China denies fingering foreign firms in antitrust probes

China denies fingering foreign firms in antitrust probes

Summary: China dismisses suggestions it is targeting MNCs in its anti-competitive investigations which include pricing probes, while market observers say these companies will benefit from the improved legal infrastructure.

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China has denied singling out multinational corporations (MNCs) in its anti-competitive probes which include pricing investigations, dismissing observations that more foreign companies appear to be targeted compared to local businesses. 

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In a report Tuesday by China Daily, president of the European Chamber of Commerce in China, Davide Cucino, voiced concerns from its member-companies over the "disproportion" in the number of MNCs involved in such investigations compared to their Chinese competitors. The chamber has some 1,700 European businesses from various industry sectors and 30 working groups representing a range of issues such as agriculture and aviation.  

Jeremie Waterman, executive director for China policy at the US Chamber of Commerce, also noted while Chinese anti-monopoly authorities initiated several cases against Chinese companies, to date, nearly all large state-owned entities had been exempted from regulatory actions.

However, government officials from China's economic policy maker National Development and Reform Commission, rebuffed the suggestions, saying: "There is no such thing as specially targeting foreign companies. Our investigations focus on monopolistic conduct and not on the entities behind it."

Local industry observers agreed, noting that the government investigations simply indicated stronger enforcement of antitrust and competition laws in China, as more companies worldwide flock to the Asian economic powerhouse in search of market opportunities. 

Amid this market growth, they said governmental probes and scrutiny would inevitably increase. This would, in turn, establish a healthy legal infrastructure and the improved law enforcement would eventually aid foreign organizations in formulating their local strategy. 

Waterman said in the China Daily report that the US Chamber was closely monitoring the situation, noting that investigations against Chinese companies appeared to be on a "much smaller scale" compared to MNCs. "However, we also support China's right to have a strong antitrust regime because we think it is the basis for modern market-based economies.

"The question now is whether the authorities will use the same yardstick for domestic and foreign companies. This is a big question and we don't know the answer. We have heard rumors that there may be some forthcoming enforcement actions against state-owned enterprises, but we haven't seen it yet," he added.

The report also cited Bala Ramasamy, professor of economics at the Shanghai-based China Europe International Business School, who noted that the influx of MNCs over the past several years had fueled concerns over price-fixing, leading to more cases involving foreign companies. 

Government initiated the probes to protect the Chinese market and ensure Chinese consumers pay the appropriate price for quality products, Bala said. 

James Roy, senior market analyst with Shanghai-based Market Research Group agreed, adding that the government faced growing pressure to provide its people access to affordable prices. He noted how price differences between the same product sold in China and other countries often led to Chinese consumers buying products from abroad.

Pointing to the Apple iPad 2 as an example, Roy said the tablet costs US$488 in China where the average per capita income is US$7,500, but is priced US$399 in the U.S. where the average per capita personal income is over US$42,000.

Topics: Tech Industry, Government, China

About

Eileen Yu began covering the IT industry when Asynchronous Transfer Mode was still hip and e-commerce was the new buzzword. Currently a freelance blogger and content specialist based in Singapore, she has over 16 years of industry experience with various publications including ZDNet, IDG, and Singapore Press Holdings.

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