From Chongqing Association of Enterprises with Foreign Investment

According to recently-released Chongqing Foreign Investment Environment Evaluation Report 2018, 31% of respondents indicated that their turnover in 2018 increased or increased greatly.

 Main Challenges in Doing Business in Chongqing

Based on the survey, the top five challenges faced by the respondents for doing business in Chongqing are:

According to the above result, the main challenge for foreign-invested enterprises in Chongqing still is the increase of labor costs, which increased by 3% comparing with the last year. In recent years, the minimum wage standards is continuously increasing, which leads to the increase of labor force price. On the other hands, the increasing cost of labor force indicates that the wages of low-end labor force were improved a lot. However, the increasing wages are attracting more people to Chongqing to find jobs, so that enterprises have more supply of labor force.

The element of slowdown of China’s economic growth changed from 15% to 13% comparing with the last year, showing that the enterprise are still confident on Chinese economic growth and optimistic on investment in Chongqing.

In addition, the influence of tax-levy burden had decreased. The central government is constantly launching tax and levy reduction measures, which bring benefit to foreign-invested enterprises. However, as enterprises still consider the tax and levy burden is high, more measures to decrease the tax and levy burden are expected to be announced.

Degree of Difficulty in Operation Comparing with Last Year

The overall global economic growths was in downturns in recent years. The chaotic international situation has also affect the global economic growth. Under the macro economic atmosphere, the foreign-invested enterprises in Chongqing would face more difficulties. Chongqing government shall think twice on how to remain the economic grow smoothly, how to explore new engine of economics, and how to attract more foreign-invested enterprises.

 Turnover Changes of the Respondents Comparing with Last Year

Based on the survey, 47% of respondents responded "almost flat" (the ratio is little higher than the evaluation of last two years). 31% of respondents said that the turnover increased. 22% of respondents pointed out that their turnover fell (the ratio is lower than that in 2016 and 2017). Overall, the trend of the change appears constant.

Changes of the Respondents’ Earnings Before Interest and Tax (“EBIT”) Comparing with Last Year

Based on the survey, there is no direct correlation between the choice of “negative growth”, “flat”, or “positive growth” made by the respondents and their engaging industry. It appears that the ratio of respondents in positive growth is rising and the ratio of respondents in negative growth is decreasing year by year, which is a good sign regarding the EBIT of respondents. However, as 37% of respondents indicated that their 2018 business operation became more difficult, this actual status of EBIT may delays to some extend and subject to observed constantly.

Whether the Respondents Considered that Their Engaging Industries Exists Overcapacity Problem?

The respondents showed the positive feedback regarding the overcapacity question since 2016 was mainly benefit from the driven force of Chongqing’s supply-side structural reform. Chongqing is increasing the effective supply with market- orientation, actively yet prudently wiping out the ineffective supply, actually reducing the burden of entity economy, reinforcing the risk control, recovering the weakness in infrastructure and livelihood sectors, and effectively reducing the existing overcapacity.