EuroBiz magazine is the internal journal of the European Union Chamber of Commerce in China, published monthly for Chamber members by SinoMedia Ltd. Distributed to over 20,000 China-based company decision-makers.

President’s Foreword
Interesting times

Dear readers,
As the Chinese proverb has it, “May you live in interesting times.” It is meant as a curse, and just now, with the Olympics just weeks away, we have in fact been living in interesting times. The recently fashionable fear of a post-Games economic slowdown has rightly been played down by economists. But new worries focus on how the authorities will handle possible protests before and during the Games, and on collateral damage from measures taken to increase security.

The word “boycott” has also been much heard recently, not for the first time in relation to an Olympic Games. Yet the risk of a boycott seems extremely low to me. True, popular calls in China for a boycott of French products, following the raucous torch relay in Paris, could have sparked a wider backlash against Chinese products and China. An escalation of mutual recrimination has at times appeared possible. But China’s leadership has been quick to discourage such sentiments, seeing not only the risk to a successful Olympics, but also to China’s long-term interest in trading and investing overseas, and in building the reputation of Chinese products.

The idea of nations punishing each other through boycotting each other’s goods strikes me as highly problematic. Is a VW or a Peugeot produced in China less Chinese than a Geely or a Chery, when European car manufacturers in China source more local content than their domestic competitors? And whose interests are served by not buying goods from a store employing a mainly Chinese workforce and selling mainly Chinese goods?

Moreover, boycotts provoke boycotts, workers and consumers see their interests damaged, and I would fully agree with EU Trade Commissioner Peter Mandelson that “it is not possible to see how they would help”. After only brief hesitation, leaders in Europe as well as in China seem to have recognised this and assured each other that boycotts are not on the cards. Good.

The European Chamber wrote a letter to the Chinese Foreign Ministry after multipleentry visas to China became virtually unobtainable in March. We said that the new visa rules were unclear and have never been published, resulting in a lack of transparency.

The Chamber warned of negative repercussions for business, especially in a time when global trade is slowing down. China, we argued, should maintain its long-established openness in permitting foreign business people access to China. The Chinese Foreign Ministry responded to my letter, explaining that visa application procedures have been temporarily strengthened – we understand, until October 2008 - to enhance security during the Olympics. They assured me that China will neither suspend the express visa service, nor stop issuing multi-entry visas to applicants who fulfil visa requirements.

While it is clear that rules are being applied with much greater vigour than usual, I am encouraged by the response. In the coming days, I hope that carefully prepared visa applications will be processed more efficiently.

We are also in regular contact with the Beijing authorities concerning the long-awaited announcement of detailed travel and transport restrictions during the Games. We are pressing the case that proper consideration needs to be given to the continued functioning of the economy, including production and distribution of goods.

Interesting times indeed. I feel privileged, not cursed, to live in them.

Joerg Wuttke
President
European Union Chamber of Commerce in China

Download EuroBiz Magazine, June 2008

PDF format, 9.8MB, 86Pages

Cover Story: Win-Win?
Joint ventures may be on the verge of a comeback
By James Roy

The pitfalls of the Sino-foreign joint venture in China are well documented. For many foreign business people in China, the phrase conjures up all manner of frightening images, from disregarded contracts and foot-dragging partners to stolen trademarks, embezzled funds and bitter lawsuits.

However, since more industries became open to 100 percent foreign ownership in the late 1990s, it has become an accepted truth for many that investing through a wholly foreign-owned entity, or WFOE (pronounced “woofie”), is preferable in any sector in which foreign direct investment (FDI) is not restricted. The numbers show a clear trend: Utilised FDI has declined steadily over the last 10 years – roughly since restrictions on many sectors were removed – while so-called “organic” investment through WFOEs has soared (see graphs).

There are many reasons why WFOEs are widely preferred. They generally take less time, effort and money to set up, and managing a relationship with a partner quickly complicates things, particularly when there are cultural differences between the two sides. Plus, if a business structured as a WFOE does fail, “you don’t need to worry about your partner suing you for negligence or bad faith,” says Richard Grams, a partner at the Guangzhou office of the law firm Stephenson Harwood & Lo. ...

Visit The European Union Chamber of Commerce in China Official Website

The Chamber was formed with the support of the EU Delegation in Beijing on 19th October 2000. It is a non-profit membership fee-based organisation with offices in Beijing, Shanghai and Nanjing, Guangzhou, Tianjin and Chengdu.

Today, the Chamber is the leading exponent of European business interests in China creating a continuously growing business forum. It comprises of over1090 members, from global companies to small-medium enterprises. Its mission is to serve member companies by being the Voice of European Business in China.

It is built around a core of some 30 Working Groups,  which meet regularly to discuss business issues in their respective industries. The Working Groups contribute to an annual Position Paper on Business in China, which the Chamber presents to the Chinese and European governments.

The Chamber is managed by a National Executive Committee made up of representatives from various European Member States. The Supervisory Board and the Advisory Council provide strategic input for the National Executive Committee. Each Chapter is managed at the local level by a Local Board which reports directly to the National Executive Committee.

Executive Committee members, the Supervisory Board and Local Boards are elected at the Spring Annual General Meeting.

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