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China: Still an Attractive Place to Do Business?
12:27 PM MST | January 7, 2011 | By IAN YOUNG
Chinese vice premier Li Keqiang launched a charm offensive this week, aimed at reassuring European industrialists that China remains an attractive investment location where overseas firms’ intellectual property (IP) is safe. His intention is to counter growing concerns among multinationals, including leading chemical firms that the business climate in China is deteriorating. They complain that Chinese firms receive preferential treatment over their overseas counterparts when bidding for government contracts, and that China’s technology-transfer rules put non-Chinese firms at a disadvantage.
Li, who is expected to succeed Wen Jiabao as China’s premier in a few years, arrived in Germany yesterday as part of a European tour that also takes in Spain and the U.K. The China Daily ran an article by Li yesterday to coincide with the trip, in which he pledged that China “will continue to improve foreign business-related laws, regulations, and policies, and give protection to intellectual-property rights in order to provide a level playing field and a stable, orderly, transparent, and predictable market environment for all players.”
Li provided similar assurances in an address to a gathering of German industry bosses and government officials in Berlin last night. He promised to give “foreign companies the same treatment as domestic companies.”
Overseas chemical executives will welcome Li’s comments, particularly about IP protection, but they need convincing that his promises will translate into action. China already has a sophisticated set of business and IP laws, but overseas executives say that the regulations are not enforced rigorously enough at the local level, leaving foreign companies’ products and technologies vulnerable. It is local and regional authorities, rather than central government, that discriminate against multinationals when awarding contracts, they add.
Time will tell whether this week’s comments by China’s future premier trickle down to the lower echelons of government and result in a real change in the enforcement of policy.