Majority of Indian companies in China are planning to continue to invest there with ‘cautious optimism and confidence’ this year, according to a survey by the Confederation of Indian Industry (CII) and Evalueserve. The survey, ‘Business Climate for Indian Companies in China’, drew responses from 57 Indian companies in China and is the second such survey.

“The survey of Indian companies working in China shows cautious optimism and confidence as compared to the previous survey last year. Most companies do not see significant impact of the current trade situation between the US and China on their business,” said CII Director General Chandrajit Banerjee.

As per the survey, 98 per cent of the respondents plan to make some investments in China in 2019 with two-fifths considering ramping up their investments over 2018. More information technology and business process outsourcing companies plan to make additional investments in 2019 compared to 2018, according to a CII.

Two thirds of the companies said that their business was very profitable or profitable in 2018, with higher earnings before interest and taxes (EBIT) than in 2017. Of the surveyed companies, 30 percent generated revenues higher than CNY 100 mn from China in 2018 and four of five respondents stated that their revenues in 2018 were higher than in the previous year. The highest number of respondents, 72 percent, invested in Shanghai, the most popular destination.

Among the challenges, while half the companies felt China’s innovation is more favourable than the worldwide average, rising labour cost, finding and retaining talent and stricter regulations were the top cited issues. Quality of products and services continues to be a key success factor in China. Seventy four per cent of the companies said that trade friction involving China and the US has had no impact on their business.