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Skepticism over WTO Implementations
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Original article: [English]

 

Six years after China entered the World Trade Organization (WTO), the majority of European businesses operating in the mainland say they have yet to be positively impacted.

Most of the 220 respondents in a confidence survey published by the European Union Chamber of Commerce in China last week expressed skepticism about China's ability and willingness to implement WTO regulations.

The survey, conducted online between August 2 and September 14, reveals that only 16% of the respondents feel they have enjoyed positive impacts on their businesses from the accession, while 37% said they have had little or no impact at all. The remaining claimed negative impacts or lack of basis to judge the changes.

When China was accepted into the WTO in December 2001, some of the commitments undertaken by it included providing non-discriminatory treatment to all WTO members; eliminating pricing biases; abandoning price controls as a protectionist policy for domestic industries and services; and, revising laws and putting forth new legislation fully in compliance with the WTO agreement.

The survey reveals that EU businesses see discrimination of foreign firms and unfair competition as one of the top five obstacles to doing business in China. A lack of transparency and inconsistencies of government regulation are also listed among the foremost barriers.

Despite the obstacles, EU businesses are in general optimistic about their future in China. As the Chamber's president Joerg Wuttke says, "EU companies are doing well in an increasingly competitive business environment."

His statement is supported by the survey results, where 61% of the respondents said they are making profits, while the majority of the unprofitable businesses are expecting to make profits in three years. All these are achieved in a regulatory environment they deemed as having “little improvement”.

Although many companies said their profitability in China is not as good as expected, and not as outstanding as compared to counterparts in other countries, 67% of the respondents said they are still committed to new investment plans in the country over the next two years. Only 33% of the respondents said they have plans to move their investments elsewhere in Asia.


Looking ahead, the survey shows that EU companies are expecting the labor cost in China to increase by 5 to 10 percent in the next few years. They are however more concerned over the challenges in recruiting and retaining qualified staff than having cheap labors.

For management personnel, 86% of the respondents think it is more difficult to recruit qualified staff than in Europe; and once recruited, 71% companies say it is more difficult to retain them as compared to in Europe. As a result, the localization of the top management team in China is not taking place as fast as desired.

The survey outcome, jointly developed by the Chamber and Ronald Berger Consultant, will be presented to related Chinese government bureaus and regulatory agencies as well as European businesses, the European Commission, and European Union member governments.

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