Small and midsized enterprises in China are facing the worst business climate they’ve seen in years. According to a regional survey of 4,000 Chinese businesses, 2012 is shaping up to be worse than 2008 and it’s the government’s fault.Among the seven sub-categories of a new government poll, human resources, financial and legal services, government administration, and infrastructure have all seen deteriorating circumstances this year, according to the Business Environment Index for China’s Provinces 2011 Report.
See: Business Climate Tougher–China Daily
The findings follow a three-part survey of businesses nationwide, conducted in 2006, 2008 and 2010. More than 90% of the 4,230 companies interviewed in 2010 were small and medium-sized enterprises. Non-State-owned enterprises contributed more than 90% of the sample, and more than 70% of the companies surveyed operate in the manufacturing sector, China Daily reported.
The survey is based on both the operational data from companies and the opinions of business owners, who were asked to grade each category from one to five, with five being classified as “very good”. The average score improved significantly between 2006 and 2008, but declined in 2010. The main complaint was not the U.S. and European economies, but about taxes and fees charged by local governments, regional protectionism and tight credit, said Fan Gang, director of the National Economics Research Institute at the China Reform Foundation, which compiled the data.
“The competitiveness of Chinese companies is highly related to the policy environment thus, less government intervention in the market and a better relationship between businesses and the authorities will be the direction of our next step in economic reform,” Fan told Chinese reporters at a forum to introduce the findings earlier this week.
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