The problems of Multinational Corporations (MNCs) operating in China seems to be growing by the day.Once the darling of MNCs around the world due to its cheap labor,strong infrastructure and supportive government,China is increasingly frustrating MNCs .The favoritism shown towards local companies is starting to hurt foreign companies in China.While foreign companies are looking to China to increase exports,the Chinese are only interested in Technology.Google has already shuttered most of its operations in China due to censorship of the Internet and allegations of cyberattacks from constituencies close to the government. China has been consistently nurturing its domestic companies both through explicit and implicit subsidies.That is a good strategy which is essential in establishing a strong domestic industrial base like South Korea and Japan.However China’s huge size,strong trade surpluses and currency undervaluation has made it a hot potato.
On top of regulation problems,MNCs are also facing labor unrest in China leading to higher wages.Recent strikes in Toyota and Honda plants have brought the issue into sharp focus.Though MNCs are sporadically complaining of discrimination there has been no large scale boycott or protests.The Chinese market remains too big and lucrative for anyone to ignore.A number of MNCs are now deriving significant percentage of global revenues from China.Nobody wants to antagonize the all powerful Chinese communist government.Despite efforts by US Trade Delegations to open up the Chinese markets for US companies,most have come a cropper.General Electric,one of the world’s biggest conglomerates has said that it does not support its own serving CEO’s statement reflecting the dilemma of MNCs.
General Electric Co. Chief Executive Jeffrey Immelt said it is getting harder for foreign companies to do business in China, and that the Obama administration hasn’t done as much as its predecessors to develop ties to the business community, people who heard his comments said Thursday.His remarks, made Wednesday night at a private dinner in Rome for Italian business leaders, GE executives and others, echoed concerns Mr. Immelt has expressed before about barriers to U.S. exports and links between business and government.But his words appeared to show a growing irritation with China, which Mr. Immelt said is increasingly developing its own technology that competes with U.S. exports, according to a person who heard him speak. “Immelt expressed anger at China, because it’s trying to suck technology away,” this person said.
As the Chinese Communist Party sees it, its very hold on power depends on tightly controlling the access of ordinary Chinese to information about their country, their rulers and the world at large. When Google decided in March to stop self-censoring search results in China by automatically redirecting queries to its uncensored service in Hong Kong, no one should have been surprised if Beijing rejected the scheme.The Chinese government is now pushing back, threatening not to renew Google’s license as an Internet content provider. It is Google’s challenge to stick to the spirit of its promise and never censor its searches in China again. To give in now would make Google into an accomplice of China’s repressive government.So far, Google’s response to Beijing’s displeasure appears consistent with its original vow. Instead of automatically rerouting queries to its Hong Kong engine, it started sending visitors to www.google.cn to a new “landing page” that links to the Hong Kong Web site, where users can perform searches beyond the reach of Chinese government censors.
And Google has insisted it has no intention of backtracking on its promise not to censor itself — that much-lauded announcement that said that if self-censorship is a requirement to remain then it must abandon China. Yet Beijing has not said whether it finds this solution acceptable. It may not.