“International Business and Globalization:
Challenges and Opportunities”
Remarks by Peter M. Robinson, President and CEO,
United States Council for International Business
China Top 500 Companies Conference
Tianjin, August 21, 2005
Thank you for inviting me to participate in the China Top 500 Companies Conference. It is a great honor for me to be with you here in Tianjin. In light of current developments on the world scene, it seems very timely to be discussing “The growth of Chinese companies under a global vision,” and “The Rise of the Bohai Economic Rim.”
I am particularly interested in these topics because my organization—the United States Council for International Business (USCIB)—represents 300 top U.S. corporations, professional firms and business associations, many of which have substantial trade and investment interests in China. And many of them have operations in Tianjin.
USCIB was founded in 1945 to promote an open system of world commerce. Today, as we celebrate our 60th
anniversary, we use three key tools in this mission:
· influencing global trade and investment rules and policy;
· offering access to international commercial arbitration to resolve disputes;
· providing the ATA Carnet export service for temporary duty-free import of goods.
Of most significance is the ability and responsibility of business to help shape the global regulatory and policy framework in which it operates internationally. Business needs reasonable, fair, and predictable trade and investment rules so that it can continue to be the engine for growth to realize the benefits of an increasingly integrated global economy for the Chinese, U.S., and all societies.
USCIB thus recognizes the importance of those international, intergovernmental organizations whose responsibility it is to develop and in some cases manage the “rules of the game” and to set standards for national law. These include such groups as the World Trade Organization (WTO); the World Intellectual Property Organization (WIPO); the U.N. Environment Program; and the International Labor Organization.
As Chinese companies increase their engagement in the global trading system, it is essential they join counterpart companies around the world to help shape the rules and to provide guidance to governmental institutions so that the latter understand the needs of business as well as rapidly changing business models.
Luckily, mechanisms already exist for such activity. For example, USCIB provides U.S. business input on trade and investment issues to the United Nations and its related agencies as the American affiliate of the International Chamber of Commerce (ICC), also known as the World Business Organization. The Chinese affiliate of ICC is the China Council for Promotion of International Trade (CCPIT/CCOIC).
We can use ICC to provide global business views to governmental institutions on a broad spectrum of issues ranging from trade policy to e-commerce to environment to customs modernization. As Chinese companies get more involved in the global marketplace, ICC’s work on raising corporate governance standards worldwide is an important vehicle to assist economies in understanding debates in Europe and the USA, and to promote and exchange best practices. ICC held a successful seminar on this topic last October in Beijing.
On international labor and social policy, USCIB speaks for U.S. employers at the International Labor Organization (ILO) as the American representative to another global business group: the International Organization of Employers (IOE). The China Enterprise Confederation (CEC) acts as the Chinese national representative to IOE and was recently elected to the ILO Governing Body.
IOE is currently playing a major role in the design and development of international initiatives on corporate responsibility. IOE is leading business participation in the International Standards Organization’s work on corporate responsibility and has organized an important international conference on CSR with the ILO that will be held this October.
USCIB also represents American business at the Organization for Economic Cooperation and Development (OECD) through its membership in the Business and Industry Advisory Committee (BIAC). China is not a member of OECD, but it does work with OECD’s Non-Member Outreach Program to receive OECD advice on the establishment of national rules and standards that will attract and facilitate foreign direct investment.
USCIB’s China Committee has been a strong supporter of this effort. Its Chairman, Clarence Kwan, National Managing Partner of China for Deloitte, is also Chairman of BIAC’s China Task Force. USCIB encourages exploration of ways to work with Chinese companies to facilitate discussions with the OECD.
China is a valued trading partner and destination for investment by USCIB member companies. We look forward to working with our counterparts in China to lead the way in these international business and governmental institutions. We also hope to develop a relationship that encourages a frank exchange of views. I would like to take the opportunity to share some general concerns on the minds of USCIB member companies.
USCIB actively supported the granting of Permanent Normal Trade Relations status to China, and welcomed China’s entry into the WTO. We appreciate the significant efforts China has made to meet its obligations under the terms of its accession agreement. We have also opposed congressional legislative initiatives to impose punitive tariffs.
However, our members continue to have concerns regarding compliance with your WTO commitments. Among the factors cited by our members as affecting their investment decisions are lack of transparency in rulemaking, non-national treatment, and ineffective enforcement of intellectual property rights.
USCIB members have also called on China to provide national treatment in government procurement and in the insurance industry, to provide for competition in the postal sector, and to eliminate market access restrictions in the area of audiovisual services.
Creating international trade and investment rules and standards is of course only half the story; we must all do our best to work together to encourage governments around the world—and I include my own government in the United States—to implement and enforce such rules. This will then create an environment in which true growth can occur.
On a more practical level, I would like to share with you some perspectives from my member companies on doing business in Tianjin. Indeed, as part of the general increase in USCIB member investment in China, several members have invested in the Binhai New Area of Tianjin (BNAT) and the Tianjin Economic Development Area (TEDA).
USCIB members have reported being impressed with the “state of the art” services provided in Tianjin, and with its physical assets—described by one member as “well-designed, well planned, and well laid-out.” Members have also been impressed with the timely responsiveness of the regional government, which shows a proactive focus by the authorities on the needs and expectations of businesses entering the area.
The infrastructure in Binhai is a significant element: the port, roads, urban public transport, rail and air connections are all world class. U.S. business welcomes the planned expansion of Tianjin airport in time for the 2008 Olympics. Binhai also benefits from its proximity to Beijing, facilitating operations with many corporate head offices in China.
Of equal importance to the physical resources are the human resources in Binhai. The higher education institutions and the large numbers of graduates joining the workforce each year enable enterprises to grow the higher value-added aspects of their business in China. One USCIB member commented on the “palpable enthusiasm to succeed” amongst the local staff.
However, one of the greatest barriers to increased investment for all regions in China is the continued concern with intellectual property rights protection. The issue of counterfeiting and piracy touches every industry in USCIB’s membership, from software to pharmaceuticals to consumer goods to foods.
The intellectual property protection legislation introduced since China’s accession to the WTO is positive, but implementation of the laws is less than complete, with low penalties, limited enforcement, and a lack of transparency in the administrative and criminal enforcement. These concerns are common to both USCIB and Chinese business interests, as counterfeit and pirated goods harm every successful business, regardless of nationality.
This issue is not specific to Binhai, but it is the single biggest concern of every foreign business operating in China today, and the first response when asked about challenges to continued investment. The coastal economic zones of China have in many ways been test-beds and forerunners for China as a nation. We believe that the single most effective step for Binhai to encourage future investments would be for Binhai to assume leadership in enforcement of China’s intellectual property legislation. USCIB and our members look forward to working with Chinese businesses and with government to find effective solutions to this shared problem.
What can we do on a practical business level to help companies take advantage of the global trading system? One way to facilitate this is to encourage the promotion and demonstration of products in overseas markets—of importance to the larger companies gathered here today as well as the small- and medium-sized companies that some day might be included in the “China Top 500 Companies.”
The ATA Carnet system—administered in the U.S. by USCIB and in China by CCPIT—is an essential tool in this regard. With an ATA Carnet customs document, companies can take their goods overseas and enjoy temporary, duty- and tax-free import of goods for fairs and exhibitions, as professional equipment, and for commercial sample purposes.
China only recently joined the ATA Carnet system so that use by Chinese companies is still minimal compared to other countries. I would encourage you to promote awareness of this valuable tool for overseas marketing and business development.
In terms of foreign business development in China, I would hope that China, which has thus far only approved the Fairs and Exhibitions Carnet, might also consider approving the other two Carnet categories for Commercial Samples and for Professional Equipment. This would be sure to attract more foreign business to Tianjin and China in general.
We can also work together to encourage strategic business partnerships. Over 30 years ago, American and Chinese business interests began laying the groundwork for such partnership. Today, we see a growth of this activity, as embodied, for example, in the recent $1 Billion investment by Yahoo—a USCIB member company—in Alibaba.com.
We live on one planet. We are a global community. Cross-border strategic partnerships enable companies from different countries to leverage their experience and respective comparative advantages for the common good. Each side can bring a value-added contribution to the table. And working through international institutions, we can help set the framework for that activity.
In closing, it is my heartfelt hope that business will take a leadership role by joining hands with partners around the world in addressing the challenges and in realizing the opportunities of an increasingly global economy. In so doing, we will create a better future for our children. The U.S. business community looks forward to working with the Chinese business community to achieve this goal. I would welcome a chance to speak with you informally about these ideas after this presentation.
Thank you.
More on USCIB’s China Committee
