Nearly half of the European businesses based in China expect a drop in revenue of more than 20 per cent because of the coronavirus outbreak, and see it as another wake-up call to rely less on China after its trade war with the US, a survey suggests.
The outbreak has hit foreign businesses severely, disrupting manufacturing and threatening to alter investment sentiment on China in the long run, according to a joint survey by the German Chamber of Commerce in China and the European Union Chamber of Commerce in China.
Respondents to the survey called for "proportionate measures" to get the flow of goods and services back on track, with the survey report saying "a return to stability is urgently demanded, and support measures should be rolled out immediately".
As a result of the disruption, nearly half of the European firms taking part in the survey expected revenue for the first half of 2020 to drop by more than 20 per cent, and planned to lower their targets for the whole year.
Polling 600 European companies operating in China in industrial sectors including machinery, auto, electronics, chemicals and services, the survey found that the impacts of the outbreak and the Chinese government's control measures were "comprehensive and severe", and that long-term sentiment "would never be the same again".
"The US-China trade war was a wake-up call on overreliance. The (coronavirus) outbreak has reinforced the need to diversify supply chains," a polled executive was quoted as saying in the survey report.
"Now more than ever, China must boost its investment allure. (It's) An opportunity to realise its stated goal of full opening up and a level playing field," another said.
More than half of the respondents reported decreased demand, and almost half reported an inability to meet delivery deadlines because of logistics disruption, staff shortages and manufacturing delays due to shortage of supplies.
Companies have also faced challenges in cash flow, rising compliance costs and difficulties in making investment decisions, the survey responses revealed.
Firms also said inconsistent rules across different regions and levels of government " some of which changed frequently and without notice " had slowed down the resumption of production.
A business executive in Beijing said "the 14-day self-quarantine requirement makes domestic business trips within China a big burden". In Shanghai, companies found "warehouses unable to operate normally due to restriction on cross-provincial goods movement", and a company in neighbouring Jiangsu complained about "no clear rules … and ad hoc communication without clear scheduling or decision criteria".
Joerg Wuttke, president of the European chamber, said standardised measures were needed.
"The patchwork of conflicting rules that emerged from the fight against the (coronavirus outbreak) has produced hundreds of fiefdoms, making it next to impossible to move goods or people across China," he said.
Dr Stephan Woellenstein, chairman of the German Chamber of Commerce in North China, said China was performing "a precarious balancing act" to combat the virus and restore economic activities.
"This will require the Chinese government to release supporting measures for those most affected " especially small and medium-sized enterprises " until operations normalise," he said.
Financial relief such as rent reduction, wage compensation and tax breaks were needed, along with unified regulations and transparent communication from the Chinese authorities, respondents said.
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