China and the European Union have reached the final agreement for the signing of the comprehensive agreement on investment (CAI), which has been under discussion for seven years.
The agreement should move towards that famous concept of reciprocity that European countries have been asking of china for a long time, and that is to say, to be able to enter the Chinese market under the same conditions granted to Chinese investments and companies on European markets.
Beijing made concessions with regard to mainly financial services, telecommunications, the sector of electric vehicles, air and water transport services, private hospitals, research and development in addition to real estate services. For China, the agreement has a political value because it means inserting itself into the logic of globalization, guaranteeing the constant interest of European investors
China-EU Comprehensive agreement on investments, what is it?
After seven years of negotiations, China and the United States have reached an agreement on the expected bilateral investment agreement that should ensure greater reciprocity for European companies in China. The announcement came yesterday at the end of a video call between Chinese President Xi Jinping, the EU leaders, and the duo Merkel – Macron, the duo who directed the negotiation marathon behind the scenes, which ended by the end of the year. And especially before Biden took office.
The deal was hailed as a success by both sides.
For China, it is an opportunity to confirm new openings after the introduction of the Foreign Investment Law in January.
For Brussels, however, the treaty will help to rebalance bilateral economic relations by granting “European investors an unprecedented level of access to the Chinese market”, greater protection of trade secrets, and more equal treatment. The latter is a commitment that Beijing will have to maintain by ensuring for the first time on bilateral basis transparency in the field of state subsidies.
The agreement will not compromise the mutual screening mechanisms envisaged for investments that risk threatening national security and according to the dispute resolution procedure, Brussels will be able to reverse in case China fails to comply.
Access to Finance and telecommunication?
While the details are not yet known, according to the South China Morning Post, China has gained entry into the European energy market in exchange for more access for European companies too. Among others, are the manufacturing, real estate, financial, and telecommunications sectors. A first small step towards a possible broader free trade agreement, which confirms growing economic interdependence after China became the bloc’s first trading partner in September.
The timing with which the negotiations were closed has attracted considerable criticism, especially within the Parliament of Strasbourg, which recently received the request for sanctions against violations of freedoms in the autonomous Uyghur region of Xinjiang.
On forced labor, an issue that had threatened the negotiations, the EU said that China has committed to effectively implementing ILO [International Labor Organization] conventions it has ratified and to work towards the ratification of the ILO fundamental conventions, including on forced labor.
EU-China to work together on climate change
For Beijing, fresh from the signing of the mega Regional Comprehensive Economic Partnership, this is a very important diplomatic victory. The fact is that despite the nickname of “systemic rival”, China remains an indispensable EU partner.
While reaffirming its transatlantic vocation, Brussels is well aware that the center of gravity of the world economy has now moved to the East.
The deal will offer European businesses better access to China’s markets in new-energy vehicles, private health care, and cloud services.
Both sides will launch cooperation to fight climate change and more importantly, it will also lay the foundations for Beijing and Brussels to start talks on a free-trade agreement.
Will this agreement make it easier for EU companies in China?
When the agreement will be officially ratified, more and more European companies will enter the Chinese market.
When entering China, what we suggest brands do is the following:
- Build an online reputation on the Chinese Internet and social media; in China, there is no Google but Baidu and there is no Whatsapp but WeChat. Chinese consumers are very digitalized and they research extensively on the Internet;
- Create a Chinese website on Baidu with localized content, a host in China, and an eccentric layout;
- Seo & Sem strategies will enable your website to rank in the highest positions;
- Use WeChat to communicate with your followers and to be engaged with them. Having an official service account will allow your company to send 4 push notifications per month to each of your followers, in order to keep them up to date with your new products or initiative;
- Weibo, a social media similar to Twitter will allow you to increase brand awareness and to be commercial and exposed to the Chinese digital world;
- Chinese forums like Zhihu or Toutiao will increase your conversion rate and will allow you to answer questions about your brand or products in an undercover way. In China, the power of community is strong and any brand in China must take advantage of it.
- In the beginning, e-commerce is highly recommended.
If you are willing to enter the Chinese market, contact Gma, and discuss with us your plan.
Gentlemen Marketing Agency is a digital marketing agency that is expert in helping foreign companies to establish or strengthen their position in China. We can help your brand increase sales in China, thanks to our services like:
- Advertising
- Baidu SEO&SEM
- Social Media
- PR
- KOL & Influencers
- E-commerce and cross-border e-commerce
- Distribution