EU and China: From businessmen to business partners?

Vice-President of the European Commission Antonio Tajani is in China for Mission Growth.

Questions:

1. If we look at the EU-China relations what are the biggest challenges the EU may face in terms of doing business in China?

2. Tajani’s trip is called Mission Growth. How much and how would you say China can contribute to EU’s growth?

Answers:

Thomas KönigChina Programme co-ordinator, European Council on Foreign Relations

1. The EU and China speak different languages – not just linguistically but economically as well. We often forget that the contemporary business structure in China is barely a decade old; strictly geared toward growth at all means – and not necessarily sustainable. Not to mention the general secrecy surrounding Chinese business practices – as a state-run system, China is notoriously secretive, with most information regarding their practices not available for public consumption.

This of course clashes with the European ideas of reciprocity within a relatively transparent system. It is a slow uphill battle, simply because the two systems of conducting business are so different. This is why the EU should do everything it can to increase exchanges and to “learn their language” rather than just imposing business-as-usual practices on the Chinese. At the same time, the EU has to make sure that its own interests are protected. A difficult balancing act.

2. Short answer: A lot. Long answer: Again, only if we learn to play on the same field. China has three means of investing in the EU: Public procurement, bond purchases and mergers and acquisitions. All three areas often circumvented the EU bureaucracy as a whole and banked on bilateral engagement – particular with European states that are struggling economically. There is an air of opportunism that surrounding Chinese investement in Europe. As long as we don’t learn to effectively address that, China will not really be able to contribute to the EU’s overall growth. Again, it is a question of learning and teaching a different, maybe less speedy and cumbersome, but ultimately geared towards long-term growth way of conducting business.

For Mission Growth to be a success, we need to be able to honestly pinpoint and discuss problems – perhaps at the expense of a comfortable dinner discussion, but ultimately to make the transition from businessmen to business partners.

David GossetDirector of Academia Sinica Europaea, China Europe International Business School, Shanghai

1. The EU would be must stronger in China with a more cohesive approach, but at the moment, what China sees, and beyond, the world, is a continent in which the national interests dominate. When Europe is united it is a global actor apt to compete in a world a giants , divided it becomes a series of countries individually too small to have a significant impact in the 21st century. Germany, France, the UK are big in Europe but relatively small in a world of giants, but when the 28 move together they can make a difference.

Another serious issue : who is the leader of Europe? In a world of change, in a world of crises, leadership becomes essential and there is a sad lack of leadership in Europe. One needs to remember the Arabic saying : “An army of sheep led by a lion will defeat an army of lions led by a sheep”.

2. The main sources of Europe’s growth are and will be internal, they will depend very much on the way Germany looks at our continent’s dynamics. Of course, massive Chinese investments within the EU would be helpful but this requires a coordinated and long-term EU’s approach toward China – one trip is clearly not enough… The Euro crisis has changed the way China looks at Europe, but it is not too late for Europe to take the necessary measures in order to be able to remain attractive and influential.

Ramon Pacheco PardoLecturer, King’s College London

1. I think there are two main challenges. Firstly, Chinese companies move up the value added chain, which means that there are companies that compete directly with European ones, both at the domestic and international levels. Secondly, the protectionism of some EU member states, which can lead to trade spats like the recent one surrounding solar panels.

2. China can contribute to the growth of the EU through the sheer size of its still growing consumer market and through the increasing FDI of Chinese companies seeking to enter the EU market and to improve economies of scale.

Jonathan Holslag, Research Fellow, Institute of Contemporary China Studies, Vrije University, Brussels

I don’t think China will contribute much to Europe’s growth. On the one hand, it still sticks to an industrial policy that makes it difficult for European firms to compete. On the other hand, its slowdown is starting to further reduce opportunities for European companies that seek to export.

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