SEB's China Financial Index: Business climate c...

Senior managers at Northern European subsidiaries in China foresee continued
improvement in business prospects on the Chinese market. Substantial
recruitments and a continued high pace in investment are expected in the coming
six months.

The latest survey reveals that competition from local and international firms
will be the major challenge going forward - not customer demand as previously
indicated.

The Chinese economy grew by 10.3 per cent in the second quarter of this year,
continuing to outperform all other major markets in the world. Continued massive
fiscal stimulus and huge bank lending are contributing factors, and export
figures are also picking up substantially.

"Nordic and German multinationals are not worried that there will be a dip in
the high growth in China. Basically all companies are expanding, primarily by
adding staff. One year ago 70 per cent of respondents answered that customer
demand was their major concern. Six months ago that figure had fallen to 48 per
cent and today only 17 per cent of companies surveyed are worried about customer
demand in China," says Fredrik Hähnel, General Manager of SEB in Shanghai and
author of the report.

Meanwhile, more companies foresee increased competition.

"China is one of the most competitive markets in the world. The experience of
many companies is that basically all their international competitors are
established in China. On top of that, the number of Chinese competitors is
increasing and their capabilities are improving rapidly. It is a bit
contradictory therefore that 75 per cent of respondents are expecting to
increase their market share in the coming six months," Hähnel continues adding
that raw material costs and the scarce supply of qualified labour are further
challenges identified by companies in this survey.

The expansive fiscal and monetary policies in China are continuing, in the short
term, while administrative measures are being taken to avoid a property bubble.
Inflation was 3.5 per cent in August and more and more analysts expect the
central bank to raise interest rates soon. This can also be seen in the answers
from Nordic and German companies.

"Eighty-five per cent of companies in our survey believe that the RMB will
continue appreciating against the USD and half the companies expect one or more
interest rate hikes," Hähnel concludes.

This is the fourth time SEB has published the China Financial Index, a unique
survey published twice a year. The purpose is to mirror changes in expectations
among Northern Eurpean companies in China, to bring about greater understanding
of the economic and financial development of the country. The survey includes
12 questions related to the business climate, investment plans, recruitment
plans and  views on currencies and interest rates. The full report can be
downloaded from: www.seb.se

For further information, please contact        Press contact
Fredrik Hähnel, General Manager of SEB in      Elisabeth Lennhede, Press & PR
Shanghai                                       [phone],[phone]
+86 138 1680 99 77                             [e-mail]

                                               Ola Kallemur, Group Press Officer
                                               [phone], [phone]
                                               

[HUG#1451165]





Press release PDF: 


http://hugin.info/1208/R/1451165/392368.pdf

China Financial Index September 2010: 


http://hugin.info/1208/R/1451165/392371.pdf




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