Companies

Increasing costs worry business managers

By Yang Ning (China Daily)
Updated: 2010-11-16 10:18

A man carries a bag of cotton in Hami, Xinjiang Uygur autonomous region. Rising costs of raw materials such as cotton have become a headache to many businesses. [Photo/China Daily]

BEIJING - Nearly three-quarters of Chinese entrepreneurs considered the rising costs of labor and raw materials as their biggest challenge both at present and in the future, according to a survey among more than 4,000 managers.

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The survey, conducted by China Entrepreneurs Survey System (CESS), found that 72.5 percent of the Chinese entrepreneurs chose "rising costs of labor" as the biggest difficulty in operating their business, 12.8 percentage points higher than the figure for last year.

Also, the rising cost of raw materials was singled out by 56 percent of the Chinese entrepreneurs, compared with 48.5 percent in 2009.

Other difficulties mentioned by entrepreneurs included the heavy burden of tax and social security and financial strains, and an overall lack of talent, said the survey.

However, it also showed that in general, product sales prices remained stable despite the concerns over rising costs.

"The most significant reason for the smooth trend of product sales prices is that most Chinese enterprises improved their profitability this year," said Wang Peiheng, director of Human Resources Study and Training Center under the Development Research Center of the State Council.

According to the survey, 67.9 percent of Chinese enterprises made a profit in the first half this year, 16.5 percentage points higher than the figure in 2009 and 5 percentage points higher than 2008.

"The survey indicated that business conditions of most Chinese enterprises were gradually

recovering to levels before the global financial crisis due to healthy order books and normalized inventory levels," said Wang.

Enterprises in mining, construction, transport, storage, computer services, software, hotels and catering and telecommunication equipment manufacturing were enjoying good profitability, he added.

The survey also demonstrated that most Chinese entrepreneurs are cautiously optimistic about the nation's future economic trend, with 74.1 percent of respondents predicting China's GDP growth in 2011 will be above 9 percent.

As the country attaches increasing importance to the transformation of the economic development pattern, some Chinese enterprises are actively seeking ways to upgrade industries and increase investment in innovation, said the CESS.

The survey was carried out during August and October of 2010 with 4,256 executives of companies in various industries nationwide.