AmCham in China echoes EU gripes over opaque laws unfairly applied

Like EU, the US chamber says firms feel unfairly targeted by opaque laws and investment may fall

PUBLISHED : Tuesday, 02 September, 2014, 11:40am
UPDATED : Wednesday, 03 September, 2014, 7:49am

Foreign companies feel unfairly targeted by China's opaque laws on issues including antitrust enforcement, says a report by the American Chamber of Commerce (AmCham) in China. It warns that investment from abroad may continue to shrink as a result.

Beijing has launched a string of antitrust probes into multinational firms from Microsoft to Audi, fuelling concerns of a deteriorating foreign investment climate and increasing protectionism.

There had been "growing perceptions that multinational companies are under selective and subjective enforcement" by Chinese authorities using approaches including anti-monopoly, IT security, food safety and other regulations that lack transparency, said Greg Gilligan, chairman of AmCham China following the issuing of its China Business Climate Survey Report.

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

In August, the European Union Chamber of Commerce in China voiced concern over the antitrust investigations, saying China was using strong-arm tactics and appeared to be unfairly targeting foreign firms.

Qin Gang, a spokesman for China's foreign ministry, responded to the chamber's paper by saying he hoped foreign companies would "abide by Chinese law".

"Anti-monopoly [regulations] protect consumers' rights and create a more open, fair and impartial market environment. It is transparent and just," he said.

In a sign of the concern, 27 per cent of respondents to the AmCham survey said they would not expand in China, up from 16 per cent in last year's survey. Only 23 per cent said their revenues from China rose substantially, down from 30 per cent in 2013.

On Monday, Microsoft was asked by the State Administration for Industry and Commerce to reply within 20 days to queries about its Windows operating system and Office software after investigators swooped on its offices in four cities.

Foreign carmakers including Mercedes Benz and Audi, 12 Japanese car-parts suppliers, as well as chipmaker Qualcomm, are also under antitrust scrutiny or have been punished.

Lester Ross, vice-chairman of AmCham China, said "negative investment sentiment" had been on the rise in the foreign community and this could hurt capital inflows into China in the longer term. "How could you expand your business if, as you succeed, the government says you must lower your price?" he said.

Foreign direct investment in China fell 17 per cent year on year in July to US$7.81 billion.