Part I: True or False
a) Ten major complaints of foreign company in 2012 for doing business in China as indicated in USCBC 2012 China business environment survey results are; 1. Human resources: Talent recruitment and retention
Finding and retaining talented employees is significant challenge for foreign companies in China. According to highly competitive environment, such talents would be recruited to the most attractive company, with higher income in short period of time. Demand for qualified employees frequently outstrips availability, especially for skilled technical and managerial talents. Market mechanism put the wages of talents up to global level for some positions, leads to rising labor costs. Companies are forced to increase and stabilize their salary to attract and retain employees with skills. It also include that employees figure their salary as a top priority, not long-term compensation or benefits, thus making it very difficult to develop benefits packages conform to global best practices. Turnover rates are still high of 10 to 20 percent, as not unusual. Companies cannot retain their skilled employees. In survey, the companies summed up the overall situation: “Operational cost in China is getting serious especially for pay and benefit and yet still lack of qualified talent in the market”
2. Administrative licensing, business and product approval China’s licensing and approval process slows investment and company expansion. Chinese government reviews and governs all business transactions, investments, mergers and acquisitions. Companies must submit their requests to different levels of officers and organisation through a long chain of command. This stalled the progress of business and took so much time and money. The product registration is slow and delayed through duplicate testing requirements. Licensing regimes are also inconsistent, even in the same city. USCBC members say they experience protectionism through licensing and approval process. “Favorable treatment of local firms in licensing applications, faster approval for local firms, restrictions placed on foreign companies.”
3. Competition with Chinese companies (state-owned or private) Stiff competition with Chinese companies, both state-owned and private is one of the challenges. 67 percent of foreign companies say they compete with state-owned enterprises and 79 percent compete with Chinese private companies. Local companies have advantages in approval and licensing procession, better contract and subsidy, giving the competitive edge. Chinese companies may be more favored in local public tenders and provincial affairs.
4. Cost increase
In China, labor, raw materials, land and utility costs are increasing across the board. As in recent years, labor cost increasing grew the greatest concern. 60 percent of the companies report that wages increased between 5-10 percent for 2012. Minimum wages increased province by province, and even sharper increase in salary for skilled labor. It signified wage inflation inside China. “Inflation, salaries, cost of offices, cost of raw materials are making it difficult to consider China a low-cost region.” noted one company.
5. Intellectual property rights enforcement (trademark, patent, copyright, trade secrets) Enforcing intellectual property right (IPR) in china is still difficult. From the survey, 95 percent of companies are very concerned about IPR enforcement. Despite that concern, over half indicated they had seen improvements in IPR protection in the past year. The continued difficulties in enforcing IPR affect companies operation and make challenges limit the types of products they can develop, make or sell in China. Developing a robust protection regime of intellectual properties is blocked by the lack of meaningful criminal deterrent....
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