Many companies from Europe cannot avoid China. However, the important market is a tough place for many companies. The European Chamber of Commerce therefore sees the government as having a duty.
EU companies can provide much-needed competition and technology to the Chinese economy, an analysis suggests. However, this requires an open market and equal competitive conditions, wrote the European Chamber of Commerce in a position paper.
“Our members want to increase their commitment and make a greater contribution to China’s development, but they must now see that concrete action is being taken,” said Chamber of Commerce President Jens Eskelund, according to the statement.
The chamber, which claims to have more than 1,700 companies as members, called on the government of the world’s second largest economy to regain the trust of companies. “Businesses need an answer as to whether China is focused on self-reliance and tightening rules based on security concerns, or whether the country plans to follow through on its promises to open markets,” Eskelund said.
The real estate industry in China is in crisis
China’s economy appeared to be recovering since opening up after the coronavirus pandemic earlier this year. However, the trend flattened out over time because demand did not increase and various sectors of the economy did not perform as expected, as the Chamber of Commerce experts analyzed. There is also currently a crisis in the real estate industry in the Middle Kingdom – an important economic driver with a share of more than a quarter of economic output.
According to the Chamber of Commerce, geopolitical tensions also led to China wanting to become less dependent on other markets, especially when it came to technology, and relying on independence. The USA and Europe also want to reduce their dependencies. To protect its own interests and development, Beijing tightened the rules for foreign companies. EU companies therefore had to struggle with new guidelines and laws, the report said.
The Chamber of Commerce therefore recommended reducing politicization in the corporate world through exchanges with other governments. Companies should also no longer be punished for the actions of their home governments. In order to restore trust among foreign companies, Beijing should also create more predictability with clearly defined laws and rules.
Opening up to the private sector is required
According to the Chamber of Commerce, China also needs to address long-standing problems for companies. The People’s Republic, led by the Communist Party, should focus less on state-owned companies. Instead, certain industrial sectors should open up to the private sector in order to increase productivity. Some industries have so far only been reserved for state-owned companies, the paper said.
The government of the country with around 1.4 billion people recently appeared open to foreign investors again on Tuesday and wanted to continue to welcome companies from all countries, said Chinese Foreign Office spokeswoman Mao Ning in Beijing.
According to the European Chamber of Commerce, China has so far failed to comply with a number of projects such as the creation of a standardized and competitive market. “Giving a new name to a number of old dishes will not satisfy the appetite of foreign investors,” the board concluded in the position paper titled “Time to Change the Menu.”
Source: Stern
