Survey of foreign companies in China finds pollution a growing problem

The Economic Times , Friday, February 13, 2015
Correspondent :
BEIJING: Foreign companies in China are struggling with growing issues, including a perception that their businesses are less welcome than before.

Such problems have been building in the past year, and they were underscored in survey results released Wednesday by the American Chamber of Commerce in China, which also found for the first time in the survey's 17-year history that most companies were having greater troubles recruiting executives because of air pollution.

Concerns about pollution have been on the rise in recent years among foreigners and Chinese. In the survey, more than half of the respondents said pollution made it more difficult to recruit senior executives to work in China. The top problem for companies trying to attract or retain senior executives, however, was the expectation of being highly compensated for working in China.

The difficulties faced by companies go well beyond human resources. Nearly half the respondents said foreign companies were less welcome in China than before. Almost one-third of the companies said they had no plans to expand investments in China in the coming year, up from 27 per cent last year and 16 per cent in 2013.

The results reflect on-the-ground attitudes among many foreigners here that large Chinese cities have become less hospitable places to live and work, as well as similar perceptions among businesspeople outside the country. The survey included responses from 477 member companies in a wide range of industries. (An additional 48 companies provided partial responses but were not counted.) More than three-quarters of the companies have a presence in Beijing, and many have offices in other major Chinese cities.

Some companies said they would increase investment this year but at a slower rate compared with last year. They cited the top reasons as: expectations of slower growth in China or the existence of faster-growing markets elsewhere; barriers to market access or policies that discriminate against foreign companies; and concerns about an uncertain policy environment.

Nearly 60 per cent of the respondents said they believed foreign companies were being singled out in government investigations, including pricing, and antimonopoly and anticorruption campaigns. On Monday, the US chip maker Qualcomm said it would pay a $975 million fine for violating China's antimonopoly law.

Sixty per cent of the survey respondents said the risk of intellectual property leaks or information technology and data security threats were greater in China than in other geographic areas where the companies operated. More than 80 per cent said their companies were suffering negative impacts from China's expansive system of Internet censorship and blocking, commonly called the Great Firewall.

China's efforts to block access to many websites have grown notably since the chamber conducted its survey. Since December, China has blocked applications that allow Internet users to download Gmail messages and also many brands of virtual private network, or VPN, software that allows users to leap over the Great Firewall and get to blocked sites like Google, Facebook and Twitter.

Duncan Clark, a technology investor and business consultant in Beijing, said the survey's results seemed to be grimmer every year. He noted that US technology companies seemed to be facing a particularly difficult environment since the Edward Snowden leaks and that resentment in China of the review process on foreign investment in the United States and other market-entry blocks to Chinese companies continued to corrode the countries' relationship.

"Once national security is invoked, and also now 'Internet sovereignty,' it is hard for cooler heads to prevail," Clark said.

The report's executive summary said that companies continue to see growth opportunities but that "challenges in China are on the rise, with a significant uptick in the number of companies reporting that the quality of China's investment environment is deteriorating."

The report recommended that policymakers in Washington and Beijing continue to pursue a bilateral investment treaty, which some US executives say they hope will help remove significant barriers to the Chinese market.

The report did note some positive developments, like the fact that corruption was no longer listed by many companies as one of their top five business challenges. (In 2013, corruption ranked No. 4.) Since taking power in late 2012, Xi Jinping, China's president and Communist Party leader, has overseen a broad anticorruption campaign that is also focused on purges of his political enemies.

For the third year in a row, companies cited labor costs as their greatest challenge, followed by inconsistent regulations or unclear laws. Ranked third in the list of challenges for a fourth year was a shortage of qualified employees.

Despite all the hurdles, 67 per cent of companies said they were "profitable" and 6 per cent said they were "very profitable." These numbers have roughly held steady since 2012.

"Much work lies ahead for all of us in 2015 and beyond," wrote James Zimmerman, the chairman of the chamber, "as the Chinese economy continues to mature, and the government implements and enforces a host of new laws that have been in the pipeline for years."

 
SOURCE : HTTP://ECONOMICTIMES.INDIATIMES.COM/NEWS/INTERNATIONAL/WORLD-NEWS/SURVEY-OF-FOREIGN-COMPANIES-IN-CHINA-FINDS-POLLUTION-A-GROWING-PROBLEM/ARTICLESHOW/46213557.CMS?PRTPAGE=1
 


Back to pevious page



The NetworkAbout Us  |  Our Partners  |  Concepts   
Resources :  Databases  |  Publications  |  Media Guide  |  Suggested Links
Happenings :  News  |  Events  |  Opinion Polls  |  Case Studies
Contact :  Guest Book  |  FAQs |  Email Us