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Bureaucracy worries foreign companies in China

By Wang Ke
0 CommentsPrint E-mail, March 23, 2011
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While U.S. companies are performing well in China and most plan to expand operations this year, apprehension about bureaucracy has increased as companies consider the risks to their China operations, according to a survey released on March 22 in Beijing.

The annual 2011 Business Climate Survey conducted by the American Chamber of Commerce in China (AmCham-China) found foreign companies were highly committed to the China market, with a striking 83 percent of 434 companies surveyed planning to increase investment in China operations this year. The figure rose 4 percent from last year.

"The results show that most companies are doing well in China and are achieving growth in revenues and profits," AmCham-China Chairman Ted Dean said. "China is a key market for most of these member companies, and investment remains strong."

The survey showed that 78 percent of firms ranked China among their top three priority locations for investment. The number of companies who ranked China as a "number one priority" rose 4 percent from last year.

"China maintains its position as a top destination for global investment," he told "So, our members are no longer focused on the risk of a ‘double dip' economic downturn following the financial crisis."

AmCham-China Chairman Ted Dean. [By Wang Ke /]

According to the survey, providing goods and services in China for the Chinese market remains the top priority of U.S. companies in China. Contrary to the common notion that foreign companies come to China to take advantage of the cheap labor market and to export to the U.S. and other markets, participants expressed a stronger interest in breaking into the Chinese consumer market and serving the Chinese customer.

However, foreign enterprises complained that bureaucracy and unclear laws and regulations impeded their investment and hiring plans. They are concerned about regulatory practices that favor domestic companies.

As in many other countries, companies in China must obtain licenses to operate. The survey showed that 71 percent believed the licensing process effectively discriminates against foreign companies. They indicated concerns with the transparency of the process, the length of time needed to secure a license, the availability of licenses, and the equal enforcement of rules pertaining to licensing.

"Our members are committed to investing in China and growing with China, but I think China should do more to realize the goal of a fair and transparent regulatory environment," Ted said.

"We believe greater market access, increased transparency, improved [intellectual property right] protection, and a fairer playing field with national treatment will open new opportunities for our members and move China closer to its own goals of a more innovative economy and more balanced economic growth."

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