— China-EU Business Association and TUPU Consulting Group Jointly Release "Report on the Development of Chinese Enterprises in the EU 2025/2026"

Brussels/Hong Kong/Budapest, October 15, 2025

On October 15, 2025, the China-EU Business Association (CEBA) and the global business strategy research institute TUPU Consulting Group jointly released the "Report on the Development of Chinese Enterprises in the EU 2025/2026" in Brussels. This marks the first annual research result jointly released by the two parties, aiming to present the operational status, challenges, structural trends, and future confidence of Chinese enterprises in the EU market in an objective, systematic, and forward-looking manner.

This year's research, based on questionnaires and in-depth interviews with 175 Chinese enterprises, was completed over six months. It systematically analyzes corporate performance, policy environment, industrial layout, and strategic judgments. The report shows that against the backdrop of global economic fluctuations and intensifying changes in the policy environment, Chinese enterprises in the European market demonstrate resilience and structural growth momentum, while also experiencing heightened challenges from "policy uncertainty."

I. Increased Uncertainty: Becoming the Dominant Environmental Variable for Chinese Enterprises Operating in Europe

Frequent policy adjustments and the proliferation of regulatory tools by the EU have continuously reduced the predictability of the business environment, making it difficult for Chinese enterprises to formulate stable medium- to long-term strategies. The report points out that 81% of the surveyed Chinese enterprises believe that the "uncertainty in the EU business environment has increased significantly."
This uncertainty is not due to a single factor but results from the of multiple variables including policy, regulation, geopolitics, and industrial security.

(1) Dense Policy Introductions Leave Enterprises Unprepared

In recent years, the EU has introduced a large number of new rules themes such as "strategic autonomy," "economic security," "supply chain resilience," and "green transition," including the FSR, CBAM, Digital Package, Net-Zero Act, etc. These policies often involve complex certification processes, supply chain traceability requirements, and national security reviews, requiring enterprises to invest significant resources to maintain compliance.

(2) Multi-level and Inconsistent Policy Implementation

Vague, repetitive, or conflicting regulations at the EU level, member state level, and local government levels make it difficult for Chinese enterprises to grasp the final requirements. Enterprises generally report: the longer the regulatory chain, the higher the uncertainty.

(3) Geopolitical Spillover Effects Significantly Amplify Business Risks

Geopolitical factors are gradually permeating trade, investment, and technology cooperation, forcing enterprises to consider non-commercial variables in decision-making.

Enterprises generally call for the EU to enhance policy transparency and establish a stable and consistent regulatory system to create a predictable environment.

II. China-EU Economic and Trade Relations Maintain Resilience Under Pressure: Trade Structure Continues to Optimize

The report mentions that despite an unstable external environment, China-EU trade maintains high-quality resilience, reflecting the high degree of industrial complementarity and stable demand between the two sides. In 2024, China and the EU continued to be each other's second-largest trading partner, with a large scale and stable structure of trade.

Eurostat data shows:
• Goods trade volume reached 732.2 billion euros in 2024, only a slight decrease of 1.6% year-on-year, much better than the global average;
• Trade in high-tech products accounted for 26%, indicating expanding China-EU technology cooperation;
• Machinery and transport equipment accounted for over 50%, reflecting deep complementarity in traditional industry and new energy manufacturing.

Particularly noteworthy is the household appliance equipment sector:
• EU imports from China: 16.3 billion euros (+27%)
• EU exports to China also grew by 27%

This indicates that even against the backdrop of tightening regulations, market demand continues to drive the optimization of the China-EU trade structure.

III. Shift Eastward in Chinese Enterprises' Investment Map in Europe, Hungary Becomes Key Node

Judging from interview data and officially released EU import data, from supply chain restructuring to business cost advantages, the direction of Chinese investment in Europe is undergoing a structural shift, with Central and Eastern Europe becoming a new growth pole.

The report shows three significant trends in Chinese investment in the EU:

(1) "Significant Eastward Shift" in Investment Geographical Structure

Previously focused on Western Europe, more Chinese enterprises are now turning to CEE countries like Hungary, Poland, Slovakia, and the Czech Republic, due to:
• Lower labor and land costs
• Gradually forming industrial clusters
• Favorable investment policies
• Proximity to Germany and the core EU manufacturing area

Notably, Hungary became the top destination for Chinese enterprise investment in Europe for the first time in 2024, an important signal for China-EU industrial cooperation.

(2) Greenfield Investment Hits New High

Greenfield Investment has become the main mode for Chinese enterprises' development in Europe.
New energy vehicles, batteries, and the energy storage industry chain are key areas for layout, reflecting the high alignment between Chinese manufacturing and the EU's green transition strategy.

(3) Chinese Enterprises Employ Over 260,000 Local Staff in the EU

Indicating that enterprises are deeply integrated into the local EU economy and employment system, no longer merely "importers."

These trends indicate that Chinese investment in Europe has shifted from trade-driven to "localization-driven."

IV. Chinese Enterprises Demonstrate High Operational Resilience: Parallel Track of Revenue Growth and Profit Improvement

Argument: Despite facing policy pressure and rising costs, the operational performance of Chinese enterprises in Europe exceeds market expectations, showing steady growth.

In the 2024-2024 period, Chinese enterprises in Europe generally performed well:
• 53% of enterprises increased revenue
• 12% achieved significant growth
• 40% of enterprises improved profits

Against the backdrop of a sluggish global economy, this performance is highly resilient.

Looking ahead to the 2025-2026 period:
• 62% of enterprises expect revenue growth
• 46% of enterprises expect profit improvement
• 50% plan to expand investment

Enterprises maintain confidence due to the EU's long-term value, including:
• Strategic significance for building global brands
• Urgent demand in areas like new energy and digitalization
• High-quality market and advanced standards
• Complete R&D and innovation system

This indicates Chinese enterprises have moved from the "market entry phase" to the "deep operation phase."

V. Business Environment Assessment Declines for Sixth Consecutive Year: Systemic Challenges Prominent

Based on enterprise visits and questionnaire surveys, the continuous deterioration of the EU's business environment is not a single-point issue but a concentration of multi-dimensional pressures requiring systemic improvement. In 2025, Chinese enterprises' comprehensive score for the EU business environment was 61 points, declining for the sixth consecutive year since 2019.

Main challenges include:

(1) High Compliance Costs

Regulations like FSR, CBAM, environmental requirements, and supply chain reviews lead to steep cost increases for enterprises.

(2) Prolonged Approval Processes, Increased Opacity

Enterprises report facing complex procedures and inconsistent standards in approvals, filings, and subsidy applications.

(3) Hidden Identity Discrimination

Over 40% of Chinese enterprises report experiencing differential treatment due to their "Chinese capital identity," including:
• Longer approval times
• Hindered market access
• Restricted eligibility for incentive policies
• Narrower government communication channels

(4) Coexistence of Labor Costs and Talent Shortage

Insufficient supply of technical talent and high labor costs in the EU have become the primary pain points for enterprise operations.

These systemic challenges exacerbate strategic uncertainty for enterprises.

VI. Expansion of the "Economic Security" Agenda: Impacting Enterprise Confidence and Planning

The EU's "economic security" framework is spreading from specific sectors to broad industries, creating new uncertainties for Chinese enterprises. Research shows 90% of Chinese enterprises believe "economic security" and "de-risking" policies negatively impact their operations.

Impacts focus on:

(1) Stricter Investment Screening: 43% of enterprises delay or suspend investment.

(2) Strengthened Trade Tools: "Among the EU's current 199 trade defense measures, 85 involve China (over 40%).

After FSR implementation:
• 63% of Chinese enterprises experienced actual impact or indirect damage
• Enterprises faced "systemic exclusion" in public procurement

(3) Expanding Digital and ICT Restrictions

13 member states have introduced cybersecurity restriction measures targeting Chinese enterprises, causing chain effects in smart cars, communications, AI, and other fields.

(4) Industry Confidence Challenged

Investment uncertainty makes it difficult for enterprises to formulate five-year or even three-year plans.

Enterprises generally call for a balance between security and openness, avoiding the generalization of the security concept, which distorts normal market competition.

VII. Enterprises Actively Adapt and Transform Positively: Finding Growth Paths Amid Difficulties

Judging from operational levels and adaptability to the EU business environment, Chinese enterprises have shifted from passive response to active adaptation, demonstrating mature multinational operation capabilities. Facing uncertainty, Chinese enterprises widely adopt proactive strategies:
• 41% disperse risks through cooperation with local enterprises
• 35% strengthen internal training and compliance systems
• 24% enhance data and information management
• Only 8% consider scaling back operations

This reflects that Chinese enterprises are no longer just "going global" but "digging in," actively integrating into the European operational system and facing risks with a long-term approach.

VIII. 97 Recommendations Proposed: Building an Open, Transparent, Predictable Cooperation Framework

The report also puts forward 97 recommendations for improving the EU business environment and building dialogue mechanisms between Chinese enterprises and EU governments. This is, of course, a massive systematic project involving comprehensive optimization of the institutional system, not partial repairs.

The report proposes 97 policy recommendations across 10 dimensions, including:
• Enhancing policy transparency
• Improving market access
• Clarifying the boundaries of economic security standards
• Strengthening investment protection mechanisms
• Promoting talent cultivation and mobility
• Strengthening scientific research and innovation cooperation
• Promoting green and digital transition cooperation

The report particularly emphasizes: 2025, as the 50th anniversary of China-EU diplomatic relations, should be a key window period for rebuilding trust and expanding cooperation. As 2025 is about to end, we still see huge cooperation potential between China and the EU in international industrial cooperation, especially in new energy, digitalization, AI, smart manufacturing, and green transition. Opportunities for development should not be missed due to politicization.

This is a complex and ever-changing era. Finding the certainty of cooperation amidst uncertainty, the China-EU Business Association and TUPU Consulting Group jointly believe:
• Chinese enterprises are important participants in the modernization of the EU industrial chain;
• The EU market remains an irreplaceable component of Chinese enterprises' global strategy;
• Cooperation remains the fundamention of China-EU relations;
• Mutual trust is a key element for future stability.

In the future, CEBA and TUPU will continue to support the steady development of Chinese enterprises in Europe through research, corporate services, policy communication, and cooperation platform building. They will also promote in-depth exchanges between China and Europe in business, technology, and culture, contributing to the construction of a stable, open, and sustainable China-EU relationship.