Not Playing Fair: European Companies Losing Billions In Chinese Market

Report for EU shows China is lax in R&D, has unfair advantage over European companies.

BRUSSELS, Belgium (AP) – European businesses lose billions of dollars every year in lost opportunities in China because of local practices that keep foreign companies out, a study produced for the European Commission said Tuesday.

European firms lost $28.2 billion in 2004 said Philip Bartley, who prepared the study for the EU.

He said there was a feeling that the playing field was not level in some sectors. Bartley said European businesses believe they were sometimes held to higher environmental and social standards than their Chinese counterparts who also benefit from state subsidiaries and exclusive access to government contracts.

“The picture is rather gloomy in telecoms, where the market is all but closed,” he said.

He said China would also benefit from opening up its market, mentioning EU and U.S. concerns over copyright and piracy enforcement. “Lax intellectual property rights in many ways keep Chinese companies lazy in terms of their own research and development.”

Bartley also said state subsidiaries were going to have a negative effect on other Chinese private sector companies who would be pushed out of the market.

He said there were huge opportunities for European business in China in the coming years as the world’s most populous nation grows an average of 10 percent a year. European businesses should focus on higher end manufacturing and form partnerships with Chinese companies for cheaper products.

Another key problem he said is low domestic consumption in China. The country’s growth is largely fueled by exports and Chinese people have yet to see the growth in spending power seen in other parts of the world.

EU Trade Commissioner Peter Mandelson last year called for China to tackle this and help erode the huge trade surplus China has with the United States and Europe. Bartley mentioned that the EU exports more to Switzerland than it does to China.