More U.S., Foreign Businesses Feel Unwelcome in China
Raymond Legaspi | | Jan 09, 2015 05:18 AM EST |
(Photo : Reuters) A man takes a "selfie" with a figurine promoting products from The Coca-Cola Co, in front of a shopping mall in Beijing December 2, 2014.
More American, European and other foreign businesses say they feel unwelcome in China, according to recent surveys, no thanks to a swift and sweeping crackdown on so-called "monopoly pricing" and corruption that has targeted foreign companies.
An American Chamber of Commerce survey in 2014 showed 60 percent of its members now feel unwelcome, a dramatic jump from 41 percent the year before. In another survey by the European Chamber, over 60 percent said that doing business in China was harder.
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European companies also revealed that China's strong-arm tactics forced companies to cough up costly fines without due process. The Wall Street Journal identified these targets as Wal-Mart, Qualcomm, Microsoft, Mercedes Benz, Coca-Cola and Audi.
Last year, China's regulators slapped a record $200 million in fines on a dozen Japanese auto parts makers that were convicted of price fixing. In another case, officials fined GlaxoSmithKline a whopping $489 million for bribery, barely a day after a closed-door trial.
Foreign businesses are also alarmed with the marked difficulty in getting licenses, foreign firms' merger and acquisition and management deportation.
The American Chamber said the harsh treatment is sending businesses away from China. About seven years ago, the country was the top investment destination for most of the chamber's members. That number has dropped to 20 percent with many scaling back growth plans.
Analysts warned the crackdown may hurt China's interests in the long run because it is these businesses that seek conflict-free ties between Washington and Beijing. The increasing disgruntlement of these so-called "friends of China" could significantly affect broader U.S.-China relations, according to William Wilson, a senior research fellow in The Heritage Foundation's Asian Studies Center.
If China seeks to improve its technological abilities, it must attract foreign talent because it hardly has local innovation, according to Wilson.
He said vested interests - such as government bureaus, local administrators and state-run businesses - are resisting more market-oriented reforms. China's President Xi Jinping is not helping after he declared open season on political opposition in China that includes anyone who appears not to be Maoist enough.
The analyst warned that as U.S. companies feel more unwelcome in the Middle Kingdom, China will likely lose its influential business lobby in Washington.
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