Global companies 'forced' to move to China

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International companies doing business in China say they are being forced to relocate there. Finnish/Dutch ship engine manufacturer Wärtsilä has given in to Chinese pressure and decided to move its production facilities out of the Netherlands.


Listen to a Newsline interview with EVO spokesman Godfried Smit:


The move means hundreds of job losses in Wärtsilä’s three Dutch factories.

'No other option'
Wärtsilä’s Dutch CEO Fred van Beers said earlier this week that the Chinese had left his company with no other option: “They only want to use local manufacturers these days. So if we don’t move to China, they won’t be using us anymore. It’s a tough decision, especially for our employees here in the Netherlands”.

Beijing’s decision that Chinese companies must use only locally produced materials has angered Dutch exporting companies, represented by the EVO organisation. Its spokesman Godfried Smit says China is violating international rules set by the World Trade Organisation (WTO):

“The rules for international trade are clearly spelt out in the WTO hand book. These practices clearly don’t meet the standards set by the WTO”.

Mr Smit says this is the reason why the Chinese government is not openly forcing companies to move to China. However, local and regional authorities do press international manufacturers into relocating, EVO claims.

“But it’s difficult to detect, as most companies that have to deal with this kind of pressure rarely speak out. If they do, they fear their access to the Chinese market will be more difficult,” Mr Smit says.

General Motors
Wärtsilä is not the only international company that has to deal with this pressure. General Motors was also forced to move part of its construction capacity to China after it unveiled plans to expand its exports to the region.

'EU should take action'
EVO wants the EU to take action against China on this issue, says Mr Smit. “The EU Commission has a huge influence on the global economy and if it says China is not in line with WTO legislation, China will hopefully listen. The Chinese should also be aware that this might be harmful to themselves. They’ve overcome the image of having an economy that only produces substandard, counterfeited stuff, and they shouldn’t want another negative image”.

China is not the only country putting up trade barriers against the rest of the world - the US and EU have done likewise. “But there’s a difference”, says Mr Smit, “as the EU and US trade barriers are normally in line with WTO guidelines”.


US protectionism
However, in early 2009, the US government came under fire when it unveiled an economic rescue package which stipulated that American investors should use only US-made iron, steel and manufactured goods in projects funded by the package.

US President Barack Obama changed the rules after criticism by the WTO.

Dutch reaction
On Thursday, Dutch deputy minister of economic affairs Frank Heemskerk asked the WTO to take action. “This clearly violates international trade laws. If China is guilty of protectionism, the WTO should act”, he said.


Picture: the Wärtsilä factory in Drunen, the Netherlands, which is to close (Photo courtesy of Wärtsilä Netherlands)