International Law

Comments on the AmCham White Paper - Part I

By Stan

Thanks to a timely reminder from IP Dragon, I downloaded the latest AmCham White Paper, a document published annually that includes feedback from the American business community in China. This includes current business sentiment, challenges from both the public and private sector, and recommendations for both the US and China governments.

The White Paper runs about 150 pages and includes quite a few substantive sections, including tax, HR, IP, standards, Customs — you name it. There’s a lot of info to chew on, certainly more than I can cram into one post.

For today, therefore, I think I’ll just stick with general remarks (and IP in a second post). Not surprisingly, given the current economic environment in both the US and China, prominence was given in the document to the issue of protectionism and nationalist sentiment. This is a subject I’ve been railing about, perhaps a little too much, in recent days, so my position on the subject should be quite clear. In the words of the White Paper:

This is a pivotal moment for bilateral relations, as China begins to reach economic maturity just as the world goes into recession. Yet signs of protectionist policies surround the enactment and implementation of both the US and Chinese stimulus packages.While nationalist inclinations in times of crisis are understandable, they should also be resisted.Protectionism in times of downturn can produce disastrous results, as the world saw in the 1930s.

[B]oth China and the US should avoid policies that reward nationality over efficiency. This is essential both in the implementation of long-term laws, like the Anti-Monopoly Law (AML)and Labor Contract Law (LCL), as well as policies to counteract the economic downturn.

I suppose we can put local protectionism/nationalism at the top of the list of business concerns at the moment.

Traditionally, when I flip open an AmCham White Paper, I first look at the list of business challenges enumerated and read about why these are relatively important compared to other concerns. This year’s greatest hits:

During China?s impressive economic development, the demand for Chinese managers of international caliber has increased significantly. Demand for skilled, appropriately qualified staff still outstrips supply and this chief operational constraint shows no sign of easing in the near term. This long-term problem may ultimately dampen companies? prospects in China more than the immediate difficulties of the economic downturn.

China?s regulatory regime continues to pose challenges, with the next four top challenges after human resource constraints (inconsistent regulatory interpretation, bureaucracy, unclear regulations and lack of transparency) all relating to the regulatory environment. These long-standing issues reflect the important role that the Chinese government plays in the economy.

So what does this boil down to? Basically HR and the regulatory environment. Those of you scratching your heads and trying to shake that deja vu feeling, stop worrying about it. You’re not going crazy. No, HR and regulatory concerns have been on the top of the list for many years now — this is indeed the current White Paper.

One comment on general regulatory challenges. Although the trend is positive as the government and the legal system here continues to modernize and reform, we of course have a long way to go. The recession has thrown a wrench into the works, minor and temporary as it may be (I hope). In the scramble to stimulate the economy, rebalance the export/import mix and boost domestic consumption’s share of growth, lots of new things are going on. While this is mostly positive from a governance standpoint, quick action does present difficulties, particularly when you have administrative and legal systems that are still in their developmental stages.

During a period characterized by instability, and where the government is looking for quick action from administrative and enforcement agencies, not everything is going to go smoothly. Some problems are no doubt the product of poor training and a lack of resources (i.e. not malicious in nature), while others, particularly those stemming from protectionism/nationalism are not so benign.

Okay, a few thoughts on the IP section of the White Paper coming up later today. Lunchtime is over — get back to work.

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Full post as published by China Hearsay on May 13, 2009 (boomark / email).