European firms say China business ‘more difficult’

Among the litany of complaints for European companies were the uncertain legal environment, higher cost of labor, regulatory headaches and the ‘Great Firewall’ that censors much of the global Internet. Above, the border city of Dandong, in China's northeast Liaoning province. (AFP)
Updated 20 June 2018
0

European firms say China business ‘more difficult’

  • Among the litany of complaints for European companies were the uncertain legal environment, higher cost of labor, regulatory headaches
  • The survey found 48 percent of European firms felt it had become “more difficult” to do business in the past 12 months

BEIJING: European companies complain they still face a difficult business climate in China despite Beijing’s pledges of openness, with about half saying it has become tougher in the past year, according to a survey released Wednesday.
The study comes as President Xi Jinping looks to portray the world’s number two as being at the forefront of the globalization while trade tensions with the United States rise.
“The root of the tension we see today starts with a China that has not opened up and reformed as quickly as it promised in its rhetoric,” said Mats Harborn, president of the European Union Chamber of Commerce in China.
Among the litany of complaints for European companies were the uncertain legal environment, higher cost of labor, regulatory headaches and the “Great Firewall” that censors much of the global Internet.
“As its economy matures, the longstanding inefficiencies in China’s business environment are rendered all the more glaring,” according to the report by the EU chamber.
Harborn told reporters that the “regulatory environment is actually holding the economy back.”
“Time is running out for China to continue its reform process,” Harborn said, noting 2018 must be the year Beijing acts.
Instead Beijing has backtracked in some areas. New cybersecurity regulations make it more costly to jump the firewall, requiring businesses to sign up for expensive and problem-plagued government-approved virtual private networks that allow users to circumvent filters and access the global Internet.
Two-thirds of companies believe that censorship and blocking of certain sites has a negative impact on their business, while only 23 percent say the state-sanctioned VPNs are efficient.
This is the “great contradiction,” said Harborn.
“We have China which claims itself a leader in globalization, talking of the importance of integration, but the cybersecurity law is creating problems.”
The survey found 48 percent of European firms felt it had become “more difficult” to do business in the past 12 months.
And a fifth say they have been victims of forced technology transfers, a practice denounced fiercely by Washington as it carries out a probe on the issue while threatening tariffs in retaliation.
And there is little optimism for the future as nearly half of European businesses believe barriers to business will harden in the coming five years, while a quarter believe they will never witness a “significant opening” of the market.
But progress was reported in some areas.
Some 61 percent of the 532 European companies polled by the chamber said they are “optimistic” about the growth of their sector in the country, compared with 55 percent the previous year.
Just over half of surveyed companies, 51 percent, consider that they are treated “unfavorably” compared to their local competitors, compared to 54 percent last year.


Gulf defense spending ‘to top $110bn by 2023’

Updated 15 February 2019
0

Gulf defense spending ‘to top $110bn by 2023’

  • Saudi Arabia and UAE initiatives ‘driving forward industrial defense capabilities’
  • Budgets are increasing as countries pursue modernization of equipment and expansion of their current capabilities

LONDON: Defense spending by Gulf Arab states is expected to rise to more than $110 billion by 2023, driven partly by localized military initiatives by Saudi Arabia and the UAE, a report has found.

Budgets are increasing as countries pursue the modernization of equipment and expansion of their current capabilities, according to a report by analytics firm Jane’s by IHS Markit.

Military expenditure in the Gulf will increase from $82.33 billion in 2013 to an estimated $103.01 billion in 2019, and is forecast to continue trending upward to $110.86 billion in 2023.

“Falling energy revenues between 2014 and 2016 led to some major procurement projects being delayed as governments reigned in budget deficits,” said Charles Forrester, senior defense industry analyst at Jane’s.

“However, defense was generally protected from the worst of the spending cuts due to regional security concerns and budgets are now growing again.”

Major deals in the region have included Eurofighter Typhoon purchases by countries including Saudi Arabia and Kuwait.

Saudi Arabia is also looking to “localize” 50 percent of total government military spending in the Kingdom by 2030, and in 2017 announced the launch of the state-owned military industrial company Saudi Arabia Military Industries.

Forrester said such moves will boost the ability for Gulf countries to start exporting, rather than purely importing defense equipment.

“Within the defense sector, the establishment of Saudi Arabia Military Industries (SAMI) in 2017 and consolidation of the UAE’s defense industrial base through the creation of Emirates Defense Industries Company (EDIC) in 2014 have helped consolidate and drive forward industrial defense capabilities,” he said.

“This has happened as the countries focus on improving the quality of the defense technological work packages they undertake through offset, as well as increasing their ability to begin exporting defense equipment.”

Regional countries are also considering the use of “disruptive technologies” such as artificial intelligence in defense, Forrester said.

Meanwhile, it emerged on Friday that worldwide outlays on weapons and defense rose 1.8 percent to more than $1.67 trillion in 2018.

The US was responsible for almost half that increase, according to “The Military Balance” report released at the Munich Security Conference and quoted by Reuters.

Western powers were concerned about Russia’s upgrades of air bases and air defense systems in Crimea, the report said, but added that “China perhaps represents even more of a challenge, as it introduces yet more advanced military systems and is engaged in a strategy to improve its forces’ ability to operate at distance from the homeland.”