Survey: Foreign companies in China feel 'targeted'

Staff Writer
Columbus CEO

BEIJING (AP) — An American business group warned Tuesday that foreign companies in China feel increasingly targeted for unfair enforcement of anti-monopoly and other laws and said investment might decline if conditions fail to improve.

The American Chamber of Commerce's report adds to mounting complaints about a flurry of investigations of global automakers, technology suppliers and other companies in recent months. Some foreign managers say Chinese authorities appear to be trying to hamper them and shield domestic rivals from competition.

Foreign companies believe they face "selective and subjective enforcement" of anti-monopoly, food safety and other rules, said the American Chamber of Commerce in China.

Almost half of companies responding to a survey "believe that foreign companies are being targeted," the group said. It said the risk was increasing that China "will permanently lose its luster as a desirable investment destination."

"Improvements in these areas are imperative if foreign companies are to continue to invest in China's future," the group said in a statement.

Uncertainty over regulatory investigations adds to challenges for foreign companies at a time when China's growth is slowing and they face more competition from ambitious local rivals.

Economic growth edged up to 7.5 percent over a year earlier in the three months ended in June from 7.4 percent the previous quarter. But that was barely half of 2007's peak of 14.2 percent.

Beijing announced last week it will fine 12 Japanese auto parts suppliers a total of $202 million on charges of price-fixing. Officials have said Mercedes Benz, Audi and Chrysler also will face punishment. Microsoft and chip maker Qualcomm also are under scrutiny.

Business groups welcomed the enactment of China's anti-monopoly law in 2008 as a step toward clarifying operating conditions. Since then, they have said it is enforced more actively against foreign companies than against local rivals.

Another business group, the European Union Chamber of Commerce in China, said last month that competition law should not be used to achieve other goals such as forcing price reductions. The group said it received reports that regulators pressure companies to accept penalties without a full hearing and to avoid involving their governments.