European companies in China are under pressure from slower growth, overcapacity

cnbc.com:

BEIJING — European companies in China are finding it harder to make money in the country as growth slows and overcapacity pressures increase, according to a survey released Friday by the EU Chamber of Commerce in China.

In the metropolis of Shanghai, business members even reported delays in getting paid as it became more difficult to enforce contracts versus the prior year, according to chapter head Carlo D'Andrea.

«State-owned enterprises, they postponed payments and they are using this in order to get some defacto loans from companies, especially from small, medium enterprise,» D'Andrea said, citing members' comments.

China's growth has slowed in recent years amid geopolitical tensions. A slump in the real estate sector, which has close ties to local government finances, has also dragged down the economy.

Only 30% of EU Chamber survey respondents said their profit margins were higher in China than their company's worldwide average — an eight-year low.

Back in 2016, just 24% of respondents said their profit margins were better in China than they were globally, the report said.

That reflected a crash in the Chinese stock market in the summer of 2015, alongside a slowdown in the real estate market at the time, EU Chamber President Jens Eskelund pointed out to reporters.

He said the current slowdown in Chinese growth had similar cyclical aspects, but there are questions about how long and deep it would be this time.

The Chamber's latest survey covered 529 respondents and was conducted from mid-January to early February.

This year's questionnaire included a new question about whether members faced difficulties in transferring dividends back to their headquarters. While more than 70% reported no issues, 4% said they were