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Easy times gone for foreign firms in China

By Liu Zhiqin (Global Times)

16:44, September 27, 2012

Time recently published a cover story titled "The New Great Wall of China."

The article argues that an increasingly strict bureaucratic approval system and more regulations and restrains concerning foreign investment have formed a new Great Wall, a symbol of China's "technical prowess, monumental resources and, most of all, its attitude toward the outside world."

According to the article, this new Great Wall seems to hinder the process of China's drawing foreign investment, making many foreign investors lose patience and confidence. The dilemma they face is either leaving or staying in China.

The article concluded that China's reform process has remained stagnant or even fallen back.

These complaints and opinions are nothing new. Since the 2008 Beijing Olympic Games, such opinions have been heard constantly.

Foreign companies have encountered more difficulties operating in China, which is an indisputable fact. But this is because the Chinese market has become more mature compared to two decades ago.

It is normal that China's investment environment and policies as well as its preferences in investors have changed a great deal.

The opening-up of the Chinese market has experienced three stages. When it had just started, a variety of foreign companies swarmed in, no matter their quality they had.

After a decade's development, the Chinese market has learned to distinguish good companies from bad ones. Now the market has taken the initiative to innovate.

In the first 10 years, China was really poor. It believed that whatever was foreign was good, so that foreign companies could easily enter the Chinese market, including some projects that required low or even no technology.

A German entrepreneur once talked with me about his impression of China 20 years ago.

Then China lacked the experience of international trade, so it had to follow the requirements of foreign companies blindly.

China's labor and raw materials were also very cheap at the time, and foreign companies could easily make money. But everything has changed. It is normal that foreign investors find it hard to adapt to the new environment.

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