Foreign firms to face new challenges

Foreign companies will meet new challenges in China this year, but their investment enthusiasm in the country will increase amid worries about a global slowdown, according to an official report Sunday.

Foreign companies will face new challenges like rising cost, inflation pressure, and renminbi appreciation, according to the annual China Enterprise Development Report released by the State Council's Development Research Center.

At the same time, foreign companies will also feel more pressures as China gradually ends the practice of "super-national treatment" under which foreign-invested enterprises had enjoyed more preferential policies than their Chinese counterparts since the beginning of the reform and opening-up, the report said.

The report also noted that problems related to the country's industrial safety have already caused alarm in the academic circles as more and more foreign companies entered into the Chinese market, which will continue to be more open to foreign investors.

If the output value of foreign enterprises reaches 30 percent of the total value of the industry in which they operate, the report defines such a sector as being at the edge of industrial safety. Based on this standard, 44.4 percent of the sectors in the industrial area have reached the cordon, according to the report.

"The competitive strength of Chinese companies is much stronger than before, and they could assume a leading position in some sectors closely related to industrial safety," Mei Xinyu from the International Trade and Economic Cooperation Research affiliated to the Ministry of Commerce told the Global Times yesterday.

Mei noted that if foreign companies could comply with the country's local rules and policies, they will have healthy development in the future.

Xiang Anbo, a researcher at the State Council's Development Research Center, told the Global Times yesterday that the Chinese government will continue to be more open to foreign companies which plan to invest in the country.

China will encourage foreign direct investment (FDI) in high-end manufacturing, services and emerging industries, according to a 29-page guideline published jointly by the National Development and Reform Commission and the Ministry of Commerce (MOFCOM) last month, a move to further open up the domestic market.

Despite new challenges, foreign companies still have more interest in expanding their businesses in China, with its fast economic growth and huge demand, amid uncertainties in the global economy, Xiang noted.

China drew $115 billion in FDI in 2011, up 9 percent over the previous year, according to the MOFCOM last Friday.