International businesses ask China to open

BOAO, China – Major multinational companies appealed gingerly to Chinese President Xi Jinping on Monday to reduce barriers to doing business in China’s heavily government-directed economy, drawing a commitment to create a more level playing field.

In a rare audience with the head of the Communist Party, executives from PepsiCo, Samsung Group, Volvo Group and more than a dozen other companies – from agribusinesses to finance – traded handshakes with Xi while carefully broaching the problems that have bedeviled business success in the world’s second-largest economy. They complained about red tape and restrictions on investment that favor Chinese state firms and outright discrimination because of political problems.

Among the few direct criticisms, PepsiCo President Zein Abdalla called for fairer treatment and decried limits on investing in agriculture, which Pepsi wants for its Lay’s potato chips and Quaker Oats products. He said continued investment by the thousands of American companies would depend on Beijing’s pushing ahead with market reforms.

“They are here and they will stay as long as the commitment to reform and opening up is maintained. Likewise foreign companies like ours naturally share your recent calls, President Xi, to promote transparency and fairness,” Abdalla said. “The better we understand the policy directions and the politics of decision-making in China the better we can plan to commit resources and continue to build successful businesses.”

The encounter marks another way Xi is differentiating himself from his predecessor, the reticent and stiff Hu Jintao. Since taking over in November, Xi has employed a more direct, plain-speaking style to appeal to the public, talking about the need for the leadership to curb corruption. His catch-all policy slogan, the China dream, speaks to people’s aspirations for better lives.

Though their investment has helped drive China’s booming economy, foreign businesses often felt their concerns were given short shrift in the past decade. Hu rarely met with them, even as his government pursued policies that favored state companies, shielded parts of the economy from foreign investment and tried to force multinational corporations into transferring technology for access to the China market.

For most of the meeting at a government guesthouse in the island town of Boao where China hosts an annual forum for the global elite, Xi listened. “Your suggestions are very helpful,” he said toward the end of the nearly hourlong gathering. “Over the 30 years of reform and opening, listening to criticisms has helped us grow and mature.”

Xi offered no more than a general commitment to protect foreign companies’ interests, “provide a level playing field for all market players” and continued efforts to make China more attractive to foreign investors. He promised that China’s maturing economy would continue to grow quickly, even if not at the rapid nearly 10 percent annual pace it has managed in recent decades.

“Through our efforts, it is possible for China to sustain a fairly high speed of economic growth,” Xi said. “A very high speed of growth we will not sustain. We don’t want to and we cannot. But a fairly high speed of growth can be sustained.”

Beyond any commitments, meetings with a senior leader like Xi are useful for foreign business executives because they confer top-level approval. As such, most of the complaints were indirect.

The chairman of Thailand-based agribusiness Charoen Pokphand Group urged better financing and tax incentives for private businesses. The head of Japan’s shipping and logistic company, Nippon Yusen Kabushiki Kaisha, or NYK, elliptically referred to the bitter dispute between Beijing and Tokyo over East China Sea islands and the spillover it had on Japanese businesses, which saw imports and sales in China plummet last year.

NYK Chairman Koji Miyahara spoke of the “unpleasant episodes” last year. “We need to forge closer relations,” he said.

Xi did not respond directly, though in closing out the meeting he offered the prospects of continued money-making for all the foreign business executives.

“I wish you every success in your business and a big fortune in China,” Xi said.