US firms fear losses over Chinese ‘protectionism’

22 March 2010

22 March 2010 | Allie Anderson

More than half of US firms doing business in China expect to lose trade as a result of the nation’s proposed “protectionist” procurement rule, a study has revealed.

The survey, released yesterday by the American Chamber of Commerce in the People’s Republic of China (AmCham-China), found that 57 per cent of its 2,600 member companies predict China’s “indigenous innovation product accreditation” system will have a negative effect on their business.

Moreover, over a third (37 per cent) of IT firms surveyed said they had lost out on business due to preferential policies already implemented by public bodies.

Under the accreditation system, proposed by the Chinese government last November, public sector buyers would give preference to specifically certified goods. To gain accreditation, the intellectual property of a product must be developed and owned in China and the trademark must also be registered in the country.

But US suppliers fear the proposals would be “restrictive and protectionist”.

“We strongly support Chinese innovation. Domestic innovation creates the potential for more partnerships between US and Chinese firms in China and globally,” said AmCham China president Michael Barbalas in a statement. “However, limiting market participants and reducing competition does not encourage innovation.”

He added that while the organisation welcomed reassurances from Chinese officials that the rule is in line with World Trade Organization regulations, he wants to see further clarification in future updated guidelines.

AmCham China’s findings add to a groundswell of concern over the procurement rule. Last December, 34 global suppliers wrote to the Chinese government urging them not to press ahead with the policy.

 

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