U.K. Businesses Call on Beijing to Make It Easier to Bring Staff to China

British businesses have called on Beijing to make it easier for their staff to enter China, give advance notice of changes to industrial policy, and to retain certain tax benefits for expatriate workers in order to make the nation more attractive to overseas talent.

Cybersecurity, cross-border capital transfers and competition with state-owned companies also continue to hinder the operations of U.K. firms in the Asian nation, according to the paper published Wednesday by the British Chamber of Commerce in China, a business group.

The recommendations laid out in the organization’s third annual position paper came after two-thirds of its more than 650 member firms said in December that doing business in China got harder last year and half said they were not optimistic about this year’s outlook.

It comes as tensions between the two nations continue to simmer over Beijing’s crackdown in Hong Kong, allegations of rights abuses in China’s far western region of Xinjiang, and British concerns about the actions of Chinese technology companies in the U.K.

While attributing some of the ongoing difficulties to the impact of the Covid-19 pandemic, the report also notes declining support for constructive engagement with China among British politicians and the general public, adding that resuming travel and staying open to foreign trade may help to mend the relationship between the two countries.

Restrictions on travel between the U.K. and China remain a major impediment for British businesses in the world’s second-largest economy, despite Beijing’s decision earlier this month to let in foreign citizens who have received certain Covid-19 vaccines, the paper says.

It notes that China does not recognize “one widely-used vaccine in the U.K.” — presumed to be the one co-developed by Oxford University and AstraZeneca PLC — and that firms said visa application processes were “inconsistent, impractical, opaque and confusing.”

Additionally, some foreign nationals working for British businesses in China have found themselves subject to apparently arbitrary restrictions or rules despite fully complying with public health requirements, such as being treated differently from Chinese citizens while traveling or prevented from meeting certain government workers, according to the report.

Those and other pressures are leaving foreign nationals in China unsure how easily they can re-enter the country if they travel abroad, prompting many to leave for good and making it harder for businesses to hire the staff they need, the report states.

It adds that the U.K. should consider adding China to its “green list” of safe travel destinations.

“Ensuring that foreign nationals feel welcome and fairly treated is just as essential as market opening to creating a global commercial hub,” said St. John Moore, the chamber’s chairman, at an event launching the report in Beijing on Wednesday. “These concerns must be tackled head-on if both countries are to have access to a diverse range of talent and ideas.”

Calls for clarity

Although British firms largely support China’s market reforms, government departments and provincial administrations sometimes apply them inconsistently, preventing companies from offering uniform products and services to customers, the report states.

At other times, a lack of transparency from Chinese authorities makes it hard for businesses to keep up with regulatory changes. The paper cites one case where Beijing altered emissions standards without publishing feedback on comments from auto firms, before some local governments later shortened a key four-year transition period. That left manufacturers rushing to develop new technologies at great cost, it says.

Echoing concerns raised by other business groups, the report also states that China’s decision to ax certain income tax benefits for expatriate workers from next year may cause mid- and senior-level managers to shun the country, potentially depriving it of the “diverse business environment it needs to generate new ideas and new growth opportunities.”

The report urges the government to “retain certain preferential tax arrangements” — which may include those affecting expat families’ education, rent and travel expenses — but refrains from calling for a full reversal of the policy.

Several of the other recommendations reflected longstanding gripes from foreign firms that do business in China, including the country’s ill-defined cybersecurity laws, burdensome cross-border capital transfers and competition with state-owned enterprises.

The report urges Beijing to ensure the final version of its Cybersecurity Law lets firms share data overseas that they deem crucial to their operations, while also hastening the publication of data security and personal information protection laws and clarifying their contents.

It also calls on the Chinese government to make it easier for businesses to move money across national boundaries, and to commit to letting foreign firms into sectors traditionally dominated by state-owned enterprises and allowing them to compete on a level playing field.

Harder to do business

In its annual business sentiment survey published in December, the chamber said 67% of its members believed it had become harder to do business in China in the past year, up from 48% the year before. The proportion of respondents who said they were optimistic about the business outlook for their sector during the year ahead fell from 54% to 49%, although most of the remainder said they felt “neutral” rather than “pessimistic” about their prospects.

Wednesday’s report also notes ongoing tensions between Beijing and London, describing bilateral relations as being at a “pivotal point” and stating that “amongst U.K. politicians, support for objective, constructive dialogue with China is waning and public opinion in the U.K. has hardened against China.”

But it adds that the post-pandemic recovery and the restoration of international travel could help to heal the relationship by strengthening business and political engagement and resuming the cultural exchanges deemed crucial for mutual trust and understanding.

“There is clearly a conscious decision to try and separate business and politics, but undoubtedly the political environment can have a consequence on business,” Moore said.

The report finds some reasons to be positive about future ties, such as the chance to coordinate on climate policy at key United Nations conferences due to be held in the Scottish city of Glasgow and the southwestern Chinese city of Kunming this year.

China rose one place to become Britain’s third-largest trade partner last year. The total value of the U.K.’s trade with the Chinese mainland shrank by 8.5% year-on-year to £79 billion ($112 billion) in 2020, less than Britain’s overall 17% decline in trade over the same period, according to data from the U.K.’s Office for National Statistics. 

Britain mainly imported telecoms and sound equipment, office machinery and clothing from China in 2020, while its main exports included crude oil, cars, pharmaceutical products and business services, according to the U.K.’s Department for International Trade.

Contact reporter Matthew Walsh (matthewwalsh@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)

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