2019 White PaPer on the Business e nvironment in China 2019年中国营商环境白皮书 The American Chamber of Commerce in South China 华南美国商会 February 2019 2019年2月 Guangzhou, Peoples Republic of China 中国 · 广州Review Committee 编审委员会 Edouard Mac Nab VP Finance - Greater China, Mead Johnson Nutrition 艾敬元 大中华区财务副总裁，美赞臣营养品 Thomas Podgurski Group Director, Royal Service Air Conditioning 谭保加士基 集团董事，皇家空调设备工程（广东）有限公司 Thomas J. Pohl Director - Finance high industry standards of safety and quality establishment; benefits generated by the sourcing activities; modernization and development of industries; establishment of supplier and distribution networks; technology development; modern business practices and management; sustainability practices; corporate social responsibility (CSR) initiatives; and, many others. China released some interesting statistics in September 2018 that suggests the US economic cooperation with China has created a large number of business opportunities and significant profits for American businesses. China was one of the top five export markets of goods for 46 states in the US, and on average, every US farmer exported over US$10,000 of agricultural products to China. A total of 3.04 million American passenger vehicles were sold in China, accounting for 12.3 percent of all passenger vehicles sold in China. General Motors alone has ten joint ventures in in the country. Its output in China accounted for 40 percent of its global output. US multinational companies have sharpened their international competitiveness by combining competitive factors of production in the two countries. The iPhone is a perfect illustration. It is designed in the US, manufactured and assembled in China, and sold all over the world. By manufacturing in China, US companies are freer to invest more money and resources in innovation and management, focus on high- end manufacturing and modern services, and upgrade its industry with more added-value and high technology. As the President of a Chamber representing more than 2,300 members, it is clear to me that the vast majority of problems foreign companies are facing in China are not related to central government issues. Many of these problems are a direct result of unfair treatment by low-level municipal governments and the fact that rarely is there a proper channel or venue where a foreign entity can get a fair hearing and treatment according to the rule of law. Too often the line between a company and the government is not just blurred but totally erased by lower-level municipal judicial systems when foreign business entities have legal problems with their joint venture counterparts. Basically, the old saying “you cant fight city hall” becomes the rule of law. Currently, very few channels exist where foreign companies can seek arbitration outside the control and influence of the low-level municipal government. These same entities often have financial connections to the domestic party in question. With a free license to kill given to these low-level municipal governments and their right as the company executive, judge, jury and enforcercomplaints by foreign companies are not treated fairly. Under the current process, any issue elevated to a higher-level Chinese government by our companies is sent by the higher-level to the very culprit lower-level government for adjudication. We urge the central government to create a new judicial venue/vehicle where foreign companies can lodge complaints and where the oversight is designated by the central government just as it is with the IPR Courts. Without concrete steps by the central government, at some point, the pressure cooker lid will explode as it did with the US-China trade tension. Until then, we must brace ourselves for the next time the pressure builds and another set of disputes arise between other nations and China. The China central government must create greater barriers that separate government-owned and partially- owned businesses from low-level municipal judicial systems. These judicial systems must be free from outside influences so that they are able to interpret laws and civil suits objectively and fairly.With best regards, Dr. Harley Seyedin President, American Chamber of Commerce in South China Winner of the 2017 Oslo Business for Peace Award Awarded by the Award Committee of Nobel Laureates in Peace and Economics Visiting Scholar, Jinan University, Guangzhou, PRC President, Allelon Energy Partners