Guangdong Research Institute for International Strategies(GRIIS) issued the report on business environment which suggests the government to be as transparent as “golden fish in the aquarium”.
The legalized and internationalized business environment is the important platform for the country or region to conduct effective international communication and cooperation and to compete in the world. It reflects the economic soft power and improves the international competitiveness. It is the essential base to accelerate regional economic and social development and constitutes the basic index to judge the core competitiveness and sustainability of the region.
Guangdong is at the critical moment of transferring and up-grading. It is of ultimate significance for the scientific development of "Accelerating transferring and up-grading to build a happy Guangdong" to enhance the legalization and internationalization of business environment. It also helps Guangdong to be among the leading in China. Nanfang Daliy, cooperating with GRIIS, put forward the special report of “Focusing on the building of business environment of Guangdong”, hoping to promote Guangdong move to a new stage in the business environment.
Under the new situation of global economic integration, the future regional economic competition will not only on location advantage or policy advantage, but also on soft power like business environment. The “Questionnaire Survey on the Legalization and Internationalization of the Business Environment in Guangdong”, held by GRIIS of GDUFS, investigated on 562 enterprises at home and abroad. The result shows that the enterprises are satisfied on the general service of the government but unsatisfied on the examination and approval efficiency, especially the formalities for the land. Other low scores lie in the consistency to the international standard, the financing convenience, and the bankruptcy protection.
The report enlightens Guangdong on the building of legalized and internationalized business environment: it requires to promote the structural reform of super-ministries and make government affairs public, which makes the government as transparent as “gloden fish in the aquarium”.
The general evaluation of government service scores the highest.
"How do you evaluate the stability and continuity of policy? What do you think of the difficulty level of the departments' work?" In the "Questionnaire Survey on the Legalization and Internationalization of the Business Environment in Guangdong", held by GRIIS of GDUFS on 562 enterprises at home and abroad, the result shows that the general evaluation of government service scores the highest, taking up 50.4%. The lowest score is the expenditure of examination and approval procedure. 76 of the 558 enterprises think the price is low, while 31 think it very low, occupying 13.5% and 5.5% respectively. The enterprises are most unsatisfied with the land formalities. Planning and constructuring formalities also have low scores.
Of the most unsatisfied item is the approval efficiency. The research team find a case that the annual examination for one evaluation authority requires nearly 20 departments' work. Prof. Li Qing, the project director, said that it indicated that our management was comprehensive but overlapped, with high costs and low efficiency, which would lead to flaws.
The legalized and internationalized business environment reflects the national or the regional economic soft power. The questionnaire includes the evaluation to the market environment, the social environment, the legal environment and the future. The enterprises are most content with the openness of the market, and then the social credit and infrastructure. The least satisfaction is the financing cost and convenience and the consistence to the international standard. Besides, 52.8% enterprises regard the financing cost of Guangdong is regular, while 3.6% think it is high. The enterprises are most satisfied with the cultural environment. In contrast, the difficulty level of hiring employees scores the lowest, followed by the living condition and social security system for the international talents.
The more efficient supervisory process is accompanied by the effective legal system and property right protection. The enterprises scores lowest the bankruptcy protection and exit, followed by efficiency of the court or arbitral authority to solve the execution of the contract and the participation to government's policy. They think the three main challenges for the future development are the increased human resource cost, labor quality and staff turnover rate, and revenue. The rates are respectively 58.9%, 52.9% and 49.6%. The former two belong to the social environment and the latter belongs to market environment.
Build a transparent government by promoting government affairs public
The building of legalized and internationalized business environment depends on the effective government management. The government, above all, should be clear on its role in the market environment, in order to provide service for the market and instill energy to the enterprises.
The Provincial Party Committee and Government of Guangdong pays high attention to the building of business environment. The 11thCongress of Party Representatives of Guangdong and the 1stplenary session of the 11thProvincial Party Committee Conference put forward the goal to “try to build an institutional framework for a legalized and internationalized business environment in five years”.
Given the above situation, the research team suggests that the first step is to promote the structural reform of super-ministries for an efficient, stable and transparent government environment so as to make the government as transparent as “golden fish in the aquarium”.
Currently, many developed countries have established super-ministry system and promoted "one-stop" service. The research team gives examples: South Korea has been promoting the super-ministry system, from which Guangdong should draw concentrative lessons. After all the previous reform, the government agencies of South Korea are in smaller quantities but of better quality, with only 15 ministries making up the central government. The super-ministry government structure brings convenience to the management of enterprise investment, due to fewer involved ministries, fewer steps of examination and approval and more fluent hand-over and take-over between ministries. Sometimes, procedures relevant to enterprise investment can be done in one single ministry. Singapore also owns similar administration structure. In addition, Singapore has set up an “one-stop” service center, in which enterprises and citizens can finish all the procedures at one wicket. Such measures have improved the working efficiency, avoided multiplying corruption and optimized the investment environment to great extent.
Secondly, the examination and approval system of Guangdong provincial government is preposed while that of many developed countries and regions is in parallel. To this end, the research team suggests “establishing joint institutions of examination and approval, and promoting parallel examination and automatic approval system to shorten the time for administrative examination and approval”.
They also suggest outsourcing and establishingintermediaryservice agencies, mostly non-official or semi-official, to simplify the government structure and improve administration efficiency.
On one hand, specialized agencies provide professional service for enterprises and help building favorable business environment. On the other hand, simplification of the government structure can surely improve the administration efficiency. At present, however, intermediary agencies in Guangdong are far from developed, the operation systems of which are immature and lack of standardization. It is the government’s job to make the best use of the circumstances, prop up the community intermediary agencies such as industry associations, chambers of commerce, environment protection organizations, consultative agencies and charities, standardize their operation system and make them play their leading roles in respective fields.
Business Environment Around the World
Enterprises are the basic constituents of the whole running market. Favorable business environment boosts the metabolism and development of enterprises and attracts foreign investments of high quality, which again accelerates transformation and upgrading of the region. The World Bank has been assessing and ranking the business environment of most countries and regions since 2004. It turns out that developed regions including European countries, the United States, Japan and South Korea are among the top. These countries have already had a sophisticated system and mature regulations about the construction of business environment. Therefore, to build a legalized and internationalized business environment, Guangdong needs analysis and research into the business environment of the former countries and combine it with the local practice.
Germany: Innovation is the Soul
Developed countries and regions such as the United States, Germany, Singapore and Hong Kong have already entered the post-industrial stage. With their economic aggregating among the global top, they have huge differences with emerging market entity like China in both investment and business environment.
Germany, for example, is similar to Guangdong in terms of export-oriented economy and was once the number one export country in the world. Compare Germany and Guangdong, Professor Li Yongning of GDUFS told Nanfang Dailythe that biggest shining point of Germany is the ability of innovation.
Most innovative enterprises in Germany are SMEs, reaching an amount of over 3 million and occupying over 90 percent of German enterprises. Distinguished features of SMEs are their flexibility and passion for innovation, so many SMEs turn out to be the world champions in certain aspects like market segment, patents and technique.
What’s more, Germany pursues the policy of positive non-interventionism, that is to say, it is the government’s turn to create favorable conditions to develop economy when market does not work. Professor Li took another example of the government’s supporting policies for SMEs. One of the policies is to give bundled training to talents of SMEs, cultivating a large quantity of management engineers with both science and technology and management knowledge. As we can see, the German government is only making plans and offering guidance at a macroscopic level. They are laying foundation of the resource integration for enterprises’ further development instead of doing examination and approval work.
Besides, Germany attaches great importance to the power of cultural integration, precision and artistry, which shocks the world psychologically. As one of the crucial factors of business environment, the cultural atmosphere and its effect on the world enables Germany to be presented in a relatively perfect way, in terms of products, crafts, universities, city culture and research institutes. Germany is undoubtedly a successful image-maker.
Japan, South Korea and Singapore: Protect the property rights of investors
Located in Asia, Japan, South Korea and Singapore share one thing in common with Guangdong: they are all adjacent to ocean. They are either with long coastline or born to be superior harbours, which endow them with advantages of making foreign trade.
As listed in the 2012 “Report on the Global Business Environment” by the World Bank, Japan ranks the 20th, while China is the 91st. Moreover, Japan is the 1stin dealing with bankruptcy and is also among the top in obtaining credit, protecting investors, carrying out contracts and making foreign trades. All the above have fully presented Japan’s advantage of its legal system, investment and financing channels, industry development and so on.
From what has been discussed about the business environment of Japan, we can learn that it is essential to enhance the legal system. For example, the working efficiency of the court and the performance of the bankruptcy regulations are closely concerned with the protection of investors’ property rights.
In 2012, the business environment of South Korea has turned out to be even better than that of Japan in the rankings. By simplifying the procedures of starting business and transacting builder’s license, enterprises’ pressure is greatly reduced. South Korea is also making efforts to lay strong legal protection on investors’ property rights and to strengthen the construction of social infrastructure. The convenience of business ranks the 8thof the world, which shows the effectiveness of the South Korean policies.
Singapore has boasted its most convenient business environment for 6 years, due to its best employees and the norm environment of foreign trades, and second best norm environment of dealing with bankruptcy and protecting investors. Additionally, Singapore ranks top 5 of the world in terms of starting business, transacting builder’s license, paying taxes and so on.
Professor Sui: Business Environment may be a new advantage for Guangdong
In 2010, one year anniversary of the establishment of GRIIS, Professor Sui Guangjun, secretary of the Party Committee of GDUFS and executive deputy director of GRIIS, pointed out that Guangdong did not have a good foundation of international strategies research. Compared with Beijing and Shanghai. Guangdong lacks further comprehension about the international cooperators with whom it has frequent contact, not to mention the academic research.
As the “think-tank” set in university and Guangdong, GRIIS has been earnestly producing research findings to provide the investors with objective and reliable reference.
In August 2012, Wang Yang, secretary of Guangdong Provincial Committee, convoked the convention of members of the Provincial Standing Committee. After discussion, the “Five-year Action Plan of Establishing Legalized and Internationalized Business Environment” was approved. It aims at setting up the framework of the new system and establishing the ideal business environment in five years’ time.
“Facing international problems, many government organs and enterprises turn out to be confused,” said Sui Guangjun. According to him, it is necessary to establish a globalized business environment for accelerating transformation and upgrading to build a happy Guangdong.
Adjusting business environment to maintain the leading advantage
Nanfang Daily(ND): Why is GRIIS so concerned with the issue of establishing a internationalized and legalized business environment? Why is it necessary that we improve the business environment in Guangdong?
Sui Guangjun(Sui): The idea of “transformation and upgrading of industry to build a happy Guangdong” has been proposed for long, which indicates that Guangdong Party Committee and the government attach great importance to the issue of business environment. In the recent 30 years of reform and opening- was raised, Guangdong has made every effort to carry it out. Although Guangdong has taken the lead of economic development and stimulated the whole country’s economy., it has also produced some negative effects, among which the most serious one is the market and economy dominant theory. It is necessary in the early stage of the reform and opening- process. However, over 30 years passed and it is high time that we made adjustments to the business environment. The market is not everything and should be regulated. If we blindly pursue economic profits, such problems as justice and environment protection will be ignored.
Construction of Globalized and Legalized Business Environment is Systematic
ND: How should Guangdong establish this internationalized and legalized business environment?
Sui: I would describe it as a huge systematic construction. Not only will it involve aspects of economy, administration, law, international relation and so on, but it also should take the nation into consideration instead of focusing on Guangdong. As one of the leaders in carrying out reform and opening up, Guangdong has a long history of foreign market construction and rich experiences in establishing business environment. To establish business environment should be based on economy but exceed economy. Considering other cultural and legal problems, there is still a long way to go. In addition, globalized and legalized business environment is strongly related to the citizens’ quality. The basic quality of Guangdong needs improving badly, especially in humanity and worship for law.
I have impressive experiences about the importance of improving citizens’ quality during my visit to Poland. The Polish government sets museology as a compulsory subject from the kindergarten education, which can well explain why this disaster-ridden country has nurtured masters like Madame Curie, Chopin and Copernicus. For China, it is essential to lay good foundations of the business environment so as to win the world’s respect.
ND: What does the business environment of Guangdong need for further improvements?
Sui: I would take Hong Kong as a reference system and present the shortcomings of the mainland including the Chinese tradition of “relationship comes the first”. Actually, mechanism and ideas are the greatest advantage, without which the government won’t dare to decentralize power and individuals and enterprises won’t be more involved in economic operation. Speaking of the function of the government, I assume that the previous mode has come to its end and Guangdong is in the right direction. What we are going to do next is to deepen administration simplification and power decentralization. We should maintain the courage and vigour in the last 30 years, regard the existed achievements as a driving force, further emancipate our mind and be the pioneer!
