Chongqing - The European Union Chamber of Commerce in China’s Southwest China Chapter released the Southwest China Position Paper 2021/2022 on May 19th. It contains constructive recommendations for developing the Chengdu-Chongqing Economic Circle and improving the region’s business environment in general. Compiled by its working groups over eight months, the document illustrates the common challenges faced by Chongqing and Chengdu and includes an in-depth analysis of each city’s business climate. The paper serves as an important tool in the chamber’s local government outreach throughout 2022 and the subsequent years, as the association keeps strengthening the efforts to support local authorities in creating a truly international business environment in southwest China.

The Southwest China Chapter was established in 2005 when the first office opened in Chengdu. The Chongqing office followed in 2012 in response to demand. In the past 17 years, the chapter has been acting as a bridge between European enterprises and the local government and a messenger to promote China in the world to attract more investors. The chapter now has 198 members who are companies of all sizes devoted to creating a conducive environment in the best interest of business and local development, from Fortune 500 multinational corporations to SMEs, with two-thirds of them based in Chengdu and one-third in Chongqing.

The chapter believes that the creation of the Twin-city Economic Circle—which will become China’s fourth economic city-cluster—should mean that the days of Chengdu and Chongqing competing for resources and investment are over. Instead, the focus should shift towards cooperation and identifying synergies between the two cities to unlock the region’s huge potential. The Southwest China Chapter welcomes this and the additional business opportunities it will bring. A key part of this ambitious development goal will entail creating an open and competitive business environment where all companies have fair market access and that the region remains both welcoming and attractive to foreign nationals.

Despite the many difficulties experienced in the past few years, particularly in the age of the COVID-19 pandemic, European businesses in China remain firmly committed to the market. Southwest China is still seen as a magnet for investment given its rich natural and energy resources, world-leading transport system, and large population. The improvement of the soft infrastructure, such as expat-friendly healthcare services, international education, and quality of life, has also outpaced foreign companies’ expectations.

A favorable business climate is essential for attracting foreign investment and developing economic growth. Though progress has been made, there are still gaps in creating a better market-oriented and internationalized business environment between Southwest China and other advanced regions in the country. According to the position paper, foreign-invested companies continue to experience regulatory and administrative barriers and struggle to access clear, consistent information on policies and regulations affecting their regional operations. Business opportunities for European small and medium-sized enterprises (SMEs) are also becoming scarcer unless they have sought-after technologies or other unique strengths in line with China’s ambitious industrial policies. 

“The first step towards improving the business environment for all companies in Southwest China and making the Economic Circle an economically vibrant and competitive region is establishing a regular, meaningful dialogue between the local authorities and industry,” said Massimo Bagnasco, vice president of the European Chamber and chair of Southwest China Chapter. “It is my sincere hope that both the Chengdu and Chongqing governments will receive the constructive recommendations presented in this report in the spirit of cooperation in which they are offered, to help Southwest China realize its full potential.”