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Issue 03, 2005 (01 March)
 Emerging Opportunities

Half of Foreign Companies Surveyed Consider to Invest in Guangzhou

The Guangzhou statistics bureau conducted a sample survey of FIEs in December 2004. Findings show that 24.8% of the surveyed foreign companies have plans to expand their investment in Guangzhou while 46.4% are considering to do so.

Over half of the respondents recognise the municipal government's efforts in improving the city's investment software over the past few years. The ratings they give to the city's various indicators range from 60 to 80, out of a scale of 1 to 100. Among these indicators, the ones with higher scores are Guangzhou's market potential (75.4), capacity to expand its market reach (72.6), policy environment (72.0) and human resources (71.6). Others in descending order are competitive environment (69.2), administration (68.4), legal environment (67.6), rationality of taxation (63.9), and investment costs (62.8).

On problems yet to be resolved, most respondents name Guangzhou's unsound regulations and policies and the lack of supporting facilities. Areas where respondents reckon improvement of regulations and policies is needed are the city's investment environment (72.8%), social security (66.8%), industrial and commercial administration (64.8%), industry administration (58.4%), project approval (56.8%), and import-export (55.2%). Respondents also find regulations and policies subject to radical changes resulting in a lack of continuity are most serious in market prices (25.2%), land supply (24.8%), local taxes (23.6%), and establishment of enterprises (21.6%).

In the respondents' opinion, the city's administrative problems basically lie in its system. 60.8% of the respondents find the various types of administrative approval excessive while 37.2% comment on the existence of multiple approving authorities and a lack of coordination among various departments. Another 35.2% say the project approval process takes too long.

On market order, 57.2% of the respondents cite "proliferation of counterfeit and substandard commodities which directly impacts companies' product sales", "a weak sense of social credibility, poor goodwill and breach of contracts" (46.8%), and "vicious competition in the same trade" (39.6%) as the prominent issues.