Chinese companies benefit the EU in many ways
But their access is restricted by EU barriers, new report says
Chinese companies establishing a presence in the EU have benefited the continent in many ways, from introducing new technology, and research and development, to participating actively in a broad range of community initiatives.
China and the EU have maintained diplomatic relations for over 40 years now. Cooperation between them in economic affairs and trade, alongside the acceleration towards globalisation, has given the confidence to many Chinese companies to establish a presence, and indeed thrive, in EU countries.
The China Chamber of Commerce to the EU (CCCEU) has just published its first report on how its 900 Chinese member companies are getting on in the EU – and the document makes for fascinating reading.
The first point to note is that Chinese companies operating in the EU are not just doing it at the marketing level. They regard the EU as an important strategic base for global development and for that reason are investing in R&D centres and manufacturing plants in the EU and attach importance to technological innovation. In fact, they are laying long-term foundations; they plan to stay here.
But it is not a one-way street. Chinese companies have brought economic benefits and innovation vitality to the EU. Many are closely related to local industries and people’s livelihood. They invest and procure, and they employ locally. The average local hire rate is almost 40%, but for some companies – such as Huawei – this figure is riding at over 70%. As such, Chinese companies are becoming more integrated into local communities and contributing to their development.
Chinese companies also drive innovation and development in EU countries by leveraging advanced technologies like cloud computing and artificial intelligence. Tencent, for example, provides car maker BMW with an advanced platform for autopilot development. Huawei, meanwhile, has launched its Seeds for the Future programme, involving 1,350 young people from 31 European countries, to nurture talent for future technology development.
Challenges facing Chinese companies in the EU
But not all is rosy. Chinese businesses in the EU face a number of uncertainties and constraints. EU countries are introducing more barriers to Chinese companies, especially in terms of foreign direct investment, restricting their access in important areas, which increases their costs and efficiency. In specific areas such as energy, AI and ICT, due to misunderstandings arising from political and public opinion, restrictions have been placed upon Chinese companies with regard to the development of specific business.
Another common complaint is from Chinese companies ,at the vanguard of several global industries, who have not been able to participate in the formulation of relevant EU standards. which has brought obstacles to the development of local business.
Also, poor communication between China and the EU at the political level has caused misunderstandings affecting the development of Chinese companies in Europe. And, due to the lack of regular communication channels between Chinese companies and local governments, the latter do not understand the needs of the companies, and the former often have difficulties in submitting requests.
Add to this the fact that European media and the public opinion have a negative impression of China, Chinese companies find it difficult to resolve basic operational problems where there should be none. This is one of the reasons Huawei is supporting a new European press award recognizing excellent reporting on constructive EU-China initiatives.
Mutually beneficial cooperation
First, it would clearly be a good idea at the political level if China and the EU were both more active in promoting mutually beneficial cooperation in order to drive long-term development for both parties. The report also points out that Chinese companies feel their achievements in some fields are being undermined, not just by the anti-globalisation noise we hear at the political level, but the feeling that somehow trade with China has to add up to a zero-sum game.
This is not the case, and nor does it necessarily have to be. In fact, the report says, in 2018, EU enterprises and their subsidiaries achieved a turnover of nearly 400 billion euros in China, while the turnover of Chinese enterprises in EU countries was less than 210 billion euros. But, clearly here, the globalisation of Chinese and European enterprises is of great benefit to the economic development of both sides.
If the EU, though, were to step up its pragmatic assistance to Chinese companies, in the areas of information sharing, resource docking and process optimization, for example, it would mean a lot to Chinese enterprises in terms of their development in Europe and could empower them to further increase investment at local level.
Chinese enterprises still need to integrate further locally in EU countries. The CCCEU report concludes that “rather than (just) establishing a Chinese company in Europe, we should (pursue) the concept of building a European enterprise with Chinese genes in it.”
Chinese companies can do more to make contacts with local industry associations and participate in standard-setting, for example. And regular and transparent communication with employees and organisations at the European level will be even more crucial.