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China

Foreigners Cry Foul as China Widens Antimonopoly Probes


The backlash to China’s latest campaign against foreign companies has begun. The country’s antimonopoly enforcers have been on a tear, targeting such automakers as Audi (NSU:GR), Chrysler (F:IM), and Mercedes (DAI:GR) as well as tech companies such as Microsoft (MSFT) and Qualcomm (QCOM). On Monday, General Motors (GM) said regulators have been asking its joint venture with local partner SAIC Motor (600104:CH) for information since 2012.

And when the Chinese regulators ask for information, you give them what they want. As I reported last week, while multinationals are entitled to question investigator demands and appeal their rulings, companies run the risk of adding to their problems by exposing themselves to accusations of obstructing investigations. “Generally, you have to show a good attitude,” Janet Yung Yung Hui, a partner at Chinese law firm Jun He, told me.

Now one business group is yelling foul. As China widens its investigations, the government needs to be more concerned about the rights of the foreign companies, says an association that represents European companies. “Inspections must not prejudge the outcome of the investigation, and full rights of defense must be afforded to the companies in question,” Beijing’s European Union Chamber of Commerce said in a statement issued yesterday, adding that it “is not convinced” that China is protecting the rights of companies currently in the spotlight.

To which the Chinese media say: Multinationals shouldn’t be complaining. ”Western media commentators seem ready to accuse China of foul play whenever foreign enterprises are concerned,” the China Daily reported on Tuesday. “Their unspoken stance is, no matter what they may have done in China, Western companies should be exempt from investigation and punishment.”

While the Europeans say they’re concerned about investigations in a country where the legal system is usually stacked in favor of the government, the Chinese media argue that the foreigners are hardly deserving of our sympathies. In fact, the companies most at risk are actually Chinese, according to a Beijing Times column reprinted by the Communist Party mouthpiece, the People’s Daily, on Tuesday. “At present, China’s national enterprises are not familiar with these rules” regulating competition. “However, transnational corporations are experienced in fighting organizations conducting anti-monopoly investigations,” the paper added. “Therefore, they are more cunning than Chinese corporations.”

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Einhorn is Asia regional editor in Bloomberg Businessweek’s Hong Kong bureau. Follow him on Twitter @BruceEinhorn.

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