"China is our second biggest lighting market and it remains very challenging, fueled by the macroeconomic slowdown, tight liquidity and a very weak construction market," Frans van Houten, CEO of Philips, told analysts last month.

"We need to be much more modest on expectations with regard to China growth. That is just being realistic," he says.

But the economic "headwinds" have affected companies in different ways. Last year, Nokia Corp's mobile phone factory, a seven-story glass and steel building in Beijing's Yizhuang high-tech industrial park, was closed.

Nokia's new owner, Microsoft Corp, the Internet giant based in the United States, then shifted investment to Vietnam to bring down costs.

While surging salaries have hit manufacturers, it is not the only reason European companies are starting to reassess their China plans.

Many are concerned that favorable government measures toward domestic companies and price-cutting have squeezed their profit margins.

"In China, headwinds related to the government's anti-corruption measures, and efforts to favor domestic innovation, centralized tendering, and price erosion, will continue to impact the Chinese healthcare market in 2015," says Ron Wirahadiraksa, chief financial officer of Philips.

"It is, therefore, expected to limit the growth of the Chinese healthcare market to low single-digits, with little change expected in the second half of this year."

Adam Dunnett, secretary-general of the EU Chamber of Commerce, has called for more market access to stem the tide of falling investment.

"A significant 60 percent of companies says they would invest more if China allowed for greater market access," he writes in an email.

As larger international companies leave the country, there are fears that smaller feeder firms will shut up shop as well. Again, high costs and falling demand are cited as the main reason. But it is not all gray skies for the overseas business community.

"Although there has been a small number of companies that have left China for Southeast Asia, searching for cheaper labor, we are not talking about their withdrawing from the market," says Jiang Heng, a deputy researcher of Chinese Academy of International Trend and Economic Cooperation. "For any foreign company, China is too large to be ignored and there is still room for growth."

The EU Chamber of Commerce survey backed that up, with half the companies polled saying they were optimistic about growth prospects this year, despite a drop of 10 percentage points compared with 2014.

To deal with the new growth realities, European companies are adjusting their strategies and investing in profitable businesses.

ABB, a multinational corporation involved in robotics, and power and automation technology, and based in Switzerland, has managed to keep a lid on costs through "relentless execution".

"Targeted measures to increase productivity and simplify the organization are bearing fruit," says Ulrich Spiesshofer, ABB's CEO. "(This has) resulted in increased customer engagement and additional cost savings."

The changing economic climate comes at a time when China is trying to diversify from its export-fueled and labor-intensive growth model toward a more value-added and comsumer-generated environment.

"Countries in Southeast Asia are attracting more investment with favorable conditions such as lower tax," Jiang says. "But many multinationals still preferred to put their regional headquarters, and development and research centers, in China."

lvchang@chinadaily.com.cn