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2010-11-03 | All chapters

Chamber has it made
Global Times, 28th October 2010

The European Union Chamber of Commerce in China will celebrate its 10th anniversary this November. There's much reason for it to celebrate, as after several months of work, the Chamber has finally received clarification of the status of foreign companies in China. As a result, the nation's highest authority has asserted that all legally registered foreign companies will be treated the same as domestic companies.

As the direct communication channel between European companies and governments for the past 10 years, the Chamber made the voice from industries heard by the Chinese government.

Dirk Moens, the Secretary General of the Chamber, admitted that European companies still have the impression that implementation and enforcement of laws and regulations are always done differently for foreign companies and domestic companies. It is an additional challenge for foreign companies operating businesses in China.

"We don't ask for preferable treatment. What we are looking for is equal treatment with the domestic companies at operating level," he told the Global Times.

Since the beginning of the global economic crisis, the Chamber has been attentive to policies from the Chinese government to see if there is any over-protection for domestic companies, as governments in different countries and regions all over the world declared that they would protect domestic industries and it raised the concern of foreign companies in China. "So far, most of our member companies are happy with what they are doing in China during the crisis," Moens said.

The history of European companies investing in China can be traced back decades, when foreign direct investment (FDI) was commonly welcome. Today the picture is very different. "The Chinese government knows well what they are going to promote. FDI is still welcome but in more selective ways," Moens commented. He suggested European companies planning to invest in China do their homework in order to know clearly where they can fit into the national agenda that is set out by the government. Otherwise it would be very difficult to get started.

Another change of European investment in China is that more and more small and medium-sized European companies are coming to China. Twenty five percent of the 1,500 members of the Chamber are small and medium companies. The obstacles and barriers to get in and operate in China that they have to face are not very different from those of big companies, but the influence on them is bigger as they are not as well equipped and don't have the resources to get past the difficulties.

The Chamber set up a specific unit to bring together small and medium-sized companies and specialized consultants to help those companies deal with local governments. "China is more like the whole European continent rather than a country. Every place here is different," Moens said. "We do not simply defend the companies, but to make the process clear for them," he added.

The Chamber also works particularly on intellectual property rights (IPR). It's started a help desk for small and medium-sized companies to call for advice on IPR. The Chamber has been helping with several hundred companies in IPR.

Thirty years ago, every foreign company that came to China had the story in its mind that if every Chinese spent one yuan, the profit would be enormous as China has the largest population in the world. But they soon realized that China was not the market they imagined. Those companies who adapted the market soon survived and those who did not went back home.

Although China is still a very attractive market, the competition here is getting more intense. Now not only are more foreign competitors coming to China, but the domestic competition is growing very quickly.