EU enterprises in China recover well
Both sides asked to collaborate, remove barriers to cooperation
Published: Apr 13, 2020 09:58 PM

Workers produce a batch of carpets to be exported on April 1 in Lianyungang, East China's Jiangsu Province. Local financial institutions have established a green channel to make loans for major enterprises that produce medical supplies to combat the coronavirus. Photo: cnsphoto

EU companies operating in China are "recovering surprisingly well" from coronavirus shutdowns, but they are facing challenges from declining market demand in China and around the world, as well as from strict anti-epidemic measures in place to stave off imported infections, officials at the European Union Chamber of Commerce in China said on Monday.

"Manufacturing is recovering well, surprisingly well," Joerg Wuttke, president of the European Chamber, which represents more than 1,700 foreign-invested enterprises across China, said during an online media briefing.

Member companies across the country from the east coast to the southwest have restarted operations, though there are some new challenges, officials at the group said. "[Member companies are] all back to work without restriction," said Paul Sives, chairman of the European Chamber's Southwest China chapter. 

It's not just EU companies. The vast majority of foreign companies in the country have also resumed operations in recent weeks as the domestic epidemic waned. As of April 7, nearly 72 percent of the 8,776 major foreign-funded enterprises had resumed more than 70 percent of their operations in China, up five percentage points from the previous week, the Chinese Ministry of Commerce (MOFCOM) said on Thursday.

However, many companies still face a rising number of challenges, according to officials at the European Chamber. Companies are worried about the demand side, as many people and companies in China have cut spending and the global supply chain is disrupted, said Wuttke, adding that while many member companies sell their products in China, their products are also sold in the US, the EU, Japan and other markets.

Also, the travel ban on foreign nationals has caused "a lot of problems for our companies," as employees are stranded in Europe and cannot return to work in China, Wuttke said. Incidents of discrimination against foreign nationals in China also raise concerns for foreign employees, he said.

To prevent an influx of coronavirus infections from overseas, Chinese officials have taken strict measures, including a temporary ban on the entry of foreigners, though some foreign nationals are still allowed to visit China for necessary economic, trade, scientific or technological activities or for emergency humanitarian needs.

There have been reports of potentially discriminatory actions against foreign nationals in some places, including stopping people from entering some public places. However, EU officials noted that these are only a "minority" of cases. "[There is] nothing extraordinary in Nanjing," said Bernard Weber, chairman of the European Chamber's Nanjing chapter in East China's Jiangsu Province.

On the government level, Chinese officials have vowed to treat foreign companies the same as their Chinese counterparts. In a guideline issued on February 18, the MOFCOM said that a complaint mechanism would be used to ensure foreign companies also receive the same policy supports.

EU officials said that many local governments in areas such as Nanjing and Shanghai have offered "more or less" the same support, including reductions in social security contributions for workers, though some have issues in implementation.

"I think there is a lot of confusion both in China and abroad. This is really an extraordinary time that requires much more mutual understanding and cooperation," Chen Fengying, a research fellow at the China Institutes of Contemporary International Relations, told the Global Times on Monday, pointing to potentially restrictive measures proposed by EU officials on Chinese companies. 

Even as China and the EU are pushing for a bilateral investment treaty (BIT), some EU officials are reportedly proposing measures to bar Chinese companies from acquiring EU companies. The Financial Times reported on Monday that Margrethe Vestager, an executive vice president of the European Commission, has called for member countries to buy stakes in companies to stop "the threat of Chinese takeovers." 

Chen said that such a proposal might be made just out of "desperation" to help companies amid the pandemic and, while it could affect some Chinese companies conducting normal business activities in the EU, it will not change both sides' efforts to reach the BIT agreement.

"More than ever, both sides need business cooperation rather than barriers, so while we will hear a lot of conflicting messages, the overall direction for bilateral cooperation remains positive," she said.