SEB's China Financial Index

Mixed picture in companies' view of China's growth. Almost half of companies see better order intake while one third see falling sales.

Northern European companies have a less positive view on the business climate. SEB's China Financial Index in September falls to 57.1 from 62.6 in February. Over half of the companies saw sales increase in the first six months of the year, but are slightly less optimistic about the remainder of the year. Less than half of the companies think that sales will increase in the coming six months and profit expactations also fell slightly in this survey. One third of companies saw falling sales figures in the first six months of the year and roughly the same number of companies expect sales to fall further in the coming six months. Investment plans remained relatively unaffected while more companies that previously cut down on recruitment plans. Salary increases fell significantly in this survey.

Economic data from China have been worrying lately. The official GDP figure landed at 7%  but a fresh string of data show that growth is currently losing steam. Leading purchasing managers indexes fell in August to the lowest levels seen in 16 months and imports, calculated in Chinese yuan, fell by 14.3% the same month while exports fell by 8.9% in July and 6.1% in August compared to the same months last year. China's devaluation and the stock market crash of over 40% have scared financial markets around the world and hardly a day goes by without headlines in international media warning of a looming crash in the Chinese economy.

Top managers of Nordic and German subsidiaries in China confirm the picture of a slowed down economy in SEB's latest China Financial Index, but the pictures varies between companies and industries. Only one in four companies has a neutral view of the the business climate the coming six months while more companies are positive than those that have a negative view.
Expansion plans are only marginally affected: Over half of companies plan for further investments and the rest are not investing at the moment. Recruitment plans fell slightly. One third of companies will continue to add employees in China while half of the companies keep the current staff number. Fifteen percent of respondents say they will cut down on staff in China.

More companies than previously, over half, view lower customer demand as the largest concern in this survey. Other companies view competition, foreign exchange risks and salary levels as the major concern.

"The result of this survey confirms two important conclusions: First of all, in line with other indexes our survey shows that economic activity in China is falling and the prospects look gloomier than six months ago. On the other hand, a second equally important conclusion is that things don't look as bad as the impression may be when reading news around the world lately" says Fredrik Hähnel, Head of SEB in China and author of the report.