China International Property Rts, Indus Standards Worry EU Cos Go back »
2005-09-04 | All chapters
China International Property Rts, Indus Standards Worry EU Cos
Federica Bianchi, Dow Jones, 4th September 2005
European companies in China are very concerned with the improper enforcement of intellectual property rights and the increasing number of China-specific industry standards that unfairly favor Chinese companies, the sixth position paper by a key representative of E.U. companies on the mainland says.
The 2005 position paper of the European Union Chamber of Commerce in China laments excessive infringement of copyrights and trademarks, operating restrictions for some European industries and the lack of involvement of European companies in setting up industry standards.
"European companies are finding it difficult to compete on a level footing with Chinese companies in China," Serge Janssens de Varebeke, the European Chamber's president, said during the official launch of the position paper Sunday.
IPR enforcement remains a challenge and could be improved, he said.
In a recent European Union Chamber survey, 46% of companies polled said China's intellectual property rights enforcement is "ineffective" and 11% found it "totally ineffective."
Janssens de Varebeke added that in some sectors, such as automotive and cosmetics, European companies are concerned that China sets up country-specific standards as non-tariff barriers to trade.
The paper mentions China Compulsory Certification, or CCC, which requires manufacturers to obtain certification before products can be marketed, imported or used for commercial purposes in China, as an example of a certification that is costly and time-consuming for producers and is recognized only in China.
European companies also complain about their exclusion from standard-setting in the mainland.
"Inviting foreign bodies to participate will quash fears that certain domestic standards, such as the CCC, hide protectionist measures," the paper says.
In the E.U., most standard-setting bodies are open to any company operating in the region, including Chinese companies.
Unfair Government Influence
The paper says concerns also remain about the close partnership between state-owned enterprises and government agencies, especially in the energy and telecom sectors.
Despite China's willingness to familiarize itself with international procurement practices, government agencies are required to purchase equipment and technology from Chinese-owned companies, the paper says.
European companies are also unhappy about the degree of liberalization of certain sectors, still dominated by state-owned companies.
For example, foreign banks have been penalized by higher capital requirements and new foreign debt regulations, the paper says.
Foreign banks' market share was a mere 1.4% at the end of 2004, down from 2% in 2001, the paper's figures show.
Despite these shortcomings, 86% of the 700 European companies represented by the European Union Chamber of Commerce in China remain optimistic about investing in the mainland, the paper says.
Looking forward, the chamber hopes to improve dialogue with the Chinese counterparts and become an "established reference point in drafting policy directives," the paper said.
First steps could involve the chamber contributing to key pieces of legislation, such as the upcoming Anti-Monopoly Law, the Telecoms Law and the Enterprise Income
Tax Legislation, the paper says.
The restructuring of China's telecommunications industry has been long awaited by foreign investors as a sign the government is ready to issue third-generation mobile phone licenses. According to industry experts, a restructuring plan is to be announced by the end of this year or the beginning of next year.
Meanwhile, the State Council, China's cabinet, is revising a draft of an anti-monopoly law, after the fair trade bureau of the State Administration for Industry and Commerce found some multinational companies, including Microsoft, to be using their stronger business positions to stifle competition.