Challenging Regulatory Environment Inconsistent regulations and enforcement are top challenges Top five business challenges in China 2012 2013 2014 2015 2016 2017 Inconsistent regulatory Inconsistent regulatory Shortage of qualified 01 Rising labor costs Rising labor costs Rising labor costs interpretation and unclear interpretation and unclear management laws laws 44% 46% 61% 43% 57% 58% Inconsistent Inconsistent Inconsistent regulatory Inconsistent regulatory regulatory regulatory interpretation and unclear interpretation and Rising labor costs Rising labor costs 02 interpretation and interpretation and laws unclear laws 54% 58% unclear laws unclear laws 37% 38% 39% 47% 03 Shortage of qualified Shortage of qualified Shortage of qualified Shortage of qualified Difficulty obtaining Increasing Chinese employees employees employees employees required licenses protectionism 29% 35% 37% 42% 29% 32% 04 Difficulty obtaining Shortage of qualified Shortage of qualified Shortage of qualified Shortage of qualified Corruption required licenses management management employees management 30% 26% 31% 32% 29% 30% Shortage of qualified Difficulty obtaining Increasing Chinese Difficulty obtaining required 05 Corruption Industry overcapacity management required licenses protectionism licenses 26% 29% 30% 31% 30% 29% Source: China Business Climate Survey Report 2017