News / Asia

China Increasing Restrictions on Foreign Businesses

Peter Simpson

For three decades foreign companies have been taking advantage of the warm welcome given to them by an emerging China. But now many international companies say they face a growing number of obstacles to doing business in the country.  Peter Simpson reports from Beijing.

When China began opening up 30 years ago, foreign enterprises were given VIP treatment by officials eager to learn Western business ways and take advantage of billions of investment dollars.

Foreign companies in turn sought to tap the vast number of potential customers in China, as well as its pool of workers.

But these days, sentiment among international companies has turned bleak.

Foreign business executives say there has been a sudden change in policy and an increase in restrictions that favor Chinese companies and smack of protectionism.

China business consultant James McGregor is the former chairman of the American Chamber of Commerce, a long-time journalist in China and best-selling business author.

During his 20 years of observing the business environment in China, he says he has seldom seen the foreign business community more angry and disillusioned than it is today.

"The foreign business community is really concerned about where things are headed," noted McGregor.  "Many foreign companies are doing well and making money here after 20 years building up their businesses. But as they look at new policies coming their way, they are concerned that future opportunities are narrowing."

The European Chamber of Commerce in China expressed concern last week that its members suffer under what it calls an unexpected and impregnable blockade erected by the Chinese in recent months.

In an open letter, the European chamber says some its members are contemplating leaving China because they are weary of slogging through what the letter calls an unpredictable business environment with the odds deliberately stacked against them.

The main bone of contention is the indigenous innovation policy, that instructs provincial and regional governments to choose Chinese companies over foreign ones for contracts.

European Chamber of Commerce Secretary General Dirk Moens says there are risks businesses will suffer damaging losses because of confusing and inconsistent regulations, and favoritism.

He says many Europeans companies have demanded action and have asked his group to seek dialogue with the Chinese government.

"Our members are pushing us to engage with the relevant authorities and the good news is we are doing that," said Moens.  "The authorities are willing to engage in this discussion as they realize the reaction means their policies lack clarity and there is a need to engage with business organizations to clarify."

Many link the hostile business environment to the arrest and lengthy imprisonment of Rio Tinto's Chinese staff, Google's pull out from China because of censorship and the accusations that the Chinese manipulate their currency.

But McGregor says these issues, especially the dispute over the value of the yuan, are not the main concerns of foreign businesses.

He says the bigger problems include rampant intellectual-property theft, state penetration of multinationals through unions and Communist Party organizations, and politicized courts and agencies that almost always favor local companies. And many foreign companies complain of what he describes as creative and selective enforcement of World Trade Organization requirements.

"There's been a lot of foreign companies in the last five years that have decided to put almost all their eggs in the China basket because they saw this place as growth and they saw opportunity," added McGregor.  "And now I think they are starting to see opportunities narrowing and closing and they are going to be reassessing. There are board rooms all around the world right now that are having a lot of discussions about this and reassessing the China opportunity."

McGregor also says the financial crisis has seen the long-held respect for the Western business model lost and in its place the emergence of Chinese triumphalism.

He says many Chinese policy makers now believe their market model is superior to those of Washington and Brussels.

Both he and Moens warn the change in attitude could drive companies out of China.

However, the Chinese government denies the environment has changed toward foreign companies.

During its annual parliamentary session last month, Premier Wen Jiabao was at pains to say international businesses are always welcome, and that he would try to create a level playing field.

Senior Chinese officials from the Foreign and Commerce Ministries do appear to have gauged the current mood.

In recent weeks they have gone on a charm offensive and have met with foreign business leaders to calm rising anger.

And Foreign Ministry spokesman Qin Gang firmly denied China violates World Trade Organization rules.

Qin says there is no discrimination against foreign companies. He says that since joining the WTO, China has treated international firms like family members, and adds that all foreign companies are welcome to do business in the country.

You May Like

Obama: Alaskans Feel Signs of Climate Change

Alaskans experiencing bigger storm surges as sea ice melts, more frequent and extensive wildfires, deteriorating glaciers, and swift shoreline erosion More

Katrina Brought Enduring Changes to New Orleans

The city’s recovery is the result of the people and culture the city is famous for, as well as newcomers and start-up industries More

Magical Photo Slides Show Native Americans in Late 1800s

Walter McClintock spent 20 years photographing the Blackfoot Indians and their vanishing culture at the dawn of the modern age More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Colombians Flee Venezuela as Border Crisis Escalatesi
X
August 27, 2015 2:08 AM
Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Is China's Economic Data Accurate?

Some investors say China's wild stock market gyrations have been made worse by worries about the reliability of that nation's economic data. And some critics say the reports can mislead investors by painting an unrealistically-strong picture of the economy. A key China scholar says Beijing is not fudging ((manipulating)) the numbers, but that the economy is evolving quickly from smoke-stack industries to services, and the ways of tracking new economic activity are falling behind the change. V
Video

Video Next to Iran, Climate at Forefront of Obama Agenda

President Barack Obama this week announced new initiatives aimed at making it easier for Americans to access renewable energy sources such as solar and wind. Obama is not slowing down when it comes to pushing through climate change measures, an issue he says is the greatest threat to the country’s national security. VOA correspondent Aru Pande has more from the White House.
Video

Video Shipping Containers Provide Experimental Housing

Housing prices around the San Francisco Bay area are out of reach for many people, so some young entrepreneurs, artists and tech industry workers are creating their own houses using converted shipping containers. But as VOA's Mike O’Sullivan reports from Oakland, the effort requires ingenuity and dealing with restrictive local laws.
Video

Video Arctic Draws International Competition for Oil

A new geopolitical “Great Game” is underway in earth’s northernmost region, the Arctic, where Russia has claimed a large area for resource development and President Barack Obama recently approved Shell Oil Company’s test-drilling project in an area under U.S. control. Greg Flakus reports.
Video

Video Philippine Maritime Police: Chinese Fishermen a Threat to Country’s Security

China and the Philippines both claim maritime rights in the South China Sea.  That includes the right to fish in those waters. Jason Strother reports on how the Philippines is catching Chinese nationals it says are illegal poachers. He has the story from Palawan province.
Video

Video Technique May Eliminate Drill-and-Fill Dental Care

Many people dread visiting dentists because they're afraid of drills. Now, however, a technology developed by a British firm promises to eliminate the need for mechanical cleaning of dental cavities by speeding a natural process of tooth repair. VOA’s George Putic reports.
Video

Video China's Spratly Island Building Said to Light Up the Night 'Like A City'

Southeast Asian countries claim China has illegally seized territory in the Spratly islands. It is especially a concern for a Philippine mayor who says Beijing is occupying parts of his municipality. Jason Strother reports from the capital of Palawan province, Puerto Princesa.
Video

Video Ages-old Ice Reveals Secrets of Climate Change

Ice caps don't just exist at the world's poles. There are also tropical ice caps, and the largest sits atop the Peruvian Andes - but it is melting, quickly, and may be gone within the next 20 years. George Putic reports scientists are now rushing to take samples to get at the valuable information about climate change locked in the ice.
Video

Video French Experiment in Integrating Roma Under Threat

Plans to destroy France’s oldest slum have sparked an outcry on the part of its Roma residents. As Lisa Bryant reports from the Paris suburb of La Courneuve, rights groups argue the community is a fledgling experiment on integrating Roma who are often outcasts in many parts of Europe.
Video

Video Kenyans Turn to Agriculture for Business

Each year Kenyan universities continue to churn out graduates for the job market despite the already existing high rate of unemployment among youth in the country. Some of these young men and women have realized that agriculture can be as rewarding as any other business or job, and they are resorting to agribusiness in large numbers as a way of tackling unemployment. Rael Ombuor reports for VOA.
Video

Video First Women Graduate Elite Army Ranger School

Two women are making history for the U.S. Army by proving they are among the toughest of the tough. VOA's Carla Babb reports from Fort Benning, Georgia as 94 men and those two women rise as graduates of the difficult Ranger school.

VOA Blogs