- Laurie BurkittThe Wall Street JournalCANCEL
April 8, 2015 10:00 p.m. ET
BEIJING—European businesses are pushing Beijing to improve working conditions—from streamlining taxes to cleaning up air pollution—in China’s capital city, one of country’s largest corporate hubs.
An overly restrictive foreign-investment environment in Beijing is posing a danger to the city’s business climate, the European Union Chamber of Commerce in China, a trade organization, said Thursday in a position paper. European companies are moving units to Hong Kong and Singapore due to tax complications in Beijing, according to the organization, which surveyed 470 European companies operating in Beijing.
The chamber said that there was a lack of coordination between national and local tax authorities, significantly increasing the administrative burden for companies operating in the capital. It added that Shanghai’s tax environment, benefiting from a single tax authority, was more streamlined.
China also needs to make the nation’s currency convertible and free up domestic interest rates if it is to boost Beijing’s status as a center for financial services, according to the business group.
European companies are also struggling to retain talent due to Beijing’s high-levels of air pollution, the European Chamber said, adding that 39% of companies said air quality was a key obstacle to talent retention, while 22% said it was a top challenge to attracting talent to Beijing.
Other factors hurting Beijing as a business center include the slow Internet speed and preferential treatment for state-owned companies. Internet censorship is choking business, impeding research and development, finance, trade and e-commerce, the European Chamber said.
“The breakdown of Google, the world’s largest search engine, and Gmail, the world’s most widely used mailbox, has dramatically affected the ability to research and conduct some very basic business operations,” the European Chamber said.
Beijing has the trade group’s second-largest membership in China behind Shanghai but the city needs to resolve obstacles to maintain corporate investment, the European Chamber said.
Other multinational companies have reported similar problems with their operations across China, citing technology obstacles as a key problem in recent months. In its annual survey of around 500 member companies published in February, the American Chamber of Commerce in China said 83% of businesses reported negative effects from Internet censorship. Slow Internet speeds and reduced access to information resulting from Web filtering were among the complaints, the chamber said in its report.
Write to Laurie Burkitt at firstname.lastname@example.org
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