REPORT: PriceWaterhouseCoopers Survey About Doing Business in China

March 2004
While the magnitude of foreign investments in China has been increasing, foreign investors continue to encounter different challenges when doing business or investing in China. What are these challenges? Is it easy for a foreign investor to exit China? What will the trend for foreign investment in China over the next three years? In order to answer the above questions,

PricewaterhouseCoopers' Advisory Division has conducted a "Doing Business in China Survey" which aims to identify issues and problems encountered by foreign companies doing business or investing in China. The key findings of the survey are as follows:

-95% of the foreign companies believe that foreign investment in China will continue to increase over the next three years.

-Only 26% of the respondents' investments in China are currently profitable and 72% of them expect profits within the next five years.

-The top three challenges faced by foreign companies doing business or investing in China were the complex and developing legal and political environment, foreign exchange controls and lack of knowledge of the local business environment.

-82% of the foreign companies think that it would not be easy to exit their investments in China.

-Most of the survey respondents needed advice on legal framework and statutory compliance requirements (74%), tax compliance and tax planning advice (57%).
If foreign companies were to invest in China again, they would devote more efforts on initial planning (42%) and thorough risk analysis (42%) prior to investing

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