Figure 12: Western Taiwan Straits Economic Zone's General Ranking by City and District, 2015 221
Figure 13: Central Chinese Economic Zone's General Ranking by City and District, 2015 222
Figure 14: Pan-North Bay Economic Zone's General Ranking by City and District, 2015 223
Figure 15: The Ranking of the Cities in Northeast China, 2015 223
Figure 16: Pearl River Delta Economic Zone's General Ranking by City and District, 2015 224
Figure 17: 11 Chinese Economic Zones' General Ranking, 2015 224
Figure 18: Evaluation of China's Regional Development Potential by 2015 TEEMA Report 236
Figure 19: The Ranking of Regional Development Potential of China's Top 11 Economic Zones 238

List of Tables

Table 1: Major Business Challenges Faced by Entrepreneurs between 2012 and 2014 12
Table 2: Major Business Challenges Faced by Enterprises 13
Table 3: Primary Restraints on Profit Growth in China 16
Table 4: Do Chinese Enterprises Have Access to Preferential Benefits? 16
Table 5: Major Concerns about Rising Costs for Foreign Enterprises in China 17
Table 6: Top Ten Challenges Faced by Germany Businesses in China 18
Table 7: Primary Challenges for Chinese, Taiwanese, and Foreign Businesses Operating in China 19
Table 8: China's Top Ten Business Challenges and Corresponding Strategies 32
Table 9: Categories and Indicators of the TEEMA Report 2015 34
Table 10: TEEMA Survey Sample Collection by Region, 2011 – 2015 36
Table 11: Analysis of Taiwanese Vendors' Business Operating by Industries, 2011 – 2015 37
Table 12: Analysis of Taiwanese Vendors' Business Operating by Invested Locations, 2011 – 2015 38
Table 13: Analysis of Taiwanese Vendors' Future Deployment Plans, 2011 – 2015 40
Table 14: Analysis of Taiwanese Vendors' Performance in China, 2015 41
Table 15: Taiwanese Companies' Business Disputes by Region, 2015 42
Table 16: Growth of Disputes Encountered by Taiwanese Vendors in China, 2014 – 2015 43
Table 17: Resolution Approaches and the Degree of Satisfaction with the Resolution, 2015 44
Table 18: Places for Taiwanese Vendors' Future Deployment, 2011 – 2015 45
Table 19: Places for Taiwanese Vendors' Future Deployment by Industry, 2015 46
Table 20: Evaluation of the Competitiveness of Chinese Cities, 2015 49
Table 21: Evaluation of China's Investment Environment, 2015 57
Table 22: Overall Score and Ranking of China's Investment Environment by Aspect, 2015 69
Table 23: Changes in Scores and Rankings of China's Investment Environment by Aspect, 2014 – 2015 75
Table 24: Overall Score and Ranking of China's Investment Environment by Indicator, 2014 – 2015 81
Table 25: Top Ten Best-Performing Investment Environment Indicators in 2015 82
Table 26: Top Ten Worst-Performing Investment Environment Indicators in 2015 83
Table 27: Top Ten Declining Investment Environment Indicators in 2015 85
Table 28: Evaluation of the Investment Environment of Chinese Cities, 2015 87
Table 29: Changes in Investment Environment Scores of China's Cities, 2014 – 2015 100
Table 30: Evaluation of China's Investment Risks, 2011 – 2015 109
Table 31: Overall Score and Ranking of China's Investment Risks by Aspect, 2011 – 2015 114
Table 32: Changes in Scores and Rankings of China's Investment Risks by Aspect, 2014 – 2015 116
Table 33: Overall Score and Ranking of China's Investment Risks by Indicator, 2014 – 2015 119
Table 34: Top Ten Best-Performing Investment Risk Indicators in 2015 121
Table 35: Top Ten Worst-Performing Investment Risk Indicators in 2015 122
Table 36: Top Ten Investment Risk Indicators, 2014 – 2015 123
Table 37: Evaluation of the Investment Risks of Chinese Cities, 2015 126
Table 38: Changes in Investment Risk Rankings of China's Seven Economic Regions, 2014 – 2015 141
Table 39: Evaluation of Chinese Cities' Degree of Recommendation by Taiwanese Vendors, 2015 149
Table 40: Overall Score and Ranking of Taiwanese Vendors' Degree of Recommendation in China by Aspect, 2015 165
Table 41: Changes in Taiwanese Vendors' Recommendations Scores of China's Cities, 2014 – 2015 167
Table 42: 2015 TEEMA's Survey of the Overall Competitiveness of Chinese Cities 183
Table 43: TEEMA's Survey of Chinese City Recommendation Level by Taiwanese Vendors, 2011 – 2015 193
Table 44: Percentage of Chinese City Recommendation Level by Region, 2006 – 2015 197
Table 45: Changes in Chinese City Recommendation Level, 2000 – 2015 199
Table 46: Cities that Posted Improvement in Ranking in the 2014 – 2015 TEEMA Reports 225
Table 47: Cities that Posted Deterioration in Ranking in the 2014 – 2015 TEEMA Reports 226
Table 48: Top Ten Best Cities by Single Indicator in 2015 230
Table 49: Ranking of China's 11 Major Economic Zones by Political Environment, TEEMA 2015 239
Table 50: Ranking of China's 11 Major Economic Zones by Environmental Conditions, TEEMA 2015 240
Table 51: Ranking of China's 11 Major Economic Zones by Regional Integration, TEEMA 2015 241
Table 52: Ranking of China's 11 Major Economic Zones by Development Sustainability, TEEMA 2015 242
Table 53: Ranking of China's 11 Major Economic Zones by Development Potential, TEEMA 2015 243

Companies covered
Alibaba, AmCham Shanghai American Chamber of Commerce in China, ASEAN, Bain & Company, BCG, Bosch,Capital Economics, CASS , Cathay United Commercial Bank, CCIA, CESS , China National Development Council and Reform Council China Social Security Research Center, China's Development Research Center of the State Council, Chinese Academy of Governance, CIER, Coolpad, Deloitte Taiwan, Economist, EUCCC, Financial Strategy Institute of Social Science Institute in China, Forbes, Foxconn, General Electric, GIC, Huawei, International Federation of Robotics, Johnson & Johnson, M.J. International, Management Institute in Taipei, Manpower Taiwan, MIIT, Ministry of Environmental Protection of the People's Republic of China, MOEA, National Academy of Economic Strategy, National Bureau of Statistics, NDC, PwC China, Roland Berger Strategy Consultants, SAIC, Samsung, Sichuan Provincial General Chamber of Commerce China, Siemens, Sustain Think Tank, Taipei Chamber of Commerce, TAITRA, Taiwan Affairs Office in Shanghai Pudong, Taiwan Business Association, TCL , Tencent, Towers Watson, UNESCO, USCBC, Wal-mart, World Bank Group, WTCC, Zhongrong Metal, ZTE

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