EUROPEAN companies in China performed strongly in 2010, according to a survey released today by the European Union Chamber of Commerce in China. But these companies have more concerns over the rising challenges in the regulatory environment.

About 78 percent of European companies in China registered a significant rise in revenue last year and 71 percent reported a net profit rise, said the European Chamber Business Conference Survey 2011.

The result was based on feedback from nearly 600 European companies.

The survey, conducted by Roland Berger Strategy Consultants, said China is increasingly regarded as a strategic market for European companies. But they see growing competition from domestic companies which are catching up quickly.

The survey urged for more transparency, saying the respondents perceive the government policies becoming increasingly unfair toward foreign-invested enterprises in recent two years. But European companies are optimistic about Chinese regulators' willingness to abide by the World Trade Organization Agreement.

The vast majority of survey respondents named "rule of law and transparency in policy-making and implementation" as a key driver for China's economic performance in the coming years.