European Union (EU) cosmetics companies reportedly intend to expand investment in China despite some concerns about rising labor costs, sluggish economic growth and escalating competition. According to a news source, the increased interest in expansion follows China’s central government’s promise to spur economic growth through a series of finance, taxation, agriculture, and technology reforms.

A recent business confidence survey conducted by the EU Chamber of Commerce and Roland Berger Strategy Consultants, showed that of 550 European companies with a presence in China surveyed, 86 percent have considered expanding investment in China and 41 percent have planned merger and acquisition deals in 2013. The survey also revealed that more than half of the companies surveyed will expand their business from first-tier cities in China to second- and third-tier cities, with interest growing in the country’s western region.

“European cities are expanding operations and geographical reach to achieve greater economies of scale and are strengthening in areas where they already hold advantages in order to maintain an edge over local competition,” said Roland Berger Senior Partner Kang Yang. Topping the list of firms that evidently consider China a priority market are European consumer goods and service firms. “Domestic daily necessities and cosmetic companies are becoming more competitive,” noted Kang. See EU Chamber of Commerce, May 30, 2013; chinadaily.com, May 31, 2013.