Thrills - and some spills

Updated: 2010-12-01 14:43

By Andrew Moody (China Daily)

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Jacques de Boisseson, the current president of the European Chamber, which celebrated its 10th anniversary at a conference in Beijing earlier this month, does not believe there is currently a level playing field.

"We have a number of areas which are closed for foreign investment, such as telecom services and insurance; and with car manufacturing you can only operate in a 50/50 joint venture," he says.

"Geely (the China car manufacturer) has just bought Volvo. You wouldn't have been able to have Volvo buying Geely because it would have had to enter into a joint venture."

The chamber, which has grown from 51 founding members in 2000 to 1,500 with seven offices around the country, produces a document on doing business in China which have grown to several hundred pages because of increasing regulations.

"The rules and regulations are not always fully adapted to consider foreign investment. There is often not enough consultation," de Boisseson adds.

"There is an issue also that some laws are taken and applied retrospectively, sometimes one or two years. Laws are also implemented differently in China according to the particular province and this creates business uncertainty."

But Wu Changqi, professor of strategic management at the Guanghua School of Management at Peking University, rejects the chamber's view that regulation is excessively applied in China and says the European Union itself is seen as being only regulatory.

"All countries apply rules and regulations and there is nothing wrong with that. If a company has a particular problem with a specific regulation they can raise it with the World Trade Organization. There is a mechanism in place for doing just this. I do not believe China is an excessive regulator," he says.

Jing Hua, managing editor of the International Financing magazine, published by the China Council for the Promotion of International Trade, insists China is meeting its obligations as a member of the WTO.

"China is doing everything in accordance with what it agreed with the WTO. Markets in many sectors are gradually opening up. This applies also to financial services which, despite all the criticism, is becoming more open to foreign entrants. This will all take time. I think the gradual approach is working," she says.

The value of the yuan, which has been problematic for China's relations with the US, is less of an issue for European companies invested and operating in China.

De Boisseson at the European Chamber said it is not a priority for his members.

"It is very much a second order issue for us. Our members are those companies that are invested in China and serve the Chinese market from China. Ninety to 95 percent of their activity is here in China," he adds.

Ernst Behrens, a former chief executive officer of Siemens China and also former chief executive officer of EADS, the parent company of Airbus, in China, says he understands China's attempts to see industrial sectors nurtured.

"We have restrictions in Europe and there are also restrictions in the United States. If you go back 20 years, the German telecommunications company (Deutsche Telekom) would buy no equipment other than from Siemens or SEL (Standard Elektrik Lorenz). The German train company was 100 percent government-owned and it would never buy a train other than a Siemens train," he says.

"We have to take into consideration that China has to look after itself and go at its own pace of development."

Behrens, president of the European Chamber from 2002 to 2004 just after the country's accession to the World Trade Organization, says he has had a number of talks with senior figures about China's technology gap.

"I have had many discussions with government officials and State-owned enterprises and they have said to me that they need technology from Western companies because they are so far behind," he says.

"They have said they will allow us access to certain markets and would cooperate with us for some time but they added one day they would become competitors. I think that is absolutely natural," he says.

Getting access to technology is not all about China persuading foreign multinationals to invest in China: A growing trend is for Chinese companies to set up their own research and development bases in places like Germany and hire the best brains locally.


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