Recommendations to boost Jiangsu’s and Nanjing’s international reputations

In its Nanjing Position Paper 2019/2020, the European Chamber’s Nanjing Chapter noted significant progress in the local government’s approach to engaging with the European business community. Since then, local officials have continued to work with the chapter to address member concerns. This engagement has proved invaluable, but took place under unfortunate circumstances. Highly restrictive COVID-19 measures disrupted member companies’ operations to varying degrees from early 2020 to early 2023. The necessity of addressing emergent issues, in order to maintain continuity of business operations to the greatest extent possible, meant that both the city’s and Jiangsu Province’s internationalisation efforts have taken a back seat over the past few years.

The COVID-19 pandemic has both created new and exacerbated old challenges, making doing business in Jiangsu more difficult. China’s persistence with its ‘dynamic-zero’ COVID policy, well after most other countries had reopened and learned to coexist with the virus, has seriously damaged investor confidence. While the focus in China has now shifted towards more pragmatic pandemic management, many of the problems that resulted from the country’s initial approach will persist if left unaddressed.

Long-term international travel restrictions and unpredictable lockdowns created significant barriers to doing business. In addition to the fear that such measures will be reimposed in the event of a future public health crisis, an environment in which abrupt policy changes and inconsistent implementation of rules are the norm is not conducive to making investment decisions. The Nanjing Chapter believes that working with the local business community to develop policies that will allow operations to continue under such circumstances, and making sure that clear and transparent channels of communication are maintained, would enable government authorities to begin the process of rebuilding investor trust in the region.

Historically, Jiangsu’s internationalisation efforts often took the form of promotional materials and events designed to showcase the province’s openness. Unfortunately, these methods have proved inefficient, as they did not improve either the quality of life for foreign nationals or the ease of doing business for European companies. Solving basic problems related to liveability and doing business would be a more effective way forward. While many of Jiangsu’s cities have a reputation for being relatively well-developed, there are still many aspects that hold them back from becoming globally competitive. They lack many of the required features, such as an established financial sector and a globally recognised innovation ecosystem. Characteristics like these cannot be created by a government, but rather develop as the result of continued market opening, improved governance, a diverse community and a business environment that guarantees rule of law.

While several international economies have recently introduced new visa policies to attract developing talent from abroad—some even do not require a job offer, as with Hong Kong’s Top Talent programme and the United Kingdom’s high-potential individual visa—Jiangsu’s work permit and residence policies are uncompetitive and confusing for foreign nationals and their employers. Improving communication and clarity about application requirements and procedures, while also trialling initiatives that attract developing talent, would make the province far more attractive as a place to work and live. Nanjing in particular would be well advised to take advantage of its high concentration of universities by encouraging international students to stay and work after graduation. Taking tangible steps to make foreign nationals already in the province feel more welcome would make Jiangsu more attractive and strengthen internationalisation efforts. At times, pandemic measures led to foreign nationals unfortunately being singled out based on their nationality. It is important that future policies are not implemented in a way that leads to such discriminatory treatment.

An additional challenge for foreign nationals living in China is the growing reliance on digital applications for carrying out day-to-day activities. A significant number of mobile phone-based public and private systems, including platforms for local services, only support users that have Chinese resident identity (ID) cards. The Nanjing Chapter proposes addressing this by creating uniform standards for collecting information across all platforms and mandating its use in both the public and private sectors.

Identification is a major challenge for foreign nationals in China. Holders of the Chinese ‘green card’ should theoretically face fewer problems than residents that only use passports, but sadly that is rarely the case. Permanent residence (PR) ID card holders continue to have trouble accessing basic services without their passport. This could be remedied by the Jiangsu Government clearly communicating that green cards must be universally accepted as a legitimate form of identification, and by issuing identification cards to all foreign residents.

In line with recommendations featured in the Nanjing Position Paper 2019/2020, Nanjing has made significant improvement in terms of its treatment of small and medium-sized enterprises (SMEs). However, there are some areas in which SMEs still struggle to get the support they need. The transition to green energy is an example that the Nanjing Chapter hopes can be rectified.

European companies are at the forefront of decarbonisation, with many having made globally binding pledges to achieve carbon neutrality well in advance of China’s 2060 target. This means that access to green energy is an increasing necessity for them. Unfortunately, member companies report a disorganised and confusing green energy purchasing experience in Jiangsu, and even have trouble documenting how much green energy they have used. This would be best remedied through the implementation of a combination of measures that give companies more control over energy purchasing and provide them with clearer guidance on Jiangsu’s plan for green energy adoption. The Nanjing Chapter is recommending the creation of agreements with other provinces to allow firms to directly purchase their own green energy, modelled after the system adopted in several southern provinces.

Environmental, health and safety inspections have become an additional challenge for Chamber members. Companies and regulators share a fundamental goal of achieving safe operations, but differing ideas about how best to do this create challenges. The length and frequency of inspections, as well as differing standards in Europe and China, are the primary reasons for this. The situation could be improved by better coordination between government bodies, as well as by establishing a board of arbitration to review expert recommendations before they become requirements.

Adopting policies that make daily life and doing business more convenient for foreign nationals, while also addressing functional concerns that affect business operations, would go a long way to restoring investor confidence in Jiangsu. Although the COVID-19 pandemic has created significant challenges, China will remain a key destination for European investment for years to come. The Nanjing Chapter believes the recommendations provided in this paper will provide Jiangsu with the tools it needs to become more competitive with other regions in China and drive towards a more international future.

To download the Nanjing Position Paper 2023/2024, please visit the Chamber’s website: https://www.europeanchamber.com.cn/en/publications-local-position-paper