Sept. 4 – The European Chamber of Commerce in China (EUCCC) has released their yearly position paper, this time taking a fairly critical stance on China’s progress on World Trade Organization reforms, citing the raising of trade barriers and the squeezing out foreign competitors from domestic markets.

The paper detailed several areas of concern:

Market Access
Mainland Chinese auto manufacturers are permitted to purchase European Union  auto manufacturers, but European Union manufacturers are limited to a 50-50 joint ventures in China.

Foreign operators of computer reservation systems for airlines and travel agencies are still banned. Moreover, foreign businesses are prohibited from operating in the mainland’s tourism sector.

Business registration regulations require that foreign investors only use government-owned certification agencies, more so in Shanghai, adding another level of expense and hindering FDI.

Transparency
The Ministry of Commerce did not provide enough evidence to explain why it rejected the Coca-Cola-Huiyuan deal.

China holds foreign investors to higher levels of standards in implementing environmental protection and labor laws.

IPR
Confidential information about applications goes beyond what is required for IP certification and is often leaked to Chinese competitors. Information leakage results in European Union businesses less likely to direct R&D operations to China, thus depressing the growth of local ingenuity.

“The reform process has to be restarted, said EUCCC President Joerg Wutte. “This is an ideal moment for China to adopt a bolder cycle of reforms, a move that would ensure that it maximizes its growth potential for the next five to ten years.”

Chinese Premier Wen Jiabao already told German Chancellor Angela Merkel in June that China would create a level playing field for foreign companies and would not take measures to discriminate against them and their products.

A copy of the paper’s executive summary can be found here. Dezan Shira & Associates managing partner for China, Alberto Vettoretti, is the chairman of the EUCCC Pearl River Delta Chapter and may be emailed at alberto@dezshira.com for comments on this article or insights into China’s FDI environment.