Bullish for More

The European Union Chamber of Commerce says its members are overall optimistic about doing business in China, but want a more level playing field.

That's according to their European Chamber Business Confidence Survey 2007 in which they questioned over 200 enterprises, large, medium and small.

The main message, according to the chamber president Joerg Wuttke, was that European companies are doing well in China, but they could be doing better.

He stressed the enterprises here are not producing goods and services for export, but for the China market. This explained why many had a strong focus on research and development.

"Investment is expanding," Wuttke explained. "It's bullish with companies expanding beyond first tier cities like Beijing, Shanghai and Guangzhou to second and third tier cities."

While more companies are profitable, the amount was less than last year.

He then went on to describe the challenges European companies are facing.

One major problem was recruiting and retaining staff, leading to higher costs. Wuttke said in the case of engineers, while there are 350,000 graduates in this field every year, not many can speak European languages. On top of that, Chinese universities don't offer much practical training so many fresh grads don't have the work experience necessary to get hired. As a result the ones that have these two skills can pick and choose where they want to work.

Another was that more than half of the companies surveyed were negative about the implementation of the World Trade Organization (WTO) pact. They claim they are still waiting for a level playing field to happen. Another irritant is the lack of transparency on the part of the Chinese government. This makes it difficult for these enterprises to plan their strategy or even be clear about regulations that sometimes change without reason.

Companies were also concerned about intellectual property rights (IPR), claiming the business environment hasn't improved much in this area. Wuttke says the EU Chamber is hopeful for a better legal system that specializes in things like copyright and environmental laws and higher penalties are enforced.

On the whole, Wuttke says European enterprises are seeing stiffer competition from Chinese ones, as the latter are starting to produce goods similar in standard to European ones. While the EU companies may not like this trend, it's benefiting the consumer in the end. Which is why the EU Chamber is pushing for more industry sectors to open up as well as revaluating the renminbi.

It looks like Wuttke is lobbying both Chinese and European officials hard. But with the slow pace China moves on trade policies, he may have to be a bit more patient to see his wish list of things to come true.