THERE HAS been a sharp rise in the number of European firms in China that believe they are being treated unfairly by the Beijing government, according to a report by the European Chamber of Commerce in China released this week.
The chamber said 43 per cent of 598 European firms surveyed see Beijing as discriminating against foreign businesses, up from 33 per cent in the same survey last year. And more worrying still is that 46 per cent expect discrimination to get worse, up from 36 per cent last year.
“This backward trend confirms the overall sentiment of frustration amongst the foreign business community caused by the perception that market reforms have stalled in many areas,” the report said.
“European companies are still heavily restricted in their investment possibilities in China. When it comes to strategic investments in particular, European investors continue to be heavily constrained in areas ranging from telecom services, to insurance, construction and the automotive industry,” it said.
EU chamber president Davide Cucino called for an end to all obstacles to a “level playing field”.
He praised China’s key role in helping to manage the global impact of the economic crisis and said many European businesses have identified China as a key source of future growth.
“This optimistic view of China’s current and future market potential is diluted by a growing frustration amongst the business community,” he said. “Companies across most industries are concerned that an increasing number of policies could be applied unequally, potentially leaving foreign-invested companies on the side.”
The EU report is the latest complaint about Beijing’s failure to live up to its free trade promises, and comes after a similar broadside in the US chamber’s report last month, which said China’s protectionism had worsened since the crisis and firms were being hurt by its technology policies.
China’s remarkable economic expansion has been built on its manufacturing industries, but now it is trying to move up the value chain by expanding its IT and clean-tech industries.
While Beijing has promised to treat foreign and domestic companies equally, and Wen Jiabao, the prime minister, even apologised last year for failures in public policy protecting foreign firms, Chinese producers still enjoy subsidies and other forms of preferential treatment in such areas as public procurement.
However, despite the frustrations, China remains a major draw for European companies.
