APPENDIX 32
Memorandum submitted by ZENECA (China)
Investment Company Limited
1998 and 1999 were milestone years in Britain's
relationship with China, with two state visits of the British
Prime Minister and of President Jiang Zemin. Business links have
played, and will continue to play an important role in developing
close relations between the two countries.
The British government and its embassy in China
play vital roles in the development and strengthening of business
ties and it is widely recognised in China that the British government
has taken a sensible approach to China on many key issues. This
approach has aided British companies in what has been a volatile
period in China.
Zeneca Agrochemicals (Zeneca) is the crop protection
and plant science business of AstraZeneca PLC, a UK-based international
bioscience group. Zeneca's joint venture, the Zeneca Nantong Agrochemicals
Company Ltd, a manufacturing plant in Jiangsu province, is the
largest foreign investment of its kind in China. This joint venture
is a good example of Sino-British co-operation in agriculture,
a field that is vital for the future development of the Chinese
economy. The British government and its organisation in China
are as keen as the Chinese government to ensure that Zeneca Nantong
is a complete success.
Zeneca appreciates the support of the British
governments for raising our concerns to the Chinese government
in the last few years. As a business, we continue to face two
pressing issues.
First, the lack of import quota for active ingredient
importation. This is despite the fact that the requirement was
clearly documented in the feasibility study and the Joint Venture
contract. Without sufficient import quota, the joint venture will
be placed in severe operational and financial difficulties, and
severe disruptions to Zeneca's overall businesses in China. We
and our joint venture partners in Nantong are becoming increasingly
anxious at the inability of the State Economic and Trade Commission
(SETC) to supply the necessary approvals. In April this year,
the UK Deputy Minister of Agriculture, Rt Hon Joyce Quin MP, raised
our concerns on import quota with the Chinese Vice Minister of
Agriculture, Mr Liu Jian. The British Ambassador to China, Sir
Anthony Galsworthy has raised the quota issue to the State Council
on Zeneca's behalf. Christopher Segar, Commercial Counsellor of
the British Embassy has also been very supportive in representing
our interests with SETC. The issue is yet to be resolved and we
are assured of the continued assistance of the British Embassy
for which we are very appreciative.
Second, the inadequate enforcement of uniform
environmental standards to ensure old and dangerous manufacturing
technology is phased out in China. Zeneca's pre-condition to investment
to China was the Agreement with the former Ministry of Chemical
Industry on environmental standards, this outlined the need to
enforce the environmental standards set by the State Environmental
Protection Association (SEPA) in China. The agreement was referenced
in the joint venture contracts approved by Zeneca. The SETC and
State Administration of Petrochemical and Chemical Industry (SAPCI)
have both confirmed that they would honour the agreement. Despite
this, SAPCI is still considering approvals for other processes,
which, with inadequate investment on waste treatment facilities,
can not meet the same environmental standards set in China.
In November 1999, Professor Geoff Randall, Adviser
to the Cabinet Office on UK Government Environmental R&D Programme,
wrote to the SAPCI and SEPA separately to raise concerns on the
issues of environmental standards and to support the publication
of the 6th Mandate which banned dated and dangerous manufacturing
processes. Recently, the British Secretary of State for Trade
and Industry, Rt Hon Stephen Byers MP also raised our concerns
with the Chinese Vice Premier Wu Banguo, who initiated an investigation
which should lead to a raised awareness of the 6th Mandate. So
with the aid of the various British organisations we have been
able to make considerable progress, but as always there is a long
way to go. The Sino Britain Chemicals Working Group which is a
forum created to raise industry issues on a formal level has also
been a useful platform for progress.
The British Government organisations in China
have good information on the fast changing political, legal and
regulatory environment in China and all avenues should be used
to continue to enhance the communications of this information.
Much of the new commercial development however is based around
the coastal cities and in particular Shanghai. So the political
and regulatory developments are well tracked by the Embassy in
Beijing but we believe the embassy could strengthen the commercial
information flow in Shanghai and the fast developing cities. The
Chinese legal framework is still not adequately developed and
laws and regulations are open to local interpretation which creates
a need to track information in the commercial centres. Any such
enhancements would greatly benefit British Companies doing business
in China by providing foresight and the opportunity to plan better,
be more proactive and consequently compete more effectively with
their global and local competitors in the Chinese market.
Although these issues will need continuous pressure
to be resolved we are grateful for the willingness of the British
Embassy in China to respond to our needs and to maintain the pressure
for the upliftment of industry and environmental standards in
this fast developing market.
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