European companies in China say it's going to be a difficult year for their business, as supply chains were hit hard by a wave of COVID-19 outbreaks  in major Chinese cities in the second quarter. 

But many businesses will remain, as everyone knows how big the market size is in China, said Klaus Zenkel, vice president of the European Union Chamber of Commerce in China. 

At the start of 2022, European businesses found themselves in ever-choppier waters due to the fallout over the conflict between Russia and Ukraine and mass closed-off management to contain the Omicron outbreaks across China, including in Jinan, Shanghai and Shenyang. To better understand the subsequent impact of external and internal events have had on European business, the European Chamber and Roland Berger conducted a flash survey from May 21 to 27.

According to the survey, two-thirds of European companies reported revenue increases in 2021, up 24 percent year-on-year, as the long COVID-19-induced shutdowns experienced in some regions during 2020 were largely avoided. However, 60 percent of respondents said they had downgraded revenue projections for this year.

Many said the challenges of doing business in China grew under the impact of COVID-19 containment measures before April.

"It is pretty much affected now by the COVID situation because nobody can really travel and nobody can really exchange with the headquarters that leads to people kind of not satisfied with the situation and some people are leaving," said Zenkel.

The survey concluded at the end of April when Shanghai was still closed off and COVID-19 restrictions were in place in Jilin Province. According to Zenkel, even though restrictions were lifted in May, the damage was already done.

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However, Chinese experts said the impact is short-term pain and won't change the long-term fundamentals of China's market.

If the virus becomes widespread among consumers, it will hurt their purchasing powers and the foundation of the Chinese economy, said Wu Haifeng, executive director of Shenzhen Institute of Data Economy.

At the end of the day, the short-term pain will finally transform to benefits for both Chinese and foreign investors, Wu suggested.

So, is China's market still attractive for European businesses? The answer is a definite yes.

"The consumer market is huge in China," said Zenkel, adding "everybody knows how big the market size is in China."

Both Zenkel and Wu agree that carbon neutrality is an important field that European and Chinese firms can cooperate in the near future.

China is committed to carbon neutrality which will lead to more investment in the green and environmentally friendly industries, said Wu.

He suggested that European and Chinese firms work together in sectors like bio-pharmaceutical and electric cars.

Most respondents are positive about business in the Greater Bay Area (GBA). European business leaders are calling for more talks with the government and a better strategy to retain international talents. They also urge the local government in Guangdong Province to help European businessmen understand the GBA's achievements and development plan. 

The survey also found that many European businesses see China as a thriving research and development hub. It also suggests that bundles of investments are waiting in the wings if these businesses are granted greater market access. 

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