Is the golden age over for multinationals in China?
Edward Tse and Paul Pan say multinationals' experience in China varies, depending on the sector and the company's ability to adapt. Some are thriving, notwithstanding the antitrust crackdown
Multinational corporations are in the spotlight these days. Recently, the Chinese government has accused a number of foreign companies of violating the antitrust law. Mercedes-Benz, Audi, Microsoft, and some Japanese car parts companies have been among those charged.
In fact, this is nothing new. Last year, Beijing also charged a number of foreign milk powder producers with alleged "abnormal price fixing", while pharmaceutical companies - including, most notably, GlaxoSmithKline - were caught in bribery and corruption scandals.
According to the results of a business confidence survey by the European Union Chamber of Commerce in China, conditions in China are getting tougher. There's an entrenched sense of pessimism within the European business community, as persistent market challenges show little sign of abating.
In turn, according to the chamber, many companies are setting more modest expectations for revenue and profitability growth and are scaling back their investment plans for the Chinese marketplace. Is the "golden age" for foreign companies in China over?
Multinational corporations started making significant investments in China in the early 1990s, especially after Deng Xiaoping took the now famous "southern tour" in 1992. After more than 20 years of investing in China, these companies' attitudes have changed dramatically.
Broadly speaking, there are three groups of companies distinguishable by their market views. The first includes multinational corporations that have come to China, made investments and, being unsuccessful, decided that China is not their cup of tea.