Retailing, Franchising, and Consumerism Business Intelligence in China

European Chamber Calls for Further Opening up and Fundamental Reforms to Build a Sustainable Economic Recovery in China

Beijing, China (September 02, 2009) / — The European Union Chamber of Commerce in China today launches the 9th edition of its primary annual lobbying document, the European Business in China Position Paper 2009/2010. This year's Position Paper indicates that further opening up and fundamental reforms are needed more than ever, not only to maintain the attractiveness of China as an investment destination for European businesses, but also for China to build a sustainable economic recovery. European businesses believe that the current economic crisis provides a prime opportunity for China to restructure the economy and build a transparent and fair business environment for all companies, both domestic and foreign.

According to the Position Paper 2009/2010, European businesses have observed a slowdown in the pace of reforms over the past 12 months, with some sectors reporting that the situation has actually gotten worse as industrial-policy interventions and foreign investment restrictions have increased.

This trend has heightened tensions with China's trading partners at an unfortunate time, with China now an increasingly important market for European business and trade with the EU an increasingly influential driver of Chinese economic growth. The European Chamber believes that China can play a proactive role in easing trade tensions by arresting the regression in the reform process observed in many industries and adopting measures to build a level playing field for all businesses in China. Such moves would also serve to boost investment and domestic consumption, and in turn enable the Chinese economy to achieve its latent potential.

Joerg Wuttke, President of the European Chamber, commented, "Over the past year, the European Chamber has noted a gradual slowdown – and in some cases a partial reversal – in the economic opening up process. However, China's experience in the last three decades has clearly proved that it is precisely in periods of crisis that increased opening and reform has bred the greatest success. We are convinced that this is an ideal moment for China to adopt a new and bolder cycle of reforms, a move that would ensure that Chinamaximises its growth potential over the next five to ten years."

Drawing on the industry knowledge and expertise of the European Chamber's over 1,400 member companies, this year's Position Paper presents Chinese and European policy-makers with more than 500 recommendations in 32 individual papers. In addition, this year's edition features eight "Local Focus Papers" highlighting the recent developments and specific issues faced by European companies across China.

The European Business in China Position Paper 2009/2010 will be presented to government and regulatory agencies in China, to the European Commission and EU member state governments, and to a wide range of business organisations and companies in China and Europe. Following the public launch of the Position Paper across China, members of the European Chamber will travel to Brussels to brief senior officials at the European Commission.

Key issues in the European Business in China Position Paper 2009/2010

Market Access
– The archaic 50/50 Joint Venture requirement continues to hinder market development.
– Equal treatment for domestic and foreign companies is conspicuously absent in the public procurement process.
– In some sectors, technical regulations and certification procedures are being used to limit market access, and in certain cases to push foreign-invested companies out of certain markets altogether.
– A noticeable lack of reform and opening up remains in the service sector and hinders the development of strong domestic consumption.
– The limited market access and opportunities for foreign companies in energy-related sectors restricts China's efforts to fight climate change.

Transparency in Legislation and Implementation
– The time granted publicly for comments on draft legislation is still well short of international best practices.
– Consultations on draft legislation are often limited to selected persons or groups and characterized by a disturbing lack of transparency.
– The enforcement of regulations on Chinese firms is often weaker than that on foreign firms.

Intellectual Property Rights (IPR)
– The lack of adequate IPR protection and the leakage of confidential information at various stages of business development are a growing concern, discouraging European companies from further transferring know-how and technology to China or setting up research and development (R&D) centres in China.

EU-China Trade Relations
– China is important for the EU but the EU is more important for China.
– EU exports to China represent 0.7% of EU GDP; China's exports to the EU represent 7% of China's GDP.
– About 40% of technology transfers introduced to China through imports and investments originate in the EU.
– 20% of all Chinese exports in 2008 went to the EU (USA 17%, Japan 9%).
– A 1% decline in EU GDP growth would lead to a 11.5% decline in Chinese exports (just 9.8% for US).

About the European Union Chamber of Commerce in China

The European Union Chamber of Commerce in China was founded by 51 European member companies on 19th October 2000. The European Chamber was established to give European businesses a common voice across different business sectors, nationalities and regions of China. More than eight years after its foundation, the European Chamber now has more than 1400 members and is active in eight cities: Beijing, Chengdu, Nanjing, Pearl River Delta (Guangzhou and Shenzhen), Shanghai, Shenyang and Tianjin. The Chamber is recognized by the European Commission and the Chinese authorities as the authoritative and independent voice of European business in China.

The European Chamber is built around 34 Working Groups and Forums, bringing together senior executives who engage in strategic discussions ranging from market access to the evolution of the business environment in China. Through regular dialogues with both the Chinese and European government, the Chamber conveys the operational business concerns of European companies and makes suggestions for improvements to policy-makers.


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