AT A NEWS conference last week to launch the EU chamber of commerce’s business confidence survey, the group’s president Davide Cucino appeared exasperated with the way Sino-European relations were going.
The overall picture for European firms in China remained very positive, he said, and premier Wen Jiabao was promising to open up more areas to foreign firms.
“Then we hear the finance ministry last week ordered locals to buy Chinese goods,” said Cucino, who is head of the China operations of the Finmeccanica Group and supervisor of Ansaldo Railways System Technical Service.
During his presentation, the fluent Mandarin speaker twice corrected the translator – this was a man keen to get his organisation’s message across as accurately as possible.
The playing fields are not getting any more level and, while the EU chamber is not in any way a confrontational organisation, you could sense that the regulatory environment was getting tougher.
While companies believe the opportunities are there, increasingly they are facing natural competition from domestic companies, because the market is maturing.
Chamber members are starting to look at Vietnam and even further afield, to other BRICs countries such as Brazil, where there is a warm welcome and where labour costs are lower.
He spoke of irritation among the membership at the way a new social-security tax on foreigners was imposed, retroactively, without any consultation with overseas groups, causing confusion and hardship.
“We have always believed in dialogue,” he said, despairing that there was not enough pressure from the Chinese side to make bilateral issues easier to resolve.
He had just reported how one in five European Union firms would consider shifting investments to other countries.
“If I was a Chinese official,” he said, “I would think this sounds alarming.”
The EU report follows one in March by the American chamber of commerce which mentioned problems such as restrictions on investment in some areas and pressure for foreign companies to hand over technology to Chinese partners.
As long as China’s economy was growing hand over fist and everyone was making money, these complaints didn’t get too much attention.
But against the backdrop of a slowing economy, in a maturing market, there is less wriggle room for European firms to tolerate regulatory hurdles or what they see as anti-competitive rules.
In a downturn, the Chinese economy needs European firms to stay onside.
The pressure is on the Chinese legislators to make good on promises, while European firms, said Cucino, must look “not to the statements, but to the facts”.
