Calls to protect domestic brands against the onslaught of foreign goods have swamped Beijing in recent months, locking the government in a dilemma. While the government is keen to promote local brands, it does not want to jeopardise its application to join the World Trade Organisation (WTO) by being seen as protectionist. The calls come as local brands lose ground to foreign brands produced by Sino-foreign joint ventures. They have taken a jingoistic turn in some quarters which see the dominance of foreign brands as an economic invasion of China and want tighter controls on overseas investment. But Beijing has made clear it will not slow down foreign investment to protect domestic industry, although ministries in charge of trade and development and economic think-tanks are mapping out plans to promote China's own prestige brands. It is believed the issue will be discussed by top leaders this month at the northern seaside resort of Beidaihe. Until now, Beijing has not come up with a coherent strategy to deal with the conundrum, although piece-meal plans to promote established brands in different industries have been proposed. The most eye-catching is a report by the Chinese General Association of Light Industry (CGALI) to the State Council, urging the government to protect 10 local breweries against the flood of foreign beer into China. CGALI has chosen Tsingtao Brewery, Guangdong's Zhujiang Brewery, Beijing's Yanjing Beer Group and another seven provincial brands with an annual production above 150,000 tonnes. Singling out brands is one thing, how to support them is another. Analysts say there is no way the country can restrict foreign investment overtly to protect domestic industry, as its WTO application is being considered. Lagging state enterprises are seeing their market shares eroding by the year as Sino-foreign joint ventures produce better and more fashionable goods. A CGALI planning and development official said: 'We have to try to keep a balance. On one hand, we have to support our own brand names and resist foreign dominance. On the other, we need foreign investment to reform the state enterprises. 'When the two principles clash, we have to deal with it case by case.' The proposals to protect the beer industry are a good example. The CGALI report suggests an easier credit policy towards selected breweries and urges the government to be more lenient in approving their fixed-asset investments. 'Many domestic enterprises have no choice but to set up joint ventures with foreign investors because the cost of borrowing is so high,' the official said. He said the government would gradually scrap the preferential treatment given to joint ventures and create a level-playing field for domestic enterprises. But the traditional means of support given to the state sector, direct injection from the government, is unlikely. It is also doubtful whether more working loans can relieve the debt-ridden breweries. The CGALI official said: 'The days of administrative capital injection are gone. But there are still many channels for the government to invest in these breweries.' The high-profile recommendations made by the association are a unique example. It has only made piece-meal recommendations in other industries. It is paying extra attention to the four industries threatened by foreign dominance - food and beverages, electrical appliances, daily chemical products and paper industries. The debate over protecting national industries came to a head this year because of the prominence of foreign brands. On the surface, the influence of foreign brands may seem pervasive, but is it in reality? A research director at the State Information Centre, Qin Hai , said the problem had not reached an alarming level in terms of the percentage of market share, but it was serious in terms of the value of industrial output. 'The economies of scale and efficiency inherent in the operations of multinational corporations far outweigh those of China,' he said. 'This has given the multinational corporations a leading position in the country, which may present a serious problem to China.' Mr Qin expected policies would only be ironed out during a national economic meeting in November. But even if the central government managed to map out a strategy, its implementation would undoubtedly meet resistance at local levels, which always have a large appetite for foreign investment. China's carbonated drinks market is now dominated by Coca-Cola and Pepsi-Cola, which have more than 50 per cent of the market and have already formed joint ventures with six of the eight most prestigious soft drinks manufacturers in China. In other sectors, such as the overall beverage market, electrical appliances, cosmetics and personal care products, local brands maintain a dominant role. An official at the Household Electric Appliances Association said: 'We are not really worried about the penetration of foreign brands because they only take up a very small market share.' She said local brands accounted for more than 90 per cent of the washing machine and refrigerator markets and more than 80 per cent of air conditioner sales. China Securities quoted a survey by the State Statistical Bureau as saying local brands accounted for 70 per cent of colour TV sales in May. But the open-door policy is forcing many state enterprises and central authorities to deal with a pressing problem: competition.