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China’s Lack of Transparency, Uneven Compliance Enforcement Cited as Concerns by U.S. Businesses

Posted September 14, 2015

An annual survey of the members of the U.S.-China Business Council (USCBC) released last week found 90% of respondents either very concerned (39%) or somewhat concerned (51%) about the enforcement of international property rights in China.

Other issues of concern to council members, a group comprised of executives based in both the U.S. and China, include the lack of transparency when it comes to government regulations and rule-making, with over half citing these shortcomings one of the biggest challenges to doing business in China.

Beyond failing to release of proposals for public comment, other problems in this regard include a lack of opportunity for companies to participate in the standard-setting process and the inability to provide input on government decisions or even to obtain accurate information on the status of licensing applications.  

The survey found that almost all Chinese governmental entities fell short of the central authority’s commitment to improve transparency. “Progress on this issue, including better and more open engagement with all stakeholders— including foreign companies—is essential if China is to meet its own goals of having a market-based, competitive economy,”  the USCBC said.

While the issue of uneven enforcement of Chinese laws and regulations moved down in rank in this year’s survey, companies reported that that the problems are persistent and the issue worsened in the last year. Moreover, enforcement differs not only between foreign and domestic companies, but also across sectors and provinces. These concerns come up in a variety of areas, including competition enforcement, tax auditing, licenses and approvals, and regulatory compliance.

Furthermore, the report notes that two years into China’s push for economic reforms, over three-quarters of companies report having seen no impact from the government’s work to streamline licensing processes and reduce red tape.