Opaque Regulations, Weak IPR Protection Discourage China Investment-EU Chamber Go back »

2007-11-22 | All chapters

Opaque Regulations, Weak IPR Protection Discourage China Investment-EU Chamber
Fergus Naughton, AFX, 22nd November 2007

China's weak intellectual property protection, a lack of transparency and inconsistencies in government regulations are still the main barriers to further investment by European companies, according to an annual survey of EU business.

Speaking at the release of the European Union Chamber of Commerce in China's "Business Confidence Survey", Joerg Wuttke, president of the lobbying group, said the overall investment climate in China is not improving.

"European companies are facing the same problems and difficulties as they did last year," Wuttke said, citing responses from over 200 EU businesses operating in China.

"Lack of transparency and inconsistencies in government regulations are the biggest obstacles for doing business in China." The majority of survey respondents were skeptical about China's ability and willingness to implement WTO regulations.

"Many believe that China is actively seeking to avoid WTO regulations, especially in the professional services sector," Wuttke said. "This is bad for business." Citing the recent revision of China's "investment catalog" -- a list of sectors open to foreign investment -- Wuttke stated that China needs to open up and ensure a level playing field.

"This investment catalog is tightening investment," Wuttke said.

"China continues to buy mines globally but is closing up operations (for foreign investors) here while expecting the world to open up," he said.

The EU Chamber president also pointed to China's blockade of foreign oil companies' attempts to set up gas stations, stating that opening of the sector is long overdue.

Wuttke said that cumbersome registration processes, customs procedures and discrimination against foreign companies are also affecting the investing environment.

He said registration procedures and product approval processes are time-consuming, costly and sometimes unnecessary.

"Delays in products coming on the market means that costs go up and at the end of the day the Chinese consumer suffers," he said.

The survey also showed that EU companies are increasingly concerned over IPR protection.

"Trademark violations are still a problem," said Wuttke. "There have been some improvements but patent violations and copyright issues are still bad," he said.

Wuttke said China needs more judges, more courts and stiffer penalties for IPR violators who "get away cheap." "There is a lot of talk and not a lot of walk," he said.

Wuttke observed that the timing of the survey was very important in view of French President Sarkozy's arrival in the capital next week for the EU-China Business Summit.

France will hold the European Union presidency in the second half of next year.

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