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Survey: US Companies 'Harmed' by Chinese Bureaucracy

  • Peter Simpson

Chinese workers set up a signboard for a shop selling American motorcycles in Beijing, April 16, 2011

Chinese workers set up a signboard for a shop selling American motorcycles in Beijing, April 16, 2011

America Chamber of Commerce in China says its members have been suffering from Chinese protectionism in key sectors

In Beijing, the American Chamber of Commerce says U.S. companies operating in China are suffering from protectionism, bureaucracy and corruption. The business group released its annual white paper Tuesday, calling on Beijing to reconsider industrial policies that discrimiate in favor of domestic companies. But, American enterprises are still turning a profit in the world’s second biggest, and still booming economy.

The 2011 annual white paper, published Tuesday says the majority of its members have been suffering from an increase in Chinese protectionism since the 2008 global economic crisis.

The reports says 26 percent of respondents claim Chinese policies favor domestic technology suppliers and bar entrance into other key sectors, such as banking, telecommunications, legal affairs and insurance.

Christian Murk, the American Chamber's president, says American companies are still making money in China, but that the opening up and reform of Chinese markets has slowed in recent years. And, he warns, the levels of bureaucracy, corruption and protectionism are hurting many U.S. ventures in the world’s second biggest economy.

"We asked people what are the challenges of doing business in China and what is difficult about operating in this market. The top five in our current survey were: bureaucracy, management level human resources constraints - that is you can’t find managers with specific skills sets - unclear laws and regulations, inconsistent regulatory interpretations and intellectual property rights infringement," he said. "And, then if you look at the lower ranking concerns, they are corruption, obtaining required licenses, non-management human resources - that is unskilled labor - national protectionism, local protectionism, and difficulty enforcing contract terms."

Murk says the restrictions and poor regulatory environment call into question China’s commitment to its obligations as a World Trade Organization member.

Under WTO rules, China is supposed to develop free and open markets.

Murk says the survey’s results were not all negative.

"We should emphasize that operating conditions are very good for American companies and that is clearly seen in our survey data," he added. "Eighty-five percent reported revenue growth in 2010. Seventy-eight percent said they were profitable or very profitable. Sixty-three percent said margins improved in China over the prior year. Forty one percent said margins in China were better than global margins."

Murk says China's latest five-year plan, announced in February, commits it to further increase market reform.

China’s Ministry of Finance was unavailable to comment Tuesday on the survey, copies of which have been handed to the Chinese government and will be given to U.S. politicians later this week.

Murk says it is time for China to once more accelerate its reform and opening policies - just as it did when it joined the WTO a decade ago, in 2001.

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