ROK Drop

Avatar of GI KoreaBy on July 23rd, 2010 at 8:17 am

Is China Practicing Protectionism Against Foreign Companies?

» by in: China

Via a reader tip comes this Foreign Policy article on how major international corporations are showing more and more disillusionment with China:

He warned that the world’s largest manufacturing company was exploring better prospects elsewhere in resource-rich countries, which did not want to be “colonised” by Chinese investors. “I really worry about China,” Mr Immelt told an audience of top Italian executives in Rome, accusing the Chinese government of becoming increasingly protectionist. “I am not sure that in the end they want any of us to win, or any of us to be successful.”….

“China and India remain important for GE but I am thinking about what is next,” he said, mentioning what he called “most interesting resource-rich countries” in the Middle East, Africa, Latin America plus Indonesia. “They don’t all want to be colonised by the Chinese. They want to develop themselves,” he said. The comments echo a rising chorus of complaints from foreign business groups in China about the regulatory environment they face.

Here is more:

The risk-reward calculation between staying quiet and speaking up has shifted towards the latter. With China employing policies including ignoring intellectual property rights, forced technology transfer and government procurement skewed towards domestic companies, some foreign businesses feel they are being pushed out of the country. “We are feeling less and less welcome in China, which is why you are seeing more people speaking out and reconsidering their futures in China,” says John Neuffer of the US Information Technology Industry Council.

What I find interesting about all of this is that this was all so predictable.  Many of these large corporations in their quest for quick profits conveniently overlooked the strategy often employed in Asia of technology transfers and copyright infringement, followed by building major domestic companies by protectionist policies in their home country.  South Korea is a perfect example of how a number of global business conglomerates developed using this same model, which now a days has greatly receded, but incidents like the Lone Star fiasco shows it still rears its head from time to time.

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