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Pushback: How China Keeps Foreign Business in Check


China uses certain standards and measures that favor local companies

"INDIGENOUS INNOVATION"

This policy favors local technology in computers, software, and new energy equipment for government purchases worth billions of dollars. GE's wind division, software companies SAP and Microsoft, and computer makers such as Dell and HP could lose contracts under these guidelines.

PATENT LAW

A new measure could force foreign companies to hand over patents if they are seen as using them to compete "unfairly." The law may also require foreign drugmakers and software writers to first register in China any innovations developed in their mainland labs, spurring fears of a loss over control of their technology.

STANDARDS

China issues more than 10,000 product standards each year, some written to keep foreigners out of the market. Several Italian appliance manufacturers were shut out by rules requiring hotter-burning gas stoves. And tiremakers say the rules make it less profitable to sell in China.

APPROVALS

Bureaucratic foot-dragging on licensing for foreign banks and insurers restricts access and boosts Chinese rivals. One insurer says he can apply to open only one branch at a time and that it takes more than 18 months to get the green light. So some foreign companies have no more than a handful of branches.


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