Recent fears of an overheating Chinese economy has stifled the plans of some wanting to do business in China’s expanding market.
Further, although the long march to economic and social reform is under way, frustrations remain for foreign businesses wanting to operate within current Chinese regulatory frameworks.
China’s entry into the World Trade Organisations is expediting some of these reforms, but there is still some way to go, according to Australian ambassador to China, Dr Alan Thomas. Dr Thomas said that while the Chinese Government had taken measures to “reign in” some sectors, growth was continuing.
“The Chinese Government believes that it is [overheating] in some sectors,” he said.
“The latest growth figures we have show about a 9.4 per cent growth rate in the first quarter of this year – on a year-on-year basis.
“Many of those that work in China believe that the real growth is closer to 12 or 13 per cent.
“The Government points to the steel sector, concrete, aluminium and real estate as some of the overheating sectors they’ve managed to reign in to smooth out the economic cycles.
“They’ve put in some fairly blunt economic administrative measures.
“These measures appear to be working. A range of production and monetary indicators are slowing.
“I also think the risk of a hard landing is fairly slight and for a number of reasons, the economy is much bigger and competitive and the export sector is much stronger than it was in the mid 1990s when there was a similar slowdown.”
Banking, the legal system and the current regulatory framework also represent issues for those looking to do business in China.
“People get very frustrated by the lack of transparency,” Dr Thomas said.
“The red tape even for a simple thing like registering a company in China still frustrates a lot of small business people. It is not a matter of filling out a form; there are various names the Chinese don’t like, but they don’t tell you what they are.
“You just apply and get rejected and just keep going through like that.
“It can be very frustrating and it costs money and time in having to deal with multiple agencies and seeming duplication.
“People need to go in with their eyes wide open, it is not like setting up a business in New Zealand.”
Further, Dr Thomas said that while some Australian companies had achieved legal decisions in their favour during disputes, many had experienced difficulty in having those decisions enforced.
