Home  Contact Us
  Follow Us On:
 
Search:
Advertising Advertising Free Newsletter Free E-Newsletter
Magazine
  
      2024       2023       2022       2021       2020       2019       2018       2017       2016       2015       2014       2013       2012       2011       2010       2009       2008

DIALOGUE: European Business in China, Business Confidence Survey Report, Interview with Mr. Adam Dunnett and Mr. Christoph Schrempp
Share to

European Business in China

Business Confidence Survey Report

Interview with Mr. Adam Dunnett and Mr. Christoph Schrempp,

Secretary General of the European Chamber of Commerce in China, and

Chairman of the Tianjin Chapter European Chamber of Commerce

By Richard J. Cook


CoverAt the Summer Davos, Prime Minister Li Keqing rightly reminded those present of China's significant economic importance in being amongst the top three destinations for FDI. Furthermore, despite increasing economic attention being sprung onto other emerging economies such as Vietnam, Thailand and Indonesia, China is still foreseen as the paramount destination for international trade and is still a major driving force for developing existing and new market sectors.


However, that being said, it is no secret that China's economic slowdown is starting to pose a significant challenge to the international economy. As for the European companies present in China, these concerns have been echoed off late, raising new questions and strategies in how to overcome the increasingly adverse business environment here.


This year's Business Confidence Survey provides a unique perspective into the real feelings and real concerns of companies operating in China. This developing dialogue is an important level of transparency from the established businesses here, but presents a coordinated effort to raise concerns and put forth recommendations to the authorities. In short, the major factors highlighted by the latest Business Confidence Survey are China's economic realignment and transition, business pessimism, bureaucratic paradoxes, establishment of a level playing field and looking ahead to the 13th Five Year Plan.


In order to gain further understanding of these factors we recently spoke to Mr. Adam Dunnett, Secretary General of the European Chamber of Commerce in China and Mr. Christoph Schrempp, Chairman of the Tianjin Chapter European Chamber of Commerce.


Economic deceleration as well as economic realignment related to the "€œEconomy in Transition Policy"€ is topping the headlines for China at the moment. How are these major issues affecting Sino-European trade and business performances off late? How would you describe the adaptation process of many companies involved in the EU Chamber and what are your concerns related to this issue?


Mr. Christoph Schrempp: One of the major issues is this economic rebalancing policy and we are keeping a close eye on many developments that are taking place. Of course maintaining stable growth is the key and some of our findings shed some light on this issue. However, there are of course concerns, again highlighted in our survey and it's important that our dialogue with lawmakers is clear and detailed so all involved understand clearly what is taking place. If transparency is hazed there is the possibility that confidence can become undermined and what we may experience then is growth rates, which are not tangible. Furthermore, the companies are that much more unwilling to invest so much in China, some companies are starting to look at cost cutting as well as decreasing R&D activities. At the end of the day this policy counts a great deal and how it is implemented needs to be observed closely to provide the right information to companies here.

6What is the key to overcoming the recent rise in pessimism about doing business in China?


Mr. Adam Dunnett: To put it simply, good news. I talked today about the Comprehensive Agreement on Investment, a major focus point in EU-China negotiations, we hope that this can be concluded soon. Ambitious, but it would be a very positive sign. However, it doesn't have to be just that, it could be the foreign investment model becoming clearer or a real cutting down of the market interference acts, facilitating a level playing field as Chinese companies get in the EU. These are just some of the discussed topics brought forward. China signing up to the WTO GPA like it said it would, that would be a real big success. It's taking a lot of the things on the table and grinding out something concrete and showing us that China is not simply kicking the can down the road.


Considering European investment in China is down by around 9%, can we expect to see an investment revival anytime soon for the outlook?


Mr. Adam Dunnett: In order to re-stimulate investment companies, potential new investors need a wider understanding of the initiatives and this is the key. If we are able to clearly deliver our points and issues to the other organizations, bodies and advisors in which they [the policy makers] are seeking council from, we will have a much better chance of success.

1
Which sectors in Tianjin can we expect to see more from in the coming months?


Mr. Christoph Schrempp: I think we have in Tianjin the good potential for further development as one of the strong pillars, for example the aviation sector, from where we still see very strong growth and not only in Tianjin but worldwide. Thus, the aviation sector is one of the segments where we can expect to see further major investments to maintain stable and continuous growth. Tianjin is in a special position considering the set up [infrastructure] of the TEDA zone and the developing areas around the Tianjin-Binhai International airport. These factors can attract more companies in which we can add a new perspective and further build cooperation with in the future.


Of course one of the other factors is the capacity for redevelopment of the petrol-chemical industry, which we expect to see significant steps being taken there. Of course another major pillar for growth is the high-tech industry which has grown considerably and is still seeing copious amounts of investment interest and that's all down to the strategic development that Tianjin has fostered.


With the initiation of the Beijing-Tianjin-Hebei Economic Belt policy also known as Jing-Jin-Ji, what opportunities are available for foreign investment and developments here?


Mr. Christoph Schrempp: As we've seen from the survey around 84% of businesses polled suggest a positive outlook of the Jing-Jin-Ji belt initiative, which is understandable. Let's be fair, there is a tremendous resource pool, tremendous innovative power, a number of major universities are inside of this proposed area, so there is access to a highly educated labour and R&D force, an incredible asset and highly desirable in all sectors. The infrastructure of the region in itself is very well coordinated, with new developments under construction as we speak. The existing airports, the new Beijing international airport under construction as well as the port here in Tianjin means Tianjin as a part of the Jing-Jin-Ji initiative is a highly desirable geo-economic position. The scale of this outmatches many other regions on a global scale. In addition, the expectation is that these little nitty-gritty barriers between Beijing, Tianjin and Hebei will disappear and this will create an economic epicenter bigger than most European states. This will make up between 8%-8.5% of China's GDP and whilst holding a fragment of China's population as it stands, this ultimately displays an outperformance, incredible really.

3With the New Silk Road Economic Belt widely being prioritized by Beijing and Brussels, can you give us a run down on what opportunities are available for European investment and development here? Has the New Silk Road Economic Belt begun to make a significant impact on Sino-European business?


Mr. Adam Dunnett: We fully appreciate the political importance of this program having spoken to a number of colleagues and companies around the world, all to which are keenly interested in the developments here. This ties with the new AIIB which will be closely tied to this new initiative. The commercial opportunities in the energy sector and infrastructure sector are still not entirely clear at this point in time, so we don't yet have a strong understanding where the investments will be taking place or what companies will be making the investments. Having said that, we are keeping close tabs on it, we are interested in it, watching it and look forward to seeing some progress that will allow for our partners to become involved.


Out of your extensive experience, what has been the greatest challenge of doing business in China?


Mr. Christoph Schrempp: The greatest challenge, still ongoing, is the legal uncertainty and quickly changing policies. A good example is the VAT regulations that have recently been changed within an announcement of only 6 weeks and this can have an impact on smaller companies. This short-term announcement really gives SMEs big challenges. Other factors such as this can make companies think - is this the right place? This is definitely one of the biggest points, besides the issue of the level playing field, which fuels uncertainty.


Mr. Adam Dunnett: I totally agree. The unpredictability is a critical factor. Many of our companies require time for adaptability and moreover they need to understand it. Vagueness of these regulations is also an issue, clearly defined regulations are the key to claiming uncertainty. Another major concern is the value of a contract in China. In China the value of a contract doesn't share the same value as a contract in Europe or elsewhere. This issue has been heard time and time again. A part of this is cultural, however this challenge is something that people are talking about.


---END---

    Subscription    |     Advertising    |     Contact Us    |
Address: Magnetic Plaza, Building A4, 6th Floor, Binshui Xi Dao.
Nankai District. 300381 TIANJIN. PR CHINA
Tel: +86 22 23917700
E-mail: webmaster@businesstianjin.com
Copyright 2024 BusinessTianjin.com. All rights reserved.