The Business Confidence Survey 2026, prepared by the European Union Chamber of Commerce in China, analyzes the operating climate for European companies in the Asian giant. China remains a vital link in global supply chains, although companies are demanding administrative reforms and greater transparency to fully restore investor confidence.

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Operating Environment and Bureaucracy Challenges

Despite the slight improvement over the previous year, the road remains uphill for most.

• 68% of companies say doing business in China was more difficult in 2025, stringing together five years of continuous deterioration.
• The slowdown in the Chinese economy (57%), competition from local private companies (47%) and geopolitical risks are the biggest concerns.
• Administrative barriers: Tangible challenges persist in day-to-day management, especially in obtaining construction permits (54%), access to financing (53%) and cross-border money transfers (65%).
• Intellectual Property (IPR): 43% of companies have been impacted by IPR infringements, a particularly serious problem in the machinery and food sectors.

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Competitiveness, Efficiency and Innovation

Nevertheless, China maintains structural strengths that make it indispensable for European companies.

• Efficiency leader: 75% of respondents consider their production in China to be more efficient than anywhere else in the world.
• Innovation ecosystem: 48% of European firms acknowledge that their Chinese competitors are now more innovative than they are.
• Profitability: The market remains profitable for 70% of companies, and optimism about future earnings has risen slightly to 17%.

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Sectoral Analysis: Industrial and Manufacturing

This sector presents a panorama of contrasts marked by China’s self-sufficiency policies.

• Deterioration by subsectors: In 2025, the environment worsened dramatically for Automotive (76%), Machinery (67%), Marine Manufacturing (67%) and Chemicals/Oil (61%).
• Challenge in Machinery: This is the sector most affected by intellectual property theft (70% impact) and where local competition is perceived as the most critical future challenge (76%).
• Unequal Treatment: Strategic sectors suffer more discrimination. 54% in machinery and 50% in marine manufacturing feel unfavorable treatment vis-à-vis locals. In contrast, Automotive (70%) and Chemicals (65%) report more equal treatment due to their technological importance for Chinese development.
• Missed Opportunities: Regulatory barriers resulted in the loss of significant business in Aviation and Aerospace (77%), Chemicals (59%) and Machinery (58%).
• Market Fidelity: Despite the risks, China remains a priority investment destination for marine manufacturing (84%) and automotive (79%), as they consider it vital to be competitive there to maintain their global relevance.

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Strategic Reconfiguration: Supply and Investment

In the industrial and machinery sector, the reconfiguration of supply chains is even more intense than the overall average, with 72% of companies having revised their strategies in the last two years. This sector applies a very pronounced “dual-track” strategy to balance competitiveness in the Chinese market with the protection of its critical assets.

Offshoring: Protection of key technology

Unlike other sectors, the machinery industry is not abandoning China, but “compartmentalizing” its operation: they localize what is necessary to be competitive in the Chinese domestic market (In China, for China) while extracting their most sensitive technological advantages from the country to protect themselves from fierce competition and intellectual property theft.

Onshoring: Efficiency for the local market

At the same time, 34% rely exclusively on onshoring and 35% combine both approaches. In China, they locate the manufacture of standard products or “commodities” for the following reasons:

• Cost reduction and efficiency: They take advantage of the fact that 75% of companies consider production in China to be more efficient than in the rest of the world.
• Speed of response: They need to shorten delivery times to better serve local customers and compete with private Chinese companies.
• Localization requirements: Many do so to comply with Beijing’s “self-sufficiency” policies and to qualify for public procurement processes.