Chinese to invest more in EU (2)

"They (distributors) are profit-oriented, which means they are not willing to use the best and most appropriate materials to optimize the effect of silk's unique advantage, its elegance and luxury," Deng said.

But the situation varies from sector to sector.

Cucino said Chinese enterprises in industries such as the automotive sector or fashion do not necessarily feel the pressure to invest overseas as they are selling to a large and growing market at home.

The survey found Chinese enterprises tend to invest in countries with strong domestic industries in specific sectors, such as Sweden for telecommunications, the United Kingdom for financial services, Germany for manufacturing, electronics and automotive, and the Netherlands for logistics.

Though 48 percent of Chinese enterprises which have invested in the EU report regulatory approval obstacles in Europe, mostly arising at local, rather than EU or national level, 78 percent report operating difficulties.

The difficulties include obtaining visas and work permits for Chinese employees, dealing with European labor laws, cultural differences in management style, and understanding tax laws across member states, the survey found.

The manager of a Chinese machinery company with branches in Europe told China Daily: "At present, transferring workers from our parent company in China is difficult because it usually takes a long time to obtain a temporary visa."

A survey respondent was quoted by the EU chamber as saying: "Labor laws are the key issue. Lack of labor market flexibility, and working hours are hard to cope with, especially in France. Taxes on labor are very high, too."

The culture is so different that a senior Chinese company representative was shocked when required to deal with employee representatives in a discussion about where to place a coffee machine in an office.

Chen Fei, general manager of Industrial and Commercial Bank of China's Brussels branch, who has dealt with many Chinese entrepreneurs in Europe, said: "The way people do business here is different. Here, business is business. No personal emotion is involved."

Chen said European companies prefer their Chinese partners to hire professionals in legal, accounting and taxation affairs. Chinese companies are reluctant to do this because of the high cost, but not hiring them could be potentially disastrous, he said.

Pan Jianping, who has been with an overseas business department at a Chinese-Japanese joint venture in telecommunications equipment for many years, said: "Going abroad is not simply selling products overseas. If you want to move up the value chain and build your own brand there, a comprehensive strategy needs to be adopted."