Page 9 - 2017 White Paper
P. 9
The American Chamber of Commerce in South China
don’t act, then these investment losses will continue for Every now and then, we are contacted by a foreign
the long term: invested enterprise telling us that they have been served
notices to move, either by a local developer or the
One, China is currently paying the price for a situation government and frequently, on very short notice. This is
which occurred in 2014, the perceived “targeting” of a major ongoing problem which China needs to address
foreign-invested enterprises. At the end of 2014, our immediately or face losing substantial export revenue for
Special Report, released in March 2015, revealed that the long-term future.
25% of multinationals with existing operations in China
postponed or cancelled their investments of over US$250 Many years ago, it was my contention that China would
million or more. The 2015 Study showed a 9.3% reduction finally enforce a crackdown on intellectual property right
in planned reinvestments by AmCham member (IPR) violations once it was clear that Chinese companies
companies; more devastatingly, the same Study revealed were getting adversely affected. That is precisely what is
a 16.9% reduction in planned reinvestments for a three- happening at the moment, since the majority of IPR cases
year period from 2015. being filed in court these days are Chinese companies
battling other Chinese companies.
Looking at export numbers for 2016, while total
Asian exports (ex-China) grew by above 7% year on Along the same vein, perhaps Chinese officials might
year, China’s exports remained sluggish at around -7%. finally face a wake-up call and realize that, in order to not
Most reinvestments in factories require 2-3 years for just attract foreign investment but to retain foreign and
construction before producing goods. Given that the Chinese investment in China, they will need to seriously
above-mentioned postponed or reduced reinvestments compete with overseas destinations and begin to offer
would have produced goods for exports in 2016 - and truly attractive incentives which would finally put China
keeping in mind that more than half of China’s exports at par with other global players.
are produced by foreign invested enterprises, it can be
deduced that those investments were shifted to other With best regards,
parts of Asia from Ch¬ina and are now producing exports
for those countries. Harley Seyedin
President
Two, many foreign invested enterprises’manufacturing The American Chamber of Commerce in South China
facilities in China were built some 15 years or so ago. The Vice Chairman
land that these enterprises occupy in many cases is now U.S.-China Trade and Investment Policy, The Asia Pacific
considered prime for redevelopment into commercial Council of American Chambers of Commerce
and residential real estate. While the central Chinese
government has instituted a national law (“三旧改
造”) encouraging the conversion of old factory land
into commercial and residential real estate, it has not
provided any incentive, any regulation or direction
on how to support those factories which had been
operating on these lands in order for them to resettle
or move economically and continue operating within
China. Therefore, many of these factories are moving out
of China to other nearby countries.
9
don’t act, then these investment losses will continue for Every now and then, we are contacted by a foreign
the long term: invested enterprise telling us that they have been served
notices to move, either by a local developer or the
One, China is currently paying the price for a situation government and frequently, on very short notice. This is
which occurred in 2014, the perceived “targeting” of a major ongoing problem which China needs to address
foreign-invested enterprises. At the end of 2014, our immediately or face losing substantial export revenue for
Special Report, released in March 2015, revealed that the long-term future.
25% of multinationals with existing operations in China
postponed or cancelled their investments of over US$250 Many years ago, it was my contention that China would
million or more. The 2015 Study showed a 9.3% reduction finally enforce a crackdown on intellectual property right
in planned reinvestments by AmCham member (IPR) violations once it was clear that Chinese companies
companies; more devastatingly, the same Study revealed were getting adversely affected. That is precisely what is
a 16.9% reduction in planned reinvestments for a three- happening at the moment, since the majority of IPR cases
year period from 2015. being filed in court these days are Chinese companies
battling other Chinese companies.
Looking at export numbers for 2016, while total
Asian exports (ex-China) grew by above 7% year on Along the same vein, perhaps Chinese officials might
year, China’s exports remained sluggish at around -7%. finally face a wake-up call and realize that, in order to not
Most reinvestments in factories require 2-3 years for just attract foreign investment but to retain foreign and
construction before producing goods. Given that the Chinese investment in China, they will need to seriously
above-mentioned postponed or reduced reinvestments compete with overseas destinations and begin to offer
would have produced goods for exports in 2016 - and truly attractive incentives which would finally put China
keeping in mind that more than half of China’s exports at par with other global players.
are produced by foreign invested enterprises, it can be
deduced that those investments were shifted to other With best regards,
parts of Asia from Ch¬ina and are now producing exports
for those countries. Harley Seyedin
President
Two, many foreign invested enterprises’manufacturing The American Chamber of Commerce in South China
facilities in China were built some 15 years or so ago. The Vice Chairman
land that these enterprises occupy in many cases is now U.S.-China Trade and Investment Policy, The Asia Pacific
considered prime for redevelopment into commercial Council of American Chambers of Commerce
and residential real estate. While the central Chinese
government has instituted a national law (“三旧改
造”) encouraging the conversion of old factory land
into commercial and residential real estate, it has not
provided any incentive, any regulation or direction
on how to support those factories which had been
operating on these lands in order for them to resettle
or move economically and continue operating within
China. Therefore, many of these factories are moving out
of China to other nearby countries.
9
