BEIJING (Sept. 4, 2014) — China is targeting foreign companies—including auto makers and suppliers—with opaque laws and rules, according to a group representing U.S. businesses there, contributing to a deteriorating environment for investment in the nation.
Sixty percent of respondents to a survey last month by the American Chamber of Commerce in China said they feel foreign business is less welcome in the country than before, the business group said Sept. 2 in Beijing. That’s up from 41 percent in a late-2013 survey. Forty-nine percent said foreign companies are being singled out in recent pricing or anti-corruption campaigns.
U.S. companies are joining Europeans in flagging increased concern that local authorities involved in an antitrust crackdown are discriminating against non-Chinese corporations. The campaign threatens to exacerbate a decline in foreign direct investment in the world’s second-largest economy.
American Chamber members say they have “growing perceptions that multinational companies are under selective and subjective enforcement by Chinese government agencies,” Greg Gilligan, the group’s chairman, said in a report. Laws and rules “lack transparency and are at times only vaguely related to the particular case.”
Dozens of foreign companies are being targeted in probes, with regulators opening an anti-monopoly investigation into Microsoft Corp. in July and state media accusing Apple Inc. of using its iPhone to steal state secrets.
The survey released Sept. 2 was conducted from Aug. 22 to Aug. 28 with 164 respondents, while the previous one had 365 responses in November and December, according to the chamber.
Volkswagen A.G.’s Audi, BMW A.G., Daimler A.G.’s Mercedes-Benz, Tata Motors Ltd.’s Jaguar Land Rover, Fiat S.p.A.’s Chrysler Group L.L.C., Toyota Motor Corp. and Honda Motor Co. have announced price cuts of vehicles or spare parts since July in the wake of the probes. General Motors Co. said last month that its joint venture with SAIC Motor Corp. has been responding to regulator requests since 2012.
China last month found a dozen Japanese auto-parts makers guilty of price fixing and doled out the biggest antitrust fines in the country since relevant rules came into effect six years ago, with Sumitomo Electric Industries Ltd. and Yazaki Corp. drawing the biggest penalties.
The anti-monopoly campaign will gradually eliminate the “comparative advantage” of foreign companies in China, said Chen Xingdong, chief China economist at BNP Paribas SA in Beijing. “They are going to lose the sense of superiority,” Mr. Chen said. “That’s definitely a shock.”
American Chamber members have “concerns that rules are shifting again for foreign companies in China in ways that are highly opaque and difficult for local managers to anticipate or adapt to,” Mr. Gilligan wrote in a note accompanying a report on China’s investment environment. “Our member companies strive hard for full compliance and need support and greater clarity to achieve that goal.”
China’s anti-monopoly measures are transparent, fair and done in accordance with the law, Qin Gang, a Foreign Ministry spokesman, said at a regular briefing in Beijing Sept. 2, responding to the chamber’s report.
“China will as always welcome foreign companies and enterprises to develop cooperation in all fields and build a good market economy,” Mr. Qin said. “At the same time, we request foreign companies observe Chinese laws while in China.”
Accusations that most of China’s antitrust probes are directed against foreign companies are “groundless and baseless,” Xu Kunlin, head of the National Development and Reform Commission’s anti-monopoly bureau, said in an interview published in the state-run China Daily.
China is targeting industries where it wants domestic companies to catch up, including in pharmaceuticals, medical devices, technology and autos, Lester Ross, a chamber vice chairman, said at a briefing Sept. 2 in Beijing.
“China used to be more friendly to foreign companies, but the honeymoon is over,” said Jin Jianmin, a senior researcher at Fujitsu Research Institute in Tokyo who previously worked for China’s government. The government has started to take complaints from domestic companies about preferences for foreign firms more seriously, he said.
This Bloomberg News report appeared in Automotive News, a Detroit-based sister publication of Tire Business.
What is the best business practice?
|Treating your customers fairly.||
67% (36 votes)
|Offering the lowest price possible.||
2% (1 votes)
|Doing the job well, as quickly as possible.||
22% (12 votes)
|Staying ahead of technology.||
4% (2 votes)
|Be heavily involved in the community.||
6% (3 votes)
|Total votes: 54|