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BIZCHINA / Center

No threat of foreign monopoly in any industry

By Jiang Wei (China Daily)
Updated: 2007-09-10 09:04

The country does not face an imminent risk of monopoly by foreign
companies in any industry, according to the China Foreign Investment
Report 2007 released by the Ministry of Commerce.

Wang Zhile, director of the Multinational Enterprise Research Centre
affiliated to the Ministry of Commerce, made the observation in an essay
for the report in response to people's rising concerns about possible
foreign monopolies in the country.

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He explained that although foreign investors do have a large market share
in certain industries, it does not necessarily mean monopolies.

The market share is usually held by different foreign-funded enterprises
that compete with each other and those who have a large share do not use
it to restrain competition in the market, which is the nature of a
monopoly.

China had approved the establishment of more than 610,000 overseas-funded
companies by the end of July, with actual use of overseas investment
totaling US$720 billion, a Ministry of Commerce official said yesterday.

The report was released in Xiamen, Fujian Province, yesterday during the
China International Fair for Investment and Trade (CIFIT) along with a
series of booklets introducing Chinese provinces and cities to potential
foreign investors, and guidelines for Chinese enterprises' outward
investment.

Policy revisions

In a related development, Zhou Xiaochuan, governor of the People's Bank
of China, told the main CIFIT forum on Saturday that the country is
likely to adjust its financial polices to support Chinese companies'
outbound investment.

Revisions will be made to the current foreign exchange policies that
encourage currency inflows while limiting outflows, he said.

The central bank will further develop the foreign-exchange market to help
companies hedge currency risks and simplify procedures for companies
investing outside.

"We will remove unnecessary controls on reviewing sources of
foreign-exchange funds and on foreign currency purchase and remittance
procedures to allow companies to use their own funds or converted
currencies to invest abroad," Zhou said.

The government also encourages qualified commercial banks to set foot
abroad by establishing branches or acquiring stakes in overseas
counterparts, he said.

(For more biz stories, please visit Industry Updates)

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