European companies in China face mounting operational hurdles but are doubling down on local supply chain investments, according to a 2025 Business Confidence Survey released Wednesday by the European Union Chamber of Commerce in China and consultancy Roland Berger.
Nearly three-quarters of surveyed firms reported increased challenges in 2024 – a 5% year-on-year rise – citing fierce market competition, regulatory hurdles, and geopolitical tensions. Yet 26% expanded their Chinese supply chain footprint during the same period, highlighting the country's paradoxical role as both a complex market and an indispensable manufacturing hub.
"China's economy isn't declining – it's transforming," said Roland Berger's Global Managing Director Denis Depoux. "Companies must localize everything from R&D to customer engagement to stay competitive."
The survey reveals China's enduring supply chain appeal: 68% of manufacturers cited superior cost-quality ratios for components compared to other global markets. "Nowhere else delivers better components at lower prices," emphasized EU Chamber President Jens Eskelund.
Recent policy moves aim to bolster foreign investor confidence. The Private Economy Promotion Law, enacted in May, guarantees fair market access and innovation support, while April's State Council measures injected liquidity through targeted rate cuts.
This dual narrative of challenge and opportunity positions China as a high-stakes market where strategic localization could determine long-term success for European businesses.
