The European Chamber of Commerce in China released its European Business in China Position Paper 2010/2011 today criticizing Beijing over its failure to keep pledges made when it joined the World Trade Organization in 2001.
While expressing concern that China is becoming more challenging for foreign companies rather than more equal, the EU Chamber’s report is calling for greater access to the country’s markets and urging Beijing to cancel discriminatory behavior that stifles competition.
“More than anything else, European companies wish to have equal access to China’s markets. Despite China’s 30 years of reform, it still remains excessively regulated and less open to competition compared to other major economies, ” the EU Chamber said in the report’s executive summary.
Accusations made in the report include discrimination in favor of Chinese firms when enforcing environmental and labor laws, mandatory certification requirements that unnecessarily restrict market access for foreign companies, and preferential treatment towards products utilizing indigenous innovation.
“European companies are still heavily restricted in their investment possibilities in China. When it comes to strategic investments in particular, European investors continue to be heavily constrained in areas ranging from telecom services, to insurance, construction, and the automotive industry, ” according to the report.
Among other complaints made in the report is the vague and broad nature of some laws “which makes compliance by foreign companies difficult in practice. ”
“The definitions are very broad and cover information relating to virtually all kinds of transaction in which foreign businesses may be engaged with Chinese companies, including mergers and acquisitions, joint ventures, technology transfer and offshore listings, ” the report said.
According to the European Chamber’s 2010 Business Confidence Survey conducted in June, around 36 percent of European companies operating in China believe that the country’s regulatory environment has become less fair towards foreign invested enterprises over the past two years. Furthermore, about 39 percent anticipate the regulatory environment to worsen over the next two years while 22 percent expect no improvements at all.
“I do believe the words of Premier Wen when he says that foreign investment is welcome, ” Jacques de Boisseson, the EU Chamber’s president, said ahead of the report’s release. He added, though, that some officials are “not welcoming foreign investment” and “would probably be satisfied with a lower level of foreign investment and a higher share for Chinese companies. ”
This was written for 2point6billion.com, a site published by publisher, Asia Briefing.