Sun Zhenyu, vice-minister of the Ministry of Foreign Trade and Economic Cooperation (MOFTEC), Tuesday said the State would grant preferential policies, such as tax breaks and loans, to overseas companies in China that are marching to the west for business expansion.

Sun said preferential policies have been successful since China launched its Go-West campaign in 1999. Some overseas companies in the east have already reaped fat profit after heading to the west.

The State eased its control over overseas enterprise expansion last year, allowing them to invest in companies in the area and set up independent companies.

Yet while the moves are focused on attracting overseas funds, overseas investors attending the seminar said preferential policies were not as important as improving the integrity of the investment environment.

"We need more transparent regulations and efficient services, instead of preferential policies and cheap labour,'' said Dong Weicheng, a manager from the Japanese Komatsu (China) Ltd.

Kerry Brown, first secretary of the British Embassy to China, also agreed that unclarified regulations scare away foreign companies.

"Foreign companies are confused about local regulations, which are quite different here and there in the west,'' Kerry said. Others chimed in their concerns, too.

"Policy makers have to focus on developing an even more transparent and consistent framework based on the law,'' Cui Jianguo, an official from the International Finance Corp, an investment instituion under the World Bank. "They need to foster a more level playing field and remove barriers of entry. They also need to improve the protection of private property rights and introduce greater fairness, transparency and consistency in the taxation of private firms."

A MOFTEC official said more detailed regulations to improve the investment environment for foreign companies will come out after China's entry into the World Trade Organization late this year.

"But that would be a step-by-step process,'' the official said.

Sun said Tuesday's seminar provided an unprecedented opportunity for overseas companies in the east to seek expansion in the west.