Southern comfort

There is nothing to suggest Harley Seyedin is cautiously optimistic about doing business in Guangzhou. The president of the American Chamber of Commerce in Guangdong is an unambiguous bull.

'Business is great,' he says. 'Our members' biggest challenge seems to be finding an opportunity in the market, rather than overcoming obstacles to get in.'

It is little wonder Mr Seyedin exudes confidence: he presides over the fastest-growing AmCham chapter worldwide. Membership is up to 806 corporations and individuals, from just 260 in January last year. Moreover, three quarters of members who took part in a survey last year say not only are they generally content with the business environment, but they see the Pearl River Delta as their preferred investment destination in China.

Mr Seyedin, a 14-year veteran of Guangzhou, credits a flexible regulatory regime. 'The government's character and capability has changed a lot in the past five years,' he says. 'The leadership is younger, with more international education and experience. Over the past 18 months, we have really felt that officials are reaching out to us. Our members get good access, and sometimes even the governor gets personally involved.'

But aren't there problems? 'We have a handful of cases every year where a member needs help, but it's usually related to investment issues which are easily cleared up with a bit of communication.'

The issue of power shortages brings a slight frown. 'Yes, that is a problem. But it's not like it took anyone by surprise here, and it's not something the local government can do a lot about. It's a national issue, because the central government controls the approval process for investment in energy projects.'

At the end of the day, the situation is manageable, he believes. 'No one is leaving because of it.'

Not every foreign investor is as enthusiastic as the AmCham boss, of course. Bureaucratic entanglements in customs are widely cited as a headache. And almost everyone who spoke recently to the South China Morning Post - off the record - decried the rampant abuse of intellectual property rights by local companies.

Yet there is also widespread recognition of the local authorities' relatively decent track record against counterfeiters.

Procter & Gamble, which commands 40 per cent of the shampoo market in China, has to contend not only with fake bottles but fake delivery trucks and impostor sales agents. However, spokeswoman Yvonne Pei says the company got better co-operation from authorities in Guangzhou than anywhere else. 'The government here acts like a service centre,' she says.

Where problems usually arise is at the lower levels of the chain of command. As in other big Chinese cities, agreement and commitment at the top seldom guarantee enforcement in the district, and although the legal system is improving, the courts are still 'very much a work in progress', according to one foreign observer.

Again, however, such criticism usually softens when placed in a bigger context.

'Guangzhou may not have Hong Kong's judges, but lawyers here are becoming very effective at securing out-of-court settlements with the assistance of the authorities,' the observer said. 'On a practical level, the gap is not as big as people might think.'

As for the city's perceived gap with Shanghai, Mr Seyedin rolls his eyes when the question is asked.

'This is an apples and oranges scenario,' he says. 'You build offices in Beijing and Shanghai, you build production capacity down here. Taiwanese, Japanese and Southeast Asian investors may talk a lot about Shanghai, but they prefer southern China because its regulatory environment is more flexible.'

That flexibility is what attracted Mr Seyedin, who set up the first western-owned power plant in China in 1995.

'The Cantonese are simply easier to do business with,' he says.

'In Shanghai, the regulatory environment is much more developed and therefore it has become rigid. Business has to suit the locality, whereas here the attitude has been that the locality should suit the business.'