EU Firms Cite Unfair Treatment In China

May 25, 2011
79% of the European firms are optimistic about their growth despite concerns.

A growing number of European companies in China say they are treated unfairly by Beijing, and many say they are facing tougher competition from homegrown firms, a business group said Wednesday.

The results of the European Union Chamber of Commerce in China's annual business confidence survey come after repeated calls from Beijing's main Western trading partners to ensure a level playing field for foreign companies.

An increasing number of EU firms in China -- 43%, as compared with 33% last year -- say they see government policies as discriminatory, and 46% say they believe that trend will continue over the next two years.

"Respondents feel there is an unfair business environment," chamber president Davide Cucine said as he presented the results of the survey, which had 598 respondents.

China's Western trading partners regularly accuse it of making it difficult for foreign companies to operate in the country. Beijing however has been vocal in its opposition to protectionism and denies it puts up investment barriers.

The survey said Chinese firms had made "vast improvements" in brand recognition, marketing and sales capabilities, and product quality -- presenting a greater challenge to their foreign counterparts.

"The competition is increasing. We believe it's a good thing," Cucine told reporters.

"Chinese companies are starting to get strong in some of the traditional strongholds of foreign companies."

About 40% of respondents said increasing competition was one of three key factors that would affect their business outlook for China over the next two years, along with labour and raw materials costs.

Only 36% of small and medium-sized businesses, which often operate in niche markets, say they are pessimistic about their future outlook in China in the face of more competition, as compared with 45% of large companies.

Cucine explained that beyond the increasing labour costs for firms dependent on large workforces, foreign companies doing business in the world's second-largest economy are also having problems finding qualified personnel.

Nevertheless, 79% of the European firms polled said they were optimistic about their growth outlook, and 59% said their firms were considering major new investments in the next two years.

"China has become much more strategically important. There is a lot of optimism about growth," Cucine said.

Copyright Agence France-Presse, 2011

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