The EU-China Business Association and the Flanders-China Chamber of Commerce organized an exclusive webinar on the key findings of the European Business in China – Business Confidence Survey 2026 on 18 June 2026.
Gwenn Sonck, Executive Director, EU-China Business Association, introduced the topic of the webinar and the speaker, and welcomed the participants. For European businesses, China remains a vital market not only because of its scale and highly efficient supply chain, but increasingly because of its rapidly growing innovation capacity. This is also the changing role China plays in the global strategies of European companies, which are no longer present in China solely to serve the local market. They are increasingly in China for China, but also in China for the world, to innovate, develop new products, strengthen their supply chains and expand internationally. China is often described as the world's toughest gym. Companies operating there must constantly improve, respond quickly and innovate to remain competitive. European companies must therefore be able to keep pace with the speed of technological development and decision-making in China, while building effective partnerships with Chinese companies.
To better understand China's innovation ecosystem firsthand, our Association is also organizing a number of tailor-made innovation trips to China, which we warmly welcome you to join to experience the dynamism of the Chinese market yourself. Do not hesitate to contact us for more information. The EU-China Business Association is the association of bilateral China business associations across Europe, aiming to to promote the economic and trade relations between China and the EU. The EUCBA is also an official partner of the EU SME Center in China, an initiative funded by the European Commission to help European SMEs understand and access the Chinese market. We also work closely together with the EUCCC. The EUCBA has about 20 member associations representing over 20,000 European and Chinese companies. On 7 July, the EU-China Business Association is organizing a high-level luncheon with the Chief of Cabinet of EU Trade Commissioner Maroš Šefčovič, Mr. Bernd Biervert-Luth. He will discuss EU-China trade relations so companies can directly engage with the Chief of Cabinet and share their concerns. The luncheon is open to EU companies doing business in China and Chinese companies in the EU.
Adam Dunnett, Secretary General, European Union Chamber of Commerce in China (EUCCC) presented the key insights from the Business Confidence Survey 2026, which was launched at the end of last month. The survey already got some great coverage in the EU press as well as in Chinese media. Coverage was a bit more positive than usual. EU firms warm to China, even as tensions spiral over a surge in China’s exports, and EU business confidence in China remains low despite a modest improvement. The survey took about an hour for members to fill out, comprising 48 questions. The Chamber also looked at the participating member companies’ financial performance, the business environment, and their strategy. The survey was done in early January and February this year. This year's response rate of 49% was one of the highest ever with 540 respondents. The survey has been organized together with Roland Berger for 19 years. We have a really good foundation to compare how the business environment has changed incredibly over the last 19 years. Mr. Dunnett said he really encourages companies to come back to China, to see what's here for them, how China has changed and what the real China reality is.
The key finding this year is that after years of business confidence deterioration, we may be approaching an inflection point. Last year, we had probably the worst survey results we've ever had. We hit record lows in six or seven important categories. This year, we've seen a bit of a reversal. That doesn't mean that everything is perfect, as it is still a challenging environment. But we're starting to see some green shoots. Our hope is that if we can continue to encourage China to follow the recommendations that we make in our position paper, that rebound will continue.
How has the business environment changed for your industry over the past year? The majority of our members or near the majority always say it has become more difficult. But this year, the number has dropped to 68%, a drop of five percentage points. On the politicization of the business environment, again our members have found it became more political, but the increase is less than what we've had in previous years, with about a five percentage point drop from previous highs. Any improvement is a welcome improvement. With the legislation coming out of both the EU and China, it's fair to say it's normal that our members would find it's a politically heavily charged environment.
The third positive result from this year's business confidence survey is the financial outlook. In terms of profitability, only 17% of our members are optimistic about profitability in the next two years, but that's an improvement over the last two years. In the previous two years, it was 12% and 15%. It's obviously quite lower than the 30% that had a positive and optimistic outlook back in 2013, but it is an improvement. Same in terms of revenue growth, as 13 years ago, 72% of our members were optimistic about revenue growth. Today, it's only half of that at 35%. It is lower than the 10 year average, but higher than the last two years. Those are three areas of improvement that we should take note of and be thankful for.
The last area Mr. Dunnett highlighted was the regulatory environment. There are more and more regulations coming out in terms of investment, extraterritorial oversight and export controls, but our members have become used to that. The majority found missed business opportunities due to market access or regulatory barriers, but it decreased from last year's 63%. The times are not as tough as in the last two years.
Besides the improvements, there are a number of challenges. The percentage of members that see China as a destination for present and future investments has been decreasing slowly over the last 15 years, as 53% now see it as a top three investment destination, the lowest number that we've had on record. Let's not forget that China is the largest and most important market for a number of our sectors. For others, it is still the United States. Europe still has a much larger investment in the U.S. and trading relationship with the U.S., but China is overall very important. The level of investment in China compared to the U.S. is still very small. Many of our companies are still putting things on hold. Some companies made big announcements. Some of the pharmaceuticals, chemicals, and even some companies in the auto sector are still investing here, but the number of those that have no plans to invest in China in the future has continued to grow. Nearly 20% no longer have planned investments or even consider China a top 10 destination.
Another challenge is China's economic slowdown. We are all aware of the overcapacity in the Chinese market. That's why there is such a big focus on going overseas, even for European companies and manufacturers in China, but the number has dropped dropped 14 percentage points. Companies are working in a very volatile international environment and China has been delivering the message that it is an anchor for stability, but it's up to us to give feedback and let our members and the Chinese government know where we see it and where we don't.
Mr. Dunnett came back from Brussels two weeks ago, and there is still a lot of misunderstanding about China. It is an economy and a market that we're going to be dealing with for the rest of our lifetime. We might as well find a way to make the best of that relationship. One area is just how innovative and efficient China is, as 75% of our members have actually said that China is more efficient than the rest of the world. People are benefitting from the low exchange rate, and while labor costs are a little bit higher, the supply chain is very strong and prices are low right now. It makes China very attractive, at least as a sourcing destination or efficiency in assembly production. About 94% of survey participants see China as very important for inputs.
We are all dealing with this huge trade surplus that China has with the EU and the Chinese are now acutely aware of it. But because of the pricing and overcapacity, we have a lot to benefit from what's being produced in China if we want to be competitive in our own supply chains. Every year for the last five years, the percentage of member companies that said that they have reviewed their supply chain and that they are onshoring into China has grown to 32% now, while those that have decided to offshore their supply chains has dropped to a new low of 7%. Of those that do offshoring, nearly half go back to Europe. Whether it's going to be the Critical Raw Materials Act or the Industrial Accelerator, this dynamic environment is going to continue in this direction for the near future.
It has taken a long time for the world to wake up and realize how innovative Chinese firms are. There is a good level of awareness now, but I still see executives coming to China and their jaw is dropping at either the robotics, AI or the e-vehicle industry, or even the pharmaceutical industry. Now we have got European pharmaceutical companies buying patents and licenses from Chinese pharmaceutical companies because they're becoming very innovative themselves. About 24%, a five percentage point increase over last year, now find Chinese companies more innovative than European firms.
The economy and profitability has seen a slight uptick this year, but companies are still struggling. Some companies that are making losses say they will stay in China simply because of the innovative environment. Let’s also not forget how important China is as a source for global revenues. Nearly 25% of EUCCC members generate 25% or more of their global revenue in mainland China. Let's not forget what an important market this is for maintaining European competitiveness, profitability and growth in the world. Nearly 80% of our companies reinvest in China, but they actually repatriate more of their profits. The benefit of having European investment in China is not simply the profitability and the innovation, but also the repatriation of profits, which is still in large part going back to Europe.
This year China released its 15th Five Year Plan. China still is very focused on self-reliance and indigenous innovation and moving up the value chain with new quality, high productive forces, which creates some opportunities for foreign companies in areas where they can contribute and challenges where perhaps they're no longer needed. What we stress is the imperative to introduce new pro-business policies that can bring quick wins. Harmonizing processes or allowing for certain certifications coming from Europe could really help European exporters that want to export to China and also fulfill China’s goal to attract more imports from Europe.
The EUCCC released a report on export controls a few months ago which you can download on the website. This is probably the most acute issue that we've been dealing with in the last 12 months, as 32% of our members have had their supply chain impacted by China's export controls. If we look at only multinationals in the manufacturing sector, that jumps to 44%. China talks about the weaponization of EU legislation and policy. Enforcement of IPR in China was getting better as laws and regulations have continued to improve year after year. But last year, 39% of members reported that enforcement of IPR laws and regulations as being inadequate. Mr. Dunnett said he didn’t know if that's because of the drive for new quality productive forces or because of the difficult economy, or simply because European companies are reporting it more frequently and paying more attention to this.
Our members are least satisfied with honoring of contracts at 12%, which refers to payment of subsidies. But European and Chinese companies have both benefited from these subsidies over time. But a lot of these subsidies that European companies have been promised are unfortunately not being paid out due to local debt issues. A large number of companies have raised this as an issue. After export controls, this is probably the next topic that we are most acutely concerned about.
About the ease of doing business, governments are very happy to register your business. They are very good at making sure you get access to utilities and that you can pay your taxes conveniently. But when it comes to cross-border money or data transfer issues, that's been an issue over the last few years.
We are very pleased to see that Šefčovič and Wang Wentao, the EU and Chinese Trade Ministers, are meeting at the end of this month. We've had a number of good parliamentary delegations coming to China. We have to speak up and focus on improving the business environment. Our position paper that will come out in September will probably have another thousand recommendations in it. We're not asking for radical changes. We're asking for more predictability and transparency on export controls, on cross-border data, and on new pieces of legislation, which puts more restrictions on investment or creates a legal mechanism for China to be able to respond or retaliate to extraterritorial actions by other countries. We want the government to allow companies to find their space, to have the clarity, to make the contributions that they can, and to ultimately be profitable. There is more and more cooperation between Chinese and European companies, which is a great thing. We've got to find ways to make it win-win, whether it's on technology cooperation or market access or going into third markets. There is a lot we can still do together, Mr. Dunnett concluded.
A Q&A Session followed Mr. Dunnett’s presentation. Q.: Have you seen many EU companies which have left China and in which sectors? Mr. Dunnett: A lot of people used to say European companies aren't leaving China. That's not true. There are companies that are leaving, but it’s a small number. There are a number of law firms that have left or drastically reduced their workforce in China. This is also true of consulting. This is partly because AI is cutting into a lot of jobs. Companies are cutting back on all sorts of expenses and professional service providers are one of them. Many companies have downsized or made cuts, but they do want to stay. They want to have some sort of presence to be able to say, we have an office in China.
Mr. Jochum Haakma, Chairman, EU-China Business Association, also joined the discussion at the end of the webinar.
The European Business in China – Business Confidence Survey 2026 is available to download free of charge here.
