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Foreign Firms Get National Treatment in China
2004-10-27

Foreign firms that conduct safety tests and quality inspections will be allowed to take a controlling stake in China-based joint ventures by the end of this year, a government minister announced Tuesday.

By 2005, foreigners will be able to launch fully owned enterprises in China to provide testing and certification services, said Li Changjiang, minister of the State Administration of Quality Supervision and Quarantine.

Liu Anping, another agency official, said China already has more than 150,000 such service providers, which test and certify products ranging from household goods to high-tech gadgets.

Demand for services that ensure trouble-free and flawless products will certainly surge in China, given that people's living standards have been on the rise, and consumers have been paying more and more attention to product quality, Liu said.

Minister Li told a press conference in Beijing that foreign testing and inspection companies would receive "national treatment.''

He did not elaborate but said foreign firms entering the Chinese market would have to go through certain procedures, which will be specified in a bulletin to be published later this year.

Both Li and Liu said the move is part of China's efforts to fulfil the commitments it made when it joined the World Trade Organization more than a year ago.

The offer is apparently a fillip to the many foreign safety-testing and certification companies that have been seeking to strengthen their foothold in the lucrative Chinese market.

Loring Knoblauch, president and chief executive of Underwriters Laboratories Inc, an independent product-safety certification organization in the United States, said his firm will augment the scope and scale of the services it provides to Chinese industries.

The company has just launched a US$15 million joint testing facility along with the China National Import and Export Commodities Inspection Corp in Suzhou, in East China's Jiangsu Province.

Underwriters Laboratories has already provided testing and certification services to more than 7,100 companies in China, virtually giving them an "access pass'' to the international market, Doug Johnson -- general manager of the joint venture and managing director of the US firm's China operations -- said Tuesday.

Underwriters Laboratories' co-operation with China will be further enhanced by its setting up more representative offices and providing testing services through the Suzhou company, said Jeff Ren of Underwriters Laboratories' Shanghai branch.

Other world-leading testing providers, such as Germany's TUeV Sueddeutschland Group, are also very active in China, Liu said.

The official conceded that the influx of foreign firms into China will further intensify competition and prod their Chinese counterparts to improve their technology and service.

But he warned there might also be "risks'' for the foreign service providers.

"More than 1,000 product safety-testing and certificating firms or laboratories already operate in China in line with advanced international standards,'' he said. "They can provide first-class testing and certificating services.''

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