A survey by the American Chamber of Commerce released on
Tuesday shows that 60% of companies feel less welcome in China than before, a
sharp increase from 41% in the previous poll a year ago. In a new question for
its members, 49% of respondents believe that foreign firms are being singled
out for attack.
The annual survey of AmCham's members is the latest evidence
that foreign investors are increasingly worried about the increasingly
aggressive tactics by Chinese regulators in industries ranging from dairy to auto
parts to technology.
These fears are combining with more general worries over China's
slowing economic growth, rising political risks, foreign policy tensions,
mounting labor costs and opaque rules for foreign investors, the AmCham
business climate survey shows. All this has contributed to a slowdown of
investment into China from North America, Europe and Japan.
Chinese officials have said they target both domestic and
foreign companies. They also say the rising number of investigations under the
country's six-year-old antimonopoly law have precedent in similar
actions in the U.S. and Europe in previous decades.
Many foreign companies caught up in probes into industry pricing
say they are instructed not to involve their foreign lawyers, according to
people with knowledge of those inquiries. The European chamber said in August
that it has heard "alarming" accounts from European companies that
intimidation tactics are being used to force companies to accept punishment
without full hearings. Chinese authorities have been advising companies not to
challenge investigations or seek legal or government assistance, the
organization said.
It said U.S. companies in China face a difficult period as
China shifts from a state-led model based on exports and investment to one
based on services and consumption. Reforms to achieve this have been
"disappointingly slow," according to a written statement.
Chinese regulators last month levied 1.24 billion yuan ($202
million) in fines against 12 Japanese auto-part makers for alleged price
manipulation. At the same time, Western multinationals face state media
attacks that can destroy their businesses. U.S.-based food processor OSI Group
LLC's China business collapsed after a Shanghai TV report into abuses at its
Shanghai plant.
Even though tests
have yet to show any contamination of OSI products, several of the company's
major customers in China have walked away, including Burger King Worldwide Inc.
and the operators of the KFC and the 7-Eleven chains.
The AmCham survey shows that while many U.S. companies are
still profitable in China, fewer are reporting substantial profit increases.
And as revenues and profits slow they are scaling back expansion plans.
While seven years ago China was the No. 1 investment
priority for a majority of AmCham members, that proportion has declined to 20%,
with respondents increasingly describing China as only one of many foreign
direct investment destinations.
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