EU companies welcome progress in the Chinese market and ask for greater access

Jorg Wuttke, president of the European Union Chamber of Commerce in China (the group representing more than 1,100 members), said on Tuesday in Beijing, that exports from the EU to China increased by 22.4% in 2006, despite of the strength of the euro against the RMB yuan. He noted that the business environment in China remains “attractive” to European companies. He made remarks at the press conference for the launch of the Chamber’s annual report on the European Business in China Position Paper 2007/2008 – the seventh such publication since 2000, and the first after the end of China’s WTO transition period last year.

The report recognizes China’s fulfillment of its WTO commitment during the transitional period. “China has undergone an extensive transformation, with the opening up of its economy and markets, as well as increasing transparency,” said the report. Wuttke appreciated the greater access to the Chinese market in the sectors of banking, food and beverage, cosmetics, and wine in particular. However, the report also lists issues that need to be addressed for “fair competition.” It asserts that EU companies have lost more than €20 billion ($27.7 billion) worth of business opportunities due to trade barriers.

It calls for more transparent and better coordinated regulation; fewer technical barriers; removal of a foreign investment cap in joint ventures; and more effective protection of intellectual rights. “We are not seeking favorable, preferential treatment; we are seeking fair, equal treatment,” said Wuttke. He warned that the current imbalance in trade would be “economically unsustainable for China and politically unsustainable in Europe.” He opposed protectionism on this issue. He does not regard China as a “threat”, but as a partner in a “win-win” relationship.

European companies do not want to be regarded as a “threat” either. The report expresses concern about voices in China questioning the possible adverse impact of growing foreign involvement in its national economy. However, a research institute of the Ministry of Commerce of China last week denied that there was any monopoly by foreign investment in any specific industry in China. Wuttke confirmed that only 5% of foreign direct investment (FDI) in China was from foreign investors; while most of the FDI came from Hong Kong and tax havens like the Virgin Islands.

Apparently, the increasing intention of foreign investors to have wholly owned businesses, instead of joint ventures with local partners as before, has aroused controversy in China. There is great concern over the development of local brands if a certain sector is dominated by a foreign company. “We do not seek out dominance or a monopoly in any industry in China,” said Wuttke. He said it was the right time for China to promulgate the Anti-monopoly Law which regulates domestic competition.

The law is widely applauded by foreign investors, but they expect further detailed clarification about the national security review in mergers and acquisition cases. The report will be presented to the government and regulatory agencies in China and Europe. (people.com.cn)