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Carrie Lee

CHINA'S austerity moves are forcing a restructuring of some Sino-foreign joint ventures, a business consultant says.

   The credit-tightening is straining mainland partners who are unable to contribute their agreed share of investment in the enterprises, said Philip Day, director of The Pacific Rim Consulting Group.

  ''That's of some concern [to foreign partners] . . . they see a need to restructure the joint ventures,'' he said.

  ''There are instances of that occurring,'' he said, adding though that it was not prevalent.

  Mr Day, who is also chairman of the Australian Chamber of Commerce, was commenting yesterday after addressing a forum on critical China issues.

  The forum comprised mainly European and American firms with a presence in Asia.

  Mr Day said companies had generally experienced a slight slowdown since the launch of the economic crackdown and expected a ''bumpy road'' in the coming months.

  But most were positive about the measures, predicting no economic downturn for next year except in the property sector.

  ''They consider it (the austerity plan) a slight correction of economic growth where the control is about to be maintained.''   None had any intention of cutting back China investment, he said.

  ''In fact, we are finding more and more companies seeking opportunities than before,'' said Mr Day, citing their optimism on China's long-term investment environment.

  However, businessmen were also aware of risks ahead, he said.

  One concern was that the economy would not be properly brought under control, he said.

  ''I think the other risk has got to be the disparity between the urban and rural economies,'' said Mr Day.

   Any resulting political unrest would affect the investment environment, he said. ''We have seen emerging isolated instances of that.''   Also, as the economy grew there would be a shortage of labour, especially in high-skill areas such as sales and marketing, accounting and financing, and general management, he said.

  But Mr Day said most companies were not affected by rising labour costs, especially in southern China.

  ''There are many places in China where the cost of workers is still very attractive [from the employer's point of view],'' he said.

  Another concern was the inadequate infrastructure network, which would continue to be a big problem as the economy expanded, he said.

  The recent Sino-US row had also aroused concern among American businessmen, he said.

  Foreign enterprises were also anxious about foreign exchange risks, he said.

  ''Successful companies in China are those able to generate foreign exchange to support operation,'' he said.

  But companies attending the forum showed no sign of worry over the proposed abandoning of preferential taxation terms for overseas investors, he said.

  Neither did they fear patriarch Deng Xiaoping's health would affect the country's economy, he said.



Clampdown puts bite on joint ventures