European businesses in China are mostly optimistic about their local operations but have also proposed many practical suggestions to the government, according to the European Business in China Position Paper 2004 issued on Friday.

The fifth edition of the paper written by the European Union Chamber of Commerce in China details the results of a wide-ranging business survey of more than 450 Chamber members.

The paper is divided into 20 commercial sector chapters, spelling out concrete recommendations aimed at creating a better understanding of varying regulatory issues.

The business confidence survey said 64 per cent of the respondents companies expected to be profitable in 2004. Those with operations in China for more than 10 years had the most optimistic expectations.

And 27 per cent expect that they will be profitable in China within three years and 20 per cent expect profitability within four to five years.

In general, 90 per cent hold optimistic or cautiously optimistic opinions on overall business in China.

As China has been a member of the WTO for nearly three years, benefits of membership are now measurable.

The majority, 61 per cent, perceive China as willing to implement its WTO commitments, the survey said.

The majority also agree that accession to the WTO has had a positive impact on China's business climate.

Chinese authorities can take credit for a number of remarkable achievements during the past year in terms of regulatory reform, said Serge Janssens de Varebeke, president of the chamber.

The European businesses particularly welcomed the new Automotive Policy, the Provisions on the Administration of Establishing Foreign-Invested Export Procurement Centres, the revision of the Provisions on the Establishment of Investment Companies by Foreign Investors, and the Regulations on Management of Foreign Investment in the Commercial Sector.

The most significant Chinese accomplishment noted by the European Chamber in the past year was the revised Foreign Trade Law, which came into force on July 1, replacing the 1994 law, no longer suitable to cover the massive developments China has undergone in the past decade.

"Furthermore, we were really encouraged by the increasing openness of the government. Many comments from the Chamber's Legal Working Group on the Foreign Trade Law found their way into the promulgated law," Varebeke said.

For pre-market registration of cosmetics, suggestions by the Cosmetics Working Group have been accepted and were written into law.

"This is but an example of the government's increasing willingness to consult with the business community before issuing new legislation," he said.

But the businesses still have their concerns. Lack of transparency, licences/quotas and registration processes top the list, according to the paper.

In the case of the cosmetics industry, it currently takes five to 12 months to register common imported cosmetics. Registration for similar domestic products only takes about two months.

(China Daily October 16, 2004)