After three 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. This report profiles major challenges faced by Chinese, Taiwanese, and foreign companies in China, and provides corresponding strategies to help business owners overcome the difficulties in China's changing business environment. List Of Topics Challenges faced by Chinese, Taiwanese, and other foreign companies in China; the research results were from surveys conducted by various organizations, including American Chamber of Commerce and European Chamber of Commerce in China Top ten challenges for businesses operating in China and their corresponding strategies, touching on labor and production costs, storage of human resources, policy uncertainty, social Insurances and tax, IP infringement issues, the need for business transformation, difficulty in securing capital funds, the risks of unclear laws and regulations, and environmental protection issues List Of Companies American Chamber of Commerce in China Bain & Company Boston Consulting Group Capital Economics Cathay United Commercial Bank China Entrepreneurs Survey System China Social Security Research Center Chinas Development Research Center of the State Council Chinese Academy of Governance Chung-Hua Institution for Economic Research Deloitte Taiwan European Chamber of Commerce in China Foxconn German Industry and Commerce International Federation of Robotics M.J. International Management Institute in Taipei Manpower Taiwan Ministry of Industry and Information Technology Ministry of Economic Affairs National Bureau of Statistics National Development Council PwC China Roland Berger Strategy Consultants State Administration for Industry and Commerce Sichuan Provincial General Chamber of Commerce China Taipei Chamber of Commerce Taiwan External Trade Development Council Taiwan Business Association TCL Towers Watson United States-China Business Counci
Table of Contents 1. Challenges Faced by Chinese Companies in China4 1.1 CESS Survey5 1.2 MIIT Survey6 2. Challenges Faced by Taiwanese Companies in China6 2.1 CIER Survey7 3. Challenges Faced by Foreign Companies in China7 3.1 American Chamber of Commerce in China8 3.2 The US-China Business Council8 3.3 AmCham Shanghai10 3.4 GIC11 3.5. European Chamber of Commerce in China11 4. Top Ten Challenges for Businesses Operating in China and Corresponding Strategies12 4.1. Challenge 1: Rising Labor Costs13 Strategy 1: Industrial Upgrading and Innovation14 Strategy 2: Relocate Entry-level Production Lines14 4.2 Challenge 2: Human Resource Shortage15 Strategy 1: Relocate High-level Staff to Taiwan15 Strategy 2: Automate Manufacturing Processes15 4.3 Challenge 3: Policy Uncertainty16 Strategy 1: Reduce Reliance on Chinese Incentives16 Strategy 2: Construct Research Systems17 4.4 Challenge 4: Excessive Burden of Social Insurances and Tax17 Strategy 1: Sign Taxation Agreements17 Strategy 2: Streamline Personnel Structure18 4.5 Challenge 5: Rising Production Costs18 Strategy 1: Reduce Energy Consumption during Manufacturing19 Strategy 2: Joint Procurement and Shipment19 4.6 Challenge 6: IP Infringement by Knock-off Products19 Strategy 1: Set up Joint IP Protection Organization20 Strategy 2: Create Technological Entry Barriers20 4.7 Challenge 7: Need for Business Transformation21 Strategy 1: Collaborate with Local Businesses21 Strategy 2: Raise Capital Funds22 4.8 Challenge 8: Difficulty in Securing Capital Funds22 Strategy 1: Secure Loans from Taiwanese Banks22 Strategy 2: Launch a Second Public Offering on Taiwan's Stock Market23 4.9 Challenge 9: Unclear Laws and Regulations23 Strategy 1: Comply with Laws and Regulations24 Strategy 2: Communicate and Negotiate with China Actively24 4.10 Challenge 10: Environmental Protection25 Strategy 1: Reduce Exhaust Gases25 Strategy 2: Optimize Waste Water Treatment25 Appendix27 Glossary of Terms27 List of Companies28
List of Tables Table 1 Major Business Challenges Faced by Entrepreneurs between 2012 and 20145 Table 2 Major Business Challenges Faced by Enterprises6 Table 3 Primary Restraints on Profit Growth in China9 Table 4 Do Chinese Enterprises Have Access to Preferential Benefits?9 Table 5 Major Concerns about Rising Costs for Foreign Enterprises in China10 Table 6 Top Ten Challenges Faced by Germany Businesses in China11 Table 7 Primary Challenges for Chinese, Taiwanese, and Foreign Businesses Operating in China12 Table 8 China's Top Ten Business Challenges and Corresponding Strategies26
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