WTO, ONE STEP FORWARD TWO STEPS BACK
China's accession to the WTO was hailed by many as the next great step in the opening of the Chinese market. For years, foreign industry groups in China have lobbied the Chinese government in an effort to gain greater market access and reduce restrictions on foreign players. No doubt, China's succession to the WTO and the subsequent commitments it has undertaken will result in increased access to the Chinese market, however a less commonly considered point is, whether it in the interests of foreign enterprises to be treated on a level playing field with domestic enterprises.
While it is true that foreign enterprises are subject to many restrictions on their business scope and operation, in many areas, they receive considerably more favorable treatment than their local counterparts. According to its commitments under the WTO, China has undertaken to provide a level playing field for local and foreign companies. As a consequence, foreign enterprises will inevitably loose their privileged status.
As the government makes further promulgations in line with the timetable set under their WTO commitments, foreign enterprises may find themselves having to deal with issues once solely in the realm of Chinese companies. An example of this is evident in the construction industry where the government has enacted a series of reforms, which according to their WTO commitments weren't actually required until 2005. The new provision, which will take effect as of 1st of October this year, requires foreign construction companies to establish Chinese entities instead of operating as foreign contractors. Foreign enterprises will find themselves having to restructure their operations to conform with the new requirements.
The benefits of China's entry into the WTO for foreign enterprises are manifold, however, it may leave some pondering the realization that they should be careful what they ask for, because they just might eventually get it.
5:16:30 PM 
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