China

U.S. Companies Fear Growing Protectionism in China


China’s regulators launched an anti-monopoly investigation into Microsoft in July

Photograph by Simon Dawson/Bloomberg

China’s regulators launched an anti-monopoly investigation into Microsoft in July

American businesses are feeling under the gun in China, with two new surveys detailing growing concerns that Beijing is targeting U.S. companies.

A report by the U.S.-China Business Council shows that 86 percent of its member companies are concerned about Beijing’s antimonopoly enforcement activity, with 30 percent fearing it will be used against them. China has upped enforcement measures, according to the report, with investigations into the auto industry and “dawn raids” at foreign IT companies.

“For American businesses operating in China, China’s AML [antimonopoly law] regime is creating more questions than answers,” John Frisbie, president of the Washington (D.C.) business association, said in a statement. “USCBC’s membership is asking: Will China use the AML to protect its domestic industry rather than promote fair competition? Is the Chinese government using the AML to force lower prices, rather than letting the ‘market play the decisive role’ as enshrined in China’s new economic reform program?”

A separate survey released Tuesday by Beijing’s American Chamber of Commerce in China found that 60 percent of respondents believe foreign business is less welcome in China than before, up from 41 percent late last year. Nearly half of those surveyed said they have been targeted in pricing or anticorruption campaigns.

Members say they have “growing perceptions that multinational companies are under selective and subjective enforcement by Chinese government agencies,” wrote Greg Gilligan, American Chamber’s chairman, in the report. Laws and regulations “lack transparency and are at times only vaguely related to the particular case.”

While Chinese companies have also been targeted, China’s state media have focused most of their reporting on antimonopoly actions taken against foreign businesses. Dozens of foreign enterprises are being probed, and China’s regulators launched an antimonopoly investigation into Microsoft (MSFT) in July. Apple’s (AAPL) iPhone has been accused of being a tool to steal state secrets in the state press.

“China will as always welcome foreign companies and enterprises to develop cooperation in all fields and build a good market economy,” said China’s foreign ministry spokesman Qin Gang, responding to the American Chamber’s report. “At the same time, we request foreign companies observe Chinese laws while in China.”

Dexter_roberts
Roberts is Bloomberg Businessweek's Asia News Editor and China bureau chief. Follow him on Twitter @dtiffroberts.

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