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Easy times gone for foreign firms in China

By Liu Zhiqin Source:Global Times Published: 2012-9-27 0:35:03

Illustration: Sun Ying
Illustration: Sun Ying



Time recently published a cover story titled "The New Great Wall of China."

The article argues that an increasingly strict bureaucratic approval system and more regulations and restrains concerning foreign investment have formed a new Great Wall, a symbol of China's "technical prowess, monumental resources and, most of all, its attitude toward the outside world."

According to the article, this new Great Wall seems to hinder the process of China's drawing foreign investment, making many foreign investors lose patience and confidence. The dilemma they face is either leaving or staying in China.

The article concluded that China's reform process has remained stagnant or even fallen back.

These complaints and opinions are nothing new. Since the 2008 Beijing Olympic Games, such opinions have been heard constantly.

Foreign companies have encountered more difficulties operating in China, which is an indisputable fact. But this is because the Chinese market has become more mature compared to two decades ago.

It is normal that China's investment environment and policies as well as its preferences in investors have changed a great deal.

The opening-up of the Chinese market has experienced three stages. When it had just started, a variety of foreign companies swarmed in, no matter their quality they had.

After a decade's development, the Chinese market has learned to distinguish good companies from bad ones. Now the market has taken the initiative to innovate.

In the first 10 years, China was really poor. It believed that whatever was foreign was good, so that foreign companies could easily enter the Chinese market, including some projects that required low or even no technology.

A German entrepreneur once talked with me about his impression of China 20 years ago.

Then China lacked the experience of international trade, so it had to follow the requirements of foreign companies blindly.

China's labor and raw materials were also very cheap at the time, and foreign companies could easily make money. But everything has changed. It is normal that foreign investors find it hard to adapt to the new environment.

The article in Time mentioned that China is prone to supporting its own industries and promoting its own brands, resulting in many foreign companies losing the chance for fair competition with Chinese ones. Such accusations have little basis, and would be better targeted at the US.

The US has always set various barriers for Chinese companies to enter its market, such as Huawei and ZTC. The complicated approval process can set a high threshold.

A Chinese businessman engaged in the IT industry in the US once told me that the US examination of Chinese companies can be like a "political investigation" in China in the past.

A manager who used to serve in the PLA may be taken as having some special political background and the company's actions may cause suspicion among Americans.

Compared with many Western countries, the Chinese market has a higher degree of openness.

China has been getting choosy with foreign investors. Without unique and excellent technologies, foreign companies can hardly attract the attention of Chinese people. This is good for China and signifies national maturity.

Nonetheless, we need to pay attention to the reason of concerns of foreign investors.

Trade authorities should look into flaws in their work. There's a lot of space for reform in areas such as publishing policies and the implementation of regulations, so as to provide better services to companies in China.

After all, maintaining foreign companies' enthusiasm and improving their business environment will surely benefit China's sustainable development.

Time recently published a cover story titled "The New Great Wall of China."

The article argues that an increasingly strict bureaucratic approval system and more regulations and restrains concerning foreign investment have formed a new Great Wall, a symbol of China's "technical prowess, monumental resources and, most of all, its attitude toward the outside world."

According to the article, this new Great Wall seems to hinder the process of China's drawing foreign investment, making many foreign investors lose patience and confidence. The dilemma they face is either leaving or staying in China.

The article concluded that China's reform process has remained stagnant or even fallen back.

These complaints and opinions are nothing new. Since the 2008 Beijing Olympic Games, such opinions have been heard constantly.

Foreign companies have encountered more difficulties operating in China, which is an indisputable fact. But this is because the Chinese market has become more mature compared to two decades ago.

It is normal that China's investment environment and policies as well as its preferences in investors have changed a great deal.

The opening-up of the Chinese market has experienced three stages. When it had just started, a variety of foreign companies swarmed in, no matter their quality they had.

After a decade's development, the Chinese market has learned to distinguish good companies from bad ones. Now the market has taken the initiative to innovate.

In the first 10 years, China was really poor. It believed that whatever was foreign was good, so that foreign companies could easily enter the Chinese market, including some projects that required low or even no technology.

A German entrepreneur once talked with me about his impression of China 20 years ago.

Then China lacked the experience of international trade, so it had to follow the requirements of foreign companies blindly.

China's labor and raw materials were also very cheap at the time, and foreign companies could easily make money. But everything has changed. It is normal that foreign investors find it hard to adapt to the new environment.

The article in Time mentioned that China is prone to supporting its own industries and promoting its own brands, resulting in many foreign companies losing the chance for fair competition with Chinese ones. Such accusations have little basis, and would be better targeted at the US.

The US has always set various barriers for Chinese companies to enter its market, such as Huawei and ZTC. The complicated approval process can set a high threshold.

A Chinese businessman engaged in the IT industry in the US once told me that the US examination of Chinese companies can be like a "political investigation" in China in the past.

A manager who used to serve in the PLA may be taken as having some special political background and the company's actions may cause suspicion among Americans.

Compared with many Western countries, the Chinese market has a higher degree of openness.

China has been getting choosy with foreign investors. Without unique and excellent technologies, foreign companies can hardly attract the attention of Chinese people. This is good for China and signifies national maturity.

Nonetheless, we need to pay attention to the reason of concerns of foreign investors.

Trade authorities should look into flaws in their work. There's a lot of space for reform in areas such as publishing policies and the implementation of regulations, so as to provide better services to companies in China.

After all, maintaining foreign companies' enthusiasm and improving their business environment will surely benefit China's sustainable development.



The author is chief representative of the Beijing Office of Zurich Bank, Switzerland. opinion@globaltimes.com.cn

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