China's telecommunications ministry denied yesterday barring Matsushita Communication Industrial Co from selling cell phones because of a Taiwan-related gaffe, a day after ministry and company officials acknowledged a ban.
The about-face comes after Matsushita spokesman Sadayoshi Hiraoka and China Ministry of Information Industry spokesman Wang Lijian Thursday said the company couldn't sell its Panasonic-brand cell phones in China for a year.
PHOTO: AFP
The company already had halted sales to fix software that displayed Taiwan as the Republic of China. That's what Taiwan calls itself, though China considers the island a "renegade province."
"It baffles me," said Fred Hu, director of Asian economic research at Goldman Sachs Asia in Hong Kong. "China's trade policy is usually very pragmatic."
Yesterday's denial, reported by the official China Daily newspaper, suggests that higher government officials may have intervened to head off what might may be a public relations nightmare for China as it hosts Pacific Rim finance ministers this weekend and stands at the threshold of WTO entry at a Geneva meeting next week.
Wang, the ministry spokesman, also stepped back from remarks made Thursday confirming the phone ban, saying that the Matsushita case "is being processed" and that "there are many possibilities."
Yokohama, Japan-based Matsushita said in a statement that it "is now checking with the Chinese government" on the matter.
"We are making efforts to regain trust from the market and resume sales as soon as possible," the statement said.
Earlier this week, China admitted it had dropped Credit Suisse First Boston from any advisory role in China Unicom Ltd's multibillion-dollar overseas share sale because the investment bank had organized a European investment tour for Taiwan businesses that included some of the nation's top government officials.
That action has raised the hackles of the anti-China lobby in the US, China's biggest export market.
"People don't like to trade with bullies," said Bob King, an aide to California Congressman Tom Lantos.
"It raises questions about China as a trading partner."
China Daily, the government's English-language mouthpiece, said in yesterday's editions that Matsushita hadn't been banned from phone sales, citing an unidentified ministry official.
"We do not know where the news came from," the newspaper quoted the official as saying. The ministry had considered a ban on phone sales, though it didn't implement one, the newspaper said.
While Goldman's Hu said China will likely get the nod for WTO entry at the Geneva meeting next week, China's mixing of economics and politics hasn't helped the nation's commercial reputation as it maneuvers to take its place as an equal among world economic powers.
This weekend, China is hosting a meeting of finance ministers of APEC countries in Suzhou, the highest-level economic summit held there to date. China has taken great pride in the event.
On Wednesday, US Ambassador to China Clark Randt skipped out on a dinner with Chinese officials to protest the decision to ban CSFB from mainland financing deals.
In Washington, Henry Hyde, chairman of the US House of Representatives Foreign Affairs Committee, is considering an investigation of the matter, according to a committee spokesman.
Matsushita has the capacity to make 2 million cellphones a year in China, enabling it to bypass a ban on Japanese imported mobile phones levied against Tokyo in June in retaliation for tariffs on Chinese leeks, mushrooms and straw.
The company apologized to China and dumped the Republic of China reference from its phones in August, after a customer complaint a month earlier triggered the controversy.
Among the other sanctions discussed was barring Matsushita phones from access to China's mobile phone network, the world's largest, the China Daily reported.
Because of the way mobile phones operate, that might be difficult, analysts said.
"I don't know any way they could do that," said Sage Brennan, who analyzes China's cell phone industry for BDA Associates, a Beijing consulting company.
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