European firms urge China to play fair

PUBLISHED : Friday, 07 September, 2012, 12:00am
UPDATED : Friday, 07 September, 2012, 3:29am

A European business group has complained that the investment environment in some Chinese industries is deteriorating.

The European Union Chamber of Commerce urged Beijing to allow greater market access to foreign investors and abolish unfair policies that favour the country's state-owned enterprises.

In its annual position paper on China released yesterday, the chamber outlined 10 areas where it said the business environment worsened last year, including logistics, public procurement, vehicles and private equity.

In the vehicle sector, it said China had not included any foreign brands in its selection of official cars. In logistics, domestic express delivery services for letters had been added to the prohibited category in the Foreign Investment Catalogue released in December, the industry group said.

It said foreign companies had benefited little from public procurement despite a "minor improvement" in the past year. They have been excluded from most of the country's infrastructure and public works projects, the paper said.

The chamber estimated the scope of government procurement open to foreign firms covered only 12 per cent - "a tiny fraction" - of the market, which was likely worth about €1.05 trillion (HK$10.2 trillion) last year. The majority of the business had been granted to state-owned enterprises and financed with public money, it said.

"Whether China will overcome its many vested interests to increase market access in key sectors is the question at the heart of the EU-China relationship," the paper said.