Party and State: A Level Playing Field For Foreign Firms?

Saturday, August 31, 2013

A Level Playing Field For Foreign Firms?

We previously wrote on this blog how the anti-monopoly laws were being unfairly used against foreign companies, but rarely are Chinese SEOs held to account. As China Unbound examines, it's not only price fixing that's the problem, environmental laws, often flouted openly by companies poisoning rivers and creating cancer villages.

It is less politically treacherous: attacking a foreign firm for not adhering to Chinese environmental regulations will not jeopardize the future of a Chinese NGO. In addition, foreign firms have traditionally been more sensitive to bad publicity and more likely to respond when alerted to their environmental failings. Of course, the multinationals should not need to be reminded to do the right thing, but holding them to account while allowing their Chinese counterparts a free pass not only disadvantages the foreign firms but also does little to address the real source of China’s environmental challenge.

The Chinese break down in tears when it's they who stand accused of doing real damage to the environment.

According to the South China Morning Post, a recent report by the Chinese Academy of Social Sciences blames Western-funded environmental organizations working in the Mekong River region for harming China’s reputation by “irresponsibly attacking Chinese investors and misleading local communities with biased reports.” The intent of these NGOs, according to the report is apparently to limit China’s economic influence in the region. When questioned about the foreign sources of funding, however, the report’s authors refused to answer.

While western companies might welcome a level playing field that does actually have some respect for the law, if the law is used selectively against competition by the Chinese, there will be few international players left in the country. There's always India.