Investment environment going worse?

Many Western media have grumbled about the alleged deterioration of China’s investment environment. They say discrimination toward foreign investors is growing, and foreign enterprises are having a hard time staying in business.

But entrepreneurs and economists from around the world are divided on whether this deterioration is real.

Take complaints seriously

Jason Ding, vice president, Roland Berger Strategy Consultants (Greater China)

In the 2010 Business Confidence Report conducted for the European Chamber of Commerce in China, we found 48 percent of interviewees said local trade protection and a dislike of foreign investment were the top non-market risks. This was at a time when most people worried about the global economy, Chinese economy, competitiveness and rising labor costs.

Thirty-nine percent of our interviewees said they were troubled by how unevenly the government applies its laws and regulations. They also complained about overly complex registration guidelines, intellectual property protection and obtaining visas and procedures for working permits.

We should be cautious with these complaints. Managing leaders usually do not raise such concerns arbitrarily. These complaints are not a “conspiracy” to break China – I believe these worries are their true feelings. It shows they are targeting long-term business strategies and expecting our system to improve: they are not in it for short-term profits.

Opening up is a policy to which China has been committed for three decades. Its investment environment has been improving over the years, especially in business law and intellectual property protection.

All these seemed to be going well during the first half of this year when the central government released its document stating how it would further improve its use of foreign capital.

The Guidelines for Foreign Investment published by the Ministry of Commerce have been revised four times since they were first published in the early 1980s. Each step has further opened investment sectors. China has opened nearly 100 of the sectors listed by the World Trade Organization – far more than the average of 54 sectors seen in most developing countries.

In 1998, the central government banned all direct-sales businesses. But considering the big domestic direct selling giants and foreign players, it lifted the ban only a few years later.