U.S. companies feel unwelcome in China, complain of unfair treatment


Microsoft’s offices in Beijing. Chinese regulators have launched a series of anti-monopoly investigations of global automakers and technology providers, stepping up pressure on foreign companies that feel increasingly unwelcome in China. (Ng Han Guan/AP)

U.S. companies in China complained Tuesday that they were being unfairly targeted by the government of President Xi Jinping, with the selective enforcement of opaque laws leading many to feel that they are no longer wanted here and causing them to reevaluate long-term investment plans.

Sixty percent of respondents surveyed last month by the American Chamber of Commerce in China said they thought foreign business was less welcome in China than before, up from 41 percent in a survey in late 2013.

Changes promised last year and meant to liberalize the economy have been “disappointingly slow” to arrive, while the environment for foreign companies has deteriorated, Chamber Chairman Greg Gilligan said in a statement.

That has led foreign investors to alter their perceptions of China in fundamental ways, he said, “with the risk increasing that China will permanently lose its luster as a desirable investment destination.”

Nearly half of respondents said foreign firms were being singled out in recent pricing or anti-corruption campaigns.

Xi has warned of the risks of Western ideas such as democracy and freedom of the press and has taken robust nationalist positions on China’s territorial disputes with its neighbors. His government also appears to be taking a more nationalistic, protectionist line in its business dealings, experts say, even though leaders still profess a commitment to economic reforms.

Dozens of foreign companies have been targeted in a crackdown on monopolistic practices and unfair pricing this year, including German and Japanese car companies and U.S. software giant Microsoft. Some have faced stringent fines, while others have been forced to cut prices.

Last month, the European Chamber of Commerce here accused antitrust investigators of abusing their power through intimidation tactics, including not allowing companies to bring their own attorneys to hearings.

Lester Ross, a vice chairman of the American Chamber of Commerce in China, said investigators were in many cases using “vague and unspecified provisions of the law” while enforcing them without respect for “due process or fairness.”

But Xu Kunlin, director general of price supervision and the anti-monopoly bureau at the National Development and Reform Commission, called accusations of unfair treatment “groundless and baseless.”

“Some of the NDRC monopoly investigations involve overseas multinationals, but that does not mean that we are targeting them,” Xu told the China Daily newspaper.

A new survey by the U.S.-China Business Council, set to be released Sept. 15, shows that 86 percent of respondents were concerned or somewhat concerned about China’s evolving competition regime, “although more about the potential impact than the actual experience so far,” the Washington-based group said in an e-mail.

Investigators raided Microsoft’s offices in July, and on Monday senior executives were questioned about complaints that the company was using “tie-in sales and verification codes” in its Windows operating system and Office software. The firm also was accused of not fully disclosing information about its products, “causing software incompatibility issues,” the official news agency Xinhua reported.

One business executive, who spoke on the condition of anonymity to discuss the matter freely, noted that Microsoft already makes relatively little money here because of widespread piracy and could hardly be accused of having a monopoly.

“A company enforcing its IP [intellectual property] — and not very well — is accused? Basically you are getting into a silly season,” he said, adding that regulators appeared to be competing with one another to get “notches in belts.”

China appeared to be targeting industries in which it wants domestic companies to catch up with the rest of world, sometimes by “taking down” foreign companies in an attempt to narrow the gap, Ross said. He cited pharmaceuticals, medical devices, high technology and automotive sectors as examples.

Nevertheless, it remains unclear whether Xi is directing the recent crackdown on foreign firms or whether regulators are coming under pressure from protectionist forces at other levels of government.

“In a sense, what we are a missing is a real lesson from the top leadership that ‘no, that is not what you should be doing,’ ” Ross said.

Although overall foreign direct investment in China is relatively stable at more than $100 billion a year, there has been “a secular downward trend” in investment from the United States, Europe and Japan, said Kim Woodard, vice chairman of the Chamber’s Policy Committee.

Simon Denyer is The Post’s bureau chief in China. He served previously as bureau chief in India and as a Reuters bureau chief in Washington, India and Pakistan.
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