To what extent does the Chinese industrial policy restrict access to European firms on its market ?

Details

Supervisors

Defraigne, Jean-Christophe

Faculty

Louvain School of Management

Degree label

Master [120] en Ingénieur de gestion

Abstract

The goal of this thesis is to evaluate the extent to which China’s industrial policies may have a restrictive impact on European companies wanting to access the Chine market. The thesis is divided in two parts, a theoretical one and a practical one. In the theoretical part, we start by reviewing the current states of the World and China in order to set the general context. A major aspect of this part is to analyze and understand China’s industrial policy within its origins, evolution and objectives. We’ve found that China’s main industrial policies are developing the services sector and domestic consumption as key contributors to future growth, moving up the value-added chain through policies such as Indigenous Innovation and ‘Made in China 2025’, cleaning up its environment and vowing to open currently monopolized sectors to foreign firms wanting to invest in China. Additionally, we also go over the opportunities some if these policies might be able to generate for European firms in the future. In the context of these industrial policies, another important section of this theoretical part is our identification of potential market access obstacles European firms might face. By doing so, we discovered that the major obstacles which could negatively impact a firm’s ability to access China’s market are ownership & control restrictions, government procurements, transfers of technology and technology standards & certification requirements. In the second part of this thesis, we analyze how these market access obstacles apply to three different sectors by looking at the market share of European companies in each of these sectors. They are namely the automotive industry, banking & insurance and the wind power sector. The reason we chose these sectors is because not only are they key sectors for China’s economy as a whole, but also because they are vastly different. Indeed, the automotive sector represents a manufacturing industry, the banking & insurance represents a service industry while the wind power sector represents relatively new technology for China. Our empirical research of the restrictive impact of market access obstacles we identified, and its implications for European firms has yielded the following results. China’s usage of ownership restrictions and creating an uneven playing field in government procurements have had restrictive effects for European firms in banking, life insurance and in the wind power sector. In the final sections of our conclusion, we also go over some of the limitations we encountered when writing this thesis and provide recommendations for European companies already operating in China or wanting to enter the Chinese market.