29 July 2010 | By: Charmaine Tan

China is a top destination for investors and has been welcoming foreign investment and expanding domestic demand in recent years. However, foreign investors are crying foul over the obstacles of doing business in China.

The unpredictability of business regulations, lack of transparency and the poor protection of intellectual property rights have prompted European and US business owners to complain about the difficulty of doing business in China.

Foreign direct investment has benefitted both China and its investors. It has brought advanced technology and business knowledge to China and investors benefit from the fast-growing market. Minister of Commerce Chen Deming has said that foreign investments are beneficial for China and that China will be more open to businesses in future.

The Chinese government acknowledged that foreign direct investment fosters innovation and had reviewed the criteria for the accreditation of innovation products in April. This means that the rules of origin can be applied to products produced by foreign enterprises as it is applied to Chinese products.

Moving forward, China wants to upgrade its high-end manufacturing and environmental goods and services industries. It will require the knowledge and expertise of foreign investors. The joint venture established between German carmaker Daimler AG and Chinese carmaker BYC Co. to develop electric vehicles for the China market is a good example of how China can benefit from the technical expertise of multinationals.

As an economy that is continually growing in importance in the global stage, the rest of the world can benefit from a more open and business-friendly China. This will contribute to a sustained global recovery.