This Swiss Business in China Survey 2022 reflects the tumultuous events of this year. This is the first time that we have needed to conduct a follow-up mid-year flash survey to re-evaluate the level of business sentiment recorded at the start of the year. We felt that this was essential in order to understand how war in Europe, growing geopolitical tensions in Asia, and the ongoing Omicron lockdowns in China have impacted the expectations of Swiss companies for 2022 and beyond.
The dramatic collapse in business confidence that this survey reports is unprecedented.
Part I of the survey shows that early in the year, although the key challenges for Swiss companies were intensifying, with ever-fiercer competition and problems in finding and retaining the right talent, plans to invest in China were at their highest ever levels on the back of high profit and re-venue growth expectations for 2022. The comparison with the 2019 data illustrates that all of the growth lost due to the pandemic had been fully recovered, and so executives of Swiss compa-nies viewed 2022 with broad optimism.
Yet within 6 months, Swiss business confidence went from its highest recorded level to its lowest, on a par with expectations for 2016 which were hit by the 2015 Chinese stock market crash and the lifting of the Swiss peg to the Euro. These radically different results are detailed in Part II of the survey.
The analysis and opinion pieces presented in Part III of this report discuss and provide novel pers-pectives on a number of crucial topics for doing business in China today. First, the possibility that the current dynamic zero-Covid policy may be lifted is considered and it is concluded that this is highly unlikely in the short term for a variety of reasons (Section 3.1). Second, the effects of the Omicron wave and growing geopolitical tensions on China’s economic outlook are evaluated for their impact on Swiss companies (Section 3.2). Next, the comparison with a parallel EU survey detailed in Section 3.3 shows that while the Swiss responses are generally consistent with their EU counterparts, they are somewhat more optimistic. This pattern is consistent with previous surveys and gives us confidence that the relatively small number of respondents to our survey provides a reasonably representative sample.
The two very different business environments for foreign companies in China are discussed in Section 3.4, highlighting the specific problems faced by firms working in sectors where China has prioritized local capacity. A closing piece makes the case that deglobalization is not an option for future international business and global prosperity (Section 3.5).
Importantly, the 2022 survey also provides new insights by asking participants a wider range of questions, many of which have a strong practical bearing. For instance, difficulties in managing relationships with headquarters, one of the key internal challenges identified in the survey, appears to be mostly linked to the slow speed of communication and the overly centralized management of R&D by HQ (Section 1.4).
Moreover, Swiss firms reported that the following four issues were important for the positive development of their business over the next 5 years: China’s national and industrial policies, growth in domestic consumption, the relationship between China and Western countries (especially the US), and further reforms to open up the economy (Section 1.6).
We hope that this work will be useful in benchmarking your business activities and providing useful facts and analysis to facilitate decision making, while at the same time increasing the overall level of understanding about China in your company.