For months, foreign companies in China have been quietly enduring increased scrutiny from Chinese government antitrust enforcers, issuing only occasional statements as they have been more frequently targeted by surprise raids, protracted investigations and escalating fines.
Now, tentatively, but together, they appear to be pushing back.
On Wednesday, the US-China Business Council, a group that lobbies on behalf of about 220 large US companies with operations in China, issued a report taking direct aim at China’s recent enthusiastic application of its six-year-old anti-monopoly law and highlighting ways that the council says enforcement could be improved.
“For American businesses operating in China, China’s AML [anti-monopoly law] regime is creating more questions than answers,” US-China Business Council president John Frisbie said in a news release.
“Will China use the AML to protect its domestic industry rather than promote fair competition? Is the Chinese government using the AML to force lower prices, rather than letting the ‘market play the decisive role’ as enshrined in China’s new economic reform program? ... [The council] sees troubling reasons for concern,” Frisbie said.
China’s antitrust clampdown has already taken aim at scores of companies, foreign and domestic — including recently Microsoft Corp, Qualcomm Inc, Daimler AG, Volkswagen AG and a dozen Japanese manufacturers of auto parts and bearings.
Actions against foreign companies tend to receive more attention from the media, but the companies, which generally lack the political patronage networks that their Chinese counterparts enjoy, tend to lie low once targeted.
Experts say it is unheard of for a foreign company to speak out against antitrust action in China, let alone to try to file an administrative appeal.
However, the council’s report is only the latest distress signal from foreign businesses in China. On Tuesday, the American Chamber of Commerce in China published the results of a survey of members showing that 60 percent of the respondents felt foreign business was less welcome in China and 49 percent believed foreign firms were being targeted in recent pricing or anticorruption campaigns.
Last month, the European Chamber of Commerce in China issued a statement on recent anti-monopoly enforcement actions, citing “numerous alarming anecdotal accounts from a number of sectors that administrative intimidation tactics are being used to impel companies to accept punishments and remedies without full hearings.”
The report by the US-China Business Council said that 86 percent of the companies it surveyed expressed concern about competition enforcement activities in China.
Companies that have fallen under antitrust scrutiny in China complained about a lack of due process, unfair treatment, long review periods for approving mergers and acquisitions and the lack of transparency in how rulings are reached and fines are set.
If China’s antitrust actions are giving Western companies a chill, it worsens an already frosty investment environment.
Foreign direct investment in mainland China fell 17 percent in July compared with that seen a year earlier, and declined 0.4 percent, to US$71.1 billion, in the first seven months of this year. The figures, which exclude the financial sector, showed investment from Japan dropped 45.4 percent in the first seven months, while investment from the US fell 17.4 percent and European investment fell 17.5 percent.
China’s slowing economic growth and rising labor and other operating costs no doubt weighed on investment flows. However, the country’s antitrust actions are unlikely to improve the situation.
PERSISTENT RUMORS: Nvidia’s CEO said the firm is not in talks to sell AI chips to China, but he would welcome a change in US policy barring the activity Nvidia Corp CEO Jensen Huang (黃仁勳) said his company is not in discussions to sell its Blackwell artificial intelligence (AI) chips to Chinese firms, waving off speculation it is trying to engineer a return to the world’s largest semiconductor market. Huang, who arrived in Taiwan yesterday ahead of meetings with longtime partner Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), took the opportunity to clarify recent comments about the US-China AI race. The Nvidia head caused a stir in an interview this week with the Financial Times, in which he was quoted as saying “China will win” the AI race. Huang yesterday said
Nissan Motor Co has agreed to sell its global headquarters in Yokohama for ￥97 billion (US$630 million) to a group sponsored by Taiwanese autoparts maker Minth Group (敏實集團), as the struggling automaker seeks to shore up its financial position. The acquisition is led by a special purchase company managed by KJR Management Ltd, a Japanese real-estate unit of private equity giant KKR & Co, people familiar with the matter said. KJR said it would act as asset manager together with Mizuho Real Estate Management Co. Nissan is undergoing a broad cost-cutting campaign by eliminating jobs and shuttering plants as it grapples
The Chinese government has issued guidance requiring new data center projects that have received any state funds to only use domestically made artificial intelligence (AI) chips, two sources familiar with the matter told Reuters. In recent weeks, Chinese regulatory authorities have ordered such data centers that are less than 30 percent complete to remove all installed foreign chips, or cancel plans to purchase them, while projects in a more advanced stage would be decided on a case-by-case basis, the sources said. The move could represent one of China’s most aggressive steps yet to eliminate foreign technology from its critical infrastructure amid a
MORE WEIGHT: The national weighting was raised in one index while holding steady in two others, while several companies rose or fell in prominence MSCI Inc, a global index provider, has raised Taiwan’s weighting in one of its major indices and left the country’s weighting unchanged in two other indices after a regular index review. In a statement released on Thursday, MSCI said it has upgraded Taiwan’s weighting in the MSCI All-Country World Index by 0.02 percentage points to 2.25 percent, while maintaining the weighting in the MSCI Emerging Markets Index, the most closely watched by foreign institutional investors, at 20.46 percent. Additionally, the index provider has left Taiwan’s weighting in the MSCI All-Country Asia ex-Japan Index unchanged at 23.15 percent. The latest index adjustments are to
RSS