European Businesses See China Protectionism ‘Specter’ Go back »

2009-09-02 | Beijing, Shanghai, Southwest China, Nanjing, Shenyang, Tianjin, South China

European Businesses See China Protectionism ‘Specter’
Bloomberg, 2nd September 2009

European businesses urged China to speed the opening of its markets and pull back from protectionism, saying they are “increasingly concerned” at local companies being favored over foreign-invested counterparts.

Foreign firms are impeded by restricted market access, a lack of legal and political transparency and violations of intellectual property rights, the European Union Chamber of Commerce in China said in its “European Business in China Position Paper,” published in Beijing today.

“The specter of protectionism has also appeared, and European companies are increasingly concerned by the tendency for local companies to be favored over foreign- invested ones,” the chamber said.

Opening markets and promoting services to stimulate domestic consumption would aid efforts to boost growth in the world’s third-biggest economy, the chamber said. Local governments are required to buy Chinese products for projects under the nation’s 4 trillion yuan ($585 billion) stimulus plan.

The chamber cited barriers for foreign companies in industries from wind power to automobiles.

“Over the past year the European Chamber has noted a gradual slowdown -- and in some cases a partial reversal -- in the economic opening up process,” said Joerg Wuttke, the chamber’s Beijing-based president. “The future growth of China’s market depends on a new round of opening up,” he said.

Wind Power

State-owned enterprises are the “big winners” from China’s stimulus spending while private and European companies are “crowded out” in some areas, Wuttke added.

Overseas companies lost out on 5 billion euros ($7 billion) of wind energy projects under the stimulus plan because bidding criteria made it impossible for them to compete, the chamber said in May.

No foreign wind-turbine maker has won a bid since 2005, it added today. “There is a marked lack of consistency in the application of qualification criteria” for public procurement projects, it said.

General Electric Co., Suzlon Energy Ltd., Gamesa Corp. Tecnologica SA and Vestas Wind Systems A/S were among companies bidding for 25 wind energy projects with generation capacity of 5.25 gigawatts, according to Wuttke.

Chinese Premier Wen Jiabao said on June 25 that the nation didn’t discriminate against foreign enterprises or products.

‘Buy China’

On June 26, the government said in a statement that the so- called “Buy China” policy was not protectionist or a breach of World Trade Organization requirements. Officials also said that products manufactured in China by foreign-invested businesses were treated as domestic products.

The chamber welcomed today the clarifications and hoped that “these definitions will be applied to all public procurement tenders.”

Seven years after joining the WTO, China hasn’t yet met commitments for market access for computer reservation systems, the chamber said.

Madrid-based Amadeus Global Travel Distribution SA, the world’s largest travel-reservation company, attempted to gain access to China’s market without success, the chamber said, adding there is no process for doing so.

Europe’s carmakers can’t establish their own manufacturing facilities in China and must operate via 50/50 joint ventures, it said.

Source: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aEX4DhQLEZ1Y