The China Advisory Council suggests rebranding business centres currently run by EU member states in China as 'European Houses' in order to boost business opportunities.
Without necessarily building new structures, the simple "double-hatting" of existing member states' SME centres could generate a European presence in provinces and cities of China where some member states currently do not have a presence.
As one Council member put it, "the EU should pool all the information from EU member states and provide an overall European information platform for all SMEs".
"An Estonian SME investing in Chengdu could then ask for support from the German Chamber of Commerce in Chengdu," said Jonathan Story, author of the policy brief submitted to the Commission. "In order to avoid duplicating existing resources, this should not necessarily mean building physical structures, however."
The report was commissioned as part of an 'Understanding China' scheme co-funded by the EU executive.
The European Commission plans to open a string of new offices across the globe to support SMEs and help European businesses access emerging markets (EurActiv 15/01/10). A €5 million SME centre is due to open in Beijing by the end of the year (EurActiv 04/11/09).
Prospects for European SMEs in Eastern China
Eastern China currently holds the best prospects for SMEs thanks to its relative concentration of English speakers, proximity to consumers and familiar business culture. Factors favouring business opportunities vary greatly between inland and coastal areas and information-sharing between member states' SME centres would help maximise the potential of the European brand.
The coastal cities of Beijing and Shanghai, for example, hold the advantage of strong infrastructure, whereas the inland city of Chongqing offers better access to markets due to its location by the Yangtze River and its transparent local government.
EU firms exchanging information between one another is just one example of the added value of being part of an EU network in a country known for its difficult business conditions.
A recent EU study revealed that small firms which trade internationally create more jobs and are more innovative. Luxury brands, the high-tech industry and the environmental sector were all identified as areas of potential growth and attractiveness for the European label, but just one in four SMEs have exported in the last three years, leaving the Chinese market untapped up to now.
China's centrally-planned economy with little market-based features has been one of the biggest hurdles for European SMEs looking to settle in the country. Special "economic development zones" have been created however with lowered enterprise and labour tax laws, offering new opportunities which could be seized upon through a common EU approach.
The report recommends expanding the Commission's Erasmus for Entrepreneurs programme to China and using 'European Houses' as training centres for SMEs interested in investing in China.
In order to maximise investment potential and strengthen the EU's negotiating position with China on trade issues, the Advisory Council stressed that speaking with one voice is crucial and that member states must show an "EU reflex" in sharing know-how on market studies, access to people and intellectual property rights.
The diversity of what is needed is making it difficult to set out a one-size-fits-all policy in this area, and a number of ad hoc efforts have already been made to solve market-specific problems facing SMEs.
For example, the Intellectual Property Rights Helpdesk in Beijing helps companies navigate China's fraught patent system. Such services should be integrated into a single one-stop-shop for SMEs, according to the paper drafted by EU staff, so as to make the most of national activities that are already well-established.
