- The Washington Times - Tuesday, March 22, 2011

Complaints about China’s bureaucracy continue to soar among U.S. businesses operating there, according to a new survey released Tuesday by the American Chamber of Commerce in China.

The China Business Climate Survey reported that U.S. businesses operating there have increasing concerns for 2011 about the country’s “unclear laws and regulations,” “difficulty enforcing contract terms” and “corruption,” to name a few.

When asked what the top five business challenges in China would be for 2011, 31 percent of 338 respondents listed “bureaucracy” as their No. 1 answer, up from 23 percent in 2010.

Despite the complaints, 85 percent of the 434 chamber members surveyed said their China-based companies had substantial increases in revenue in 2010, a 29 percentage point increase from the results of the 2009 survey.

“Results are improving and returning to levels before the economic crisis,” Greg Gilligan, the Chamber’s China vice chairman and the managing director of APCO, said at a panel discussion Tuesday in Beijing after the release of the survey’s results.

“It’s a recognition for improvement but also being cautious about the way forward,” he said, adding that this was especially important “in the global context that everybody is cautious about … It’s been a tough couple of years.”

In another of the survey’s striking findings, 78 percent of respondents said operations in 2010 were profitable, which is the highest level of performance reported by the survey since 2002. Eighty-three percent of respondents reported that they will see an increase in investment in China operations in 2011 as well.

“When we compared how long a company had operations in China and its profitability, we found consistently that the longer a company is in China, the more profitable it is,” the survey said. “The most unprofitable members are new in the market and still in the start-up phase.”

The question pertaining to unclear laws and difficulties in obtaining required licenses is one that sits heavily on top of American businesses trying to start operations in China. Survey results showed that the process of obtaining required licenses is getting slightly better, as only 21 percent of respondents said it would be a major challenge in 2011 as opposed to 24 percent in 2010.

However, one panelist said the bureaucracy revolving around permits in China is still too long a process that bogs down U.S. businesses that try to get started there.

“A couple of years ago, we looked at how quickly you could establish a business in Beijing,” said Bruno Roy, managing partner of McKinsey & Co.’s Beijing office. “We came up with 37 days. If you tried to launch the same business in Singapore, it’s going to take you five days. Governments have to do much better across the board.”

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