The U.S.-China Business Council's Membership Survey is out. The results are not too surprising, with one exception. Here's the Top Ten list of member problems in China:

1. HR – recruitment and retention. This is nothing new and has been a steady complaint from my clients for quite a while now. Getting talent that has industry knowledge as well as language skills and experience working in an international business environment — not too easy these days. If you are lucky enough to find someone, be ready to cough up unseemly amounts of money.

2. Administrative licensing. They are talking about business setups and other specific government approvals, such as expanding a business scope or having a product approved for the China market. I suppose I am surprised that this is #2. If you are in an industry that is closed or requires special licensing (e.g. pharma, media, IT, financial services) then yes, this is a big deal. For everyone else, although it takes more time and expense to set up a WFOE in China than in many other countries, it's a heck of a lot easier and cheaper than it was a few years ago. Maybe I'm missing something here, or maybe the membership of USCBC include a lot of those industries?

3. IP enforcement. No commentary required here, I think.

4. Competition and overcapacity. Interesting, and bound to get even worse as Chinese enterprises continue to improve on quality, adopt new technology, and move up the value chain.

5. Transparency. Again, no comment necessary. I think things are moving in the right direction, however.

6. Standards.  Problems not only with determining what a particular standard is and how it will be applied, but foreign enterprises do not have access to the standards-making process. I think this issue is going to grow in importance in the next few years, particularly as Chinese MNCs expand internationally and begin to participate in standards-making activities in other countries. There is a protectionist element here certainly but also a simple lack of administrative experience.

7. Protectionism in China.  I think this is also reflected in several of the other items.

8. Logistics.  This is another one of those "getting better, but still a big problem" issues.

9. Access to China's services sector. I'm scratching my head a little with this one. Why is this on here as a separate line item? I acknowledge the issue but wonder about the categorization here. Again, if you are in a closed/protected sector, then you got big problems. If you are a widget manufacturer, the market is wide open and has been for years.

10. Protectionism in the United States. This is the one that surprised me a little bit – not the issue, but the fact that it is on the list. I don't remember last year's survey, so I'm not sure if this is new. However, the issue is certainly a big one and bound to get worse because of the 2008 U.S. presidential elections. I would be surprised if anyone takes the Graham-Schumer retaliatory China tariff bill seriously anymore, but there are a lot of other things going on, including Congressional interference/protectionism with respect to Chinese acquisitions of U.S. domestic enterprises.

As usual for surveys of this kind, the conclusion was that things are better but huge problems remain. Shocking, I know. Please control your enthusiasm.

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