“Tempt” the Chinese market, which is difficult for foreign companies to navigate

Visitors will walk the Bund in Shanghai, China, on Friday, February 12, 2021.

Qilai Shen | Bloomberg | Getty Images

Beijing — Foreign companies are trying to maintain a favorable opportunity in China, even as new regulations and pandemics make international operations difficult.

As these businesses See crackdowns on domestic tech giants, The Chinese government continues to promote the world’s second-largest economy as an opening to foreign capital.

In the past few weeks, the municipalities of Beijing and Shenzhen have announced new benefits of foreign capital in special development areas, following the municipalities of Hainan Province, an island-wide state that is becoming a free trade area. Similar business-friendly policies have been deployed in the past, with mixed results.

“The main difference is that it’s much more targeted than it used to be,” said Adam Dunnett, Secretary-General of the EU Chamber of Commerce in China.

“Now you have to show that you really have something that China wants, or you don’t feel that China is a competitor to its own interests and needs,” he said.

Chinese authorities have launched the latest five-year development plan this year.including Ambitious goals for technological progress Beijing too in the face of rising pressure from the U.S. Build economic reliance on domestic consumption, not exports..

“In our view, some companies will be kicked out of the market,” Danette said. “They will fight as much as they can. Others can offer something, the market is there and they are willing to offer it because it is good and they try to keep it as much as possible And others, frankly, are in areas that are not considered sensitive and will work on their own with relatively little interference. “

Regarding the overall operating environment, leaders of business interest groups in China’s America and Europe said Members have not made significant progress on the demand for more equal access within the country during the Trump era... A paper released Thursday by the EU Chamber of Commerce in China said that government procurement policies in particular still favor local companies over foreign companies.

Beijing’s regulatory crackdown has not helped emotions. In July, Chinese authorities ordered a ride-hailing app Didi NS Suspend new user registration A few days later That New York IPO, And told the tutoring company after school to shorten business hours.Companies from Tal education NS Tencent I’ve seen stocks plummet.

“Recently, crackdowns have been taking place across the sector in a completely ununderstood or unpredictable way,” said Greg Gilligan, chairman of the American Chamber of Commerce in Beijing. “Of course, companies need stability and predictability.”

Another pressing challenge for businesses, according to Gilligan, is the approval of visas for executives, their spouses and children. “These restrictive travel policies have a direct negative impact on foreign investment decisions.”

At a press conference this month, China’s National Economic Planning Agency acknowledged this particular investment stumbling block in encouraging foreign direct investment. There was no mention of support for employee transfers, but rather a general statement about relaxing restrictions on foreign capital.

Read more about China from CNBC Pro

Rapid growth to become the world’s second largest economy Relied heavily on foreign investment.. However, foreign companies have long been dissatisfied with the need to transfer their own technology to do business domestically. Chinese authorities have also banned foreign companies from doing business in delicate industries and forced joint ventures with local players.

The Chinese government has lifted many of these restrictions in recent years. Especially in finance And the automotive sector.

Joerg Wuttke, chairman of the EU Chamber of Commerce in China, said in a phone call with reporters that Chinese authorities have welcomed more European manufacturing in the last two years.

“They don’t mind having [a] “Foreigners supply it,” he said, “as long as they are in the Great Wall.”

Slice of opportunity

Local governments are also relaxing control in a targeted manner.

Liu Miei, Deputy Director of the “Two Zones”, said the “Two Zones” policy designation developed last year in the Beijing capital lifted local restrictions on the complete foreign ownership of aircraft maintenance projects. .. Think tank center for China and globalization in early September.

“Two Zones” halved the amount of assets needed by the new foreign investment company’s parent company to $ 200 million, making it the only region in the country to allow foreign investment in audiovisual production. I added that there is.

In early September, the central government announced that the Qianhai Free Trade Area, which connects Shenzhen and Hong Kong, would expand eight-fold to 120.56 square kilometers (46.5 square miles). The expansion of the financial hub, which is already home to UBS and HSBC, is due to the mainland’s increased control of Hong Kong, the global financial center.

Klaus Zenkel, general manager of Imedco Technology (Shenzhen) and vice president of the EU Chamber of Commerce in southern China, is optimistic about Maehai’s plans, including giving the district a high level of administrative autonomy. Said that.

It is not yet clear how well such a plan will be implemented. Regarding the state of the southern island of Hainan, where authorities are accelerating the announcement of tax incentives and other business-friendly policies this year, these changes are not enough for foreign companies to come soon, Hong Kong said. General Manager Chen Jie said the base developer Keyestone Group.

Mr Chen said most non-consumer brands will first monitor how other companies already operating on the island are paying fares under the new policy. The company is building a Hello Kitty theme park in Hainan and plans to open it in 2024.

New legislation requires higher compliance

“Tempt” the Chinese market, which is difficult for foreign companies to navigate

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