According to Survey : The Wall st Journal
By ANDREW BROWNE And LAURIE BURKITT
BEIJING—Growing numbers of U.S. businesses say they feel unwelcome in China amid a crackdown on monopoly pricing and corruption that they say unfairly targets foreign companies.
A survey by the American Chamber of Commerce in China released on Tuesday shows that 60% of companies feel less welcome in China than before, a sharp increase from 41% in the previous poll a year ago. In a new question for its members, 49% of respondents believe that foreign firms are being singled out for attack.
The annual survey of AmCham’s members is the latest evidence that foreign investors are increasingly worried about the progressively aggressive tactics by Chinese regulators in industries ranging from dairy to auto parts to technology.
These fears are combining with more general worries over China’s slowing economic growth, rising political risks, foreign policy tensions, mounting labor costs and opaque rules for foreign investors, the AmCham business climate survey shows. All this has contributed to a slowdown of investment into China from North America, Europe and Japan.
Some 61% of European companies that have operated in China for more than a decade said doing business in the country is getting more difficult, according to a survey this year by the European Union Chamber of Commerce in China.
Chinese officials have said they target both domestic and foreign companies. They also say the rising number of investigations under the country’s six-year-old antimonopoly law have precedent in similar actions in the U.S. and Europe in previous decades.
The antitrust probes “are aimed at protecting consumer rights and making sure market competition is open and fair,” Qin Gang, China’s foreign ministry spokesman said at a regular briefing Tuesday. They are “completely legal, transparent and fair.”
“As usual, China welcomes foreign companies, but at the same time, foreign companies also need to abide by Chinese laws,” he said.
Many foreign companies caught up in probes into industry pricing say they are instructed not to involve their foreign lawyers, according to people with knowledge of those inquiries. The European chamber said in August that it has heard “alarming” accounts from European companies that intimidation tactics are being used to force companies to accept punishment without full hearings. Chinese authorities have been advising companies not to challenge investigations or seek legal or government assistance, the organization said.
AmCham said it noted “an increasing sense of pessimism among foreign multinational companies in China” and warned that China could “permanently lose its luster as a desirable investment destination.”
It said U.S. companies in China face a difficult period as China shifts from a state-led model based on exports and investment to one based on services and consumption. Reforms to achieve this have been “disappointingly slow,” AmCham Chairman Gregory Gilligan said in a written statement.
“Our concern is that if the investment environment deteriorates too far, important relationships and linkages between China and the rest of the world will be materially damaged,” Mr. Gilligan said.
Chinese regulators last month levied 1.24 billion yuan ($202 million) in fines against 12 Japanese auto-part makers for alleged price manipulation. BMW AG, Volkswagen AG’s Audi and Mercedes-Benz parent Daimler AG are awaiting possible punishment following similar probes. Microsoft Corp. and Qualcomm Inc. are being investigated for potential monopolistic activity. BMW, Audi and Daimler responded to the investigations by cutting prices. Qualcomm has said it is cooperating with authorities; Microsoft has said that it abides by laws in China and is cooperating with investigators.
At the same time, Western multinationals face state media attacks that can destroy their businesses. U.S.-based food processor OSI Group LLC’s China business collapsed after a Shanghai TV report into alleged abuses at its Shanghai plant. Six OSI employees have been arrested. The company has apologized.
Even though tests have yet to show any contamination of OSI products, several of the company’s major customers in China have walked away, including Burger King Worldwide Inc. and the operators of the KFC and the 7-Eleven chains. McDonald’s Corp. has suspended OSI supplies to its 2,000-plus outlets in China and is reconsidering its relationship with OSI in the country altogether.
The AmCham survey shows that while many U.S. companies are still profitable in China, fewer are reporting substantial profit increases. And as revenues and profits slow they are scaling back expansion plans.
While seven years ago China was the No. 1 investment priority for a majority of AmCham members, that proportion has declined to 20%, with respondents increasingly describing China as only one of many foreign direct investment destinations.http://www.wsj.com/articles/u-s-firms-feel-less-welcome-in-china-1409624607#:xJpuDbJj7R50IA
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