China has been criticized for its discriminatory policies against foreign companies by Global Giants like GE and Siemens.These companies have explicitly complained about strong Chinese bias against non domestic companies.China heavily subsidies home grown companies both explicitly and implicitly.Cheap cost of capital,free land and cheap labor have already made Chinese very difficult to compete with.On top of that,the Chinese government has introduced a host of rules like mandatory domestic content,technology transfers and other restrictive rules which have infuriated foreign companies.The discrimination has become particularly severe in the last few years making companies like Google openly revolt against the Chinese despite the potential loss one of the world’s largest markets.
Now Japan has warned China that it will lose FDI if it continues to use such policies against foreign companies.Recent labor unrest in Honda and Toyota factories have become a sticking point for the Japanese.Opaque and confusing rules,export controls over rare earth minerals and heavily biased judiciary have made life quite difficult for the foreign companies.The European Union on the other hand has complained of the lack of access to the Chinese market.Rules meant to deter foreign investment has made EU companies look elsewhere.Despite WTO rules,China has not eased market entry of foreign firms into the domestic market.Though some of these complaints are hypocritical as EU and Japan keeps their agricultural markets tightly closed,some of the objections are valid.
The European Union Chamber of Commerce in China in its annual survey out Wednesday (1 September) listed a series of technical barriers to EU investment in the airline reservation, automotive, construction, insurance, oil refinery, research and innovation and telecommunications sectors.
The paper took China’s leaders to task for failing to live up to commitments in the World Trade Organisation. The business lobby’s chief, Jacques de Boisseson, also gently criticised the authoritarian country’s top economic official, Premier Wen Jiabao, who in April said foreign firms can compete on a level playing field with Chinese ones.”I do believe the words of Premier Wen when he says that foreign investment is welcome,” Mr de Boisseson told Reuters. “[But China] would probably be satisfied with a lower level of foreign investment and a higher share for Chinese companies.”
Japanese Foreign Minister Katsuya Okada warned Thursday China risks losing foreign investments unless it introduces more transparency and consistency into its business rules, including its legal framework to deal with labor issues.Among other examples of problems Japanese companies have had to deal with, the foreign minister also pointed to abrupt cuts in exports of rare earth metals used in manufacturing hybrid cars, and unfavorable local court rulings and weak implementation of favorable rulings for companies facing intellectual-property disputes.