Application Of Anti-Monopoly Law On Transplants Raise Chinese Protectionism Concerns
A number of antitrust probes into companies such as Microsoft, Audi and Chrysler may be hinting at China’s preference for domestic firms over the transplants.
Reuters reports the State Administration for Industry and Commerce and the National Development and Reform Commission are pursuing investigations into the companies as part of enforcement efforts of a six-year-old anti-monopoly law that stipulates fines of anywhere from 1 percent to 10 percent of a company’s earnings for the previous year if found in violation.
Antitrust expert and professor at University of Melbourne Law School Mark Williams notes a large number of anti-monopoly investigations are being aimed at transplants, which suggests the law “is being used to discipline new entrants to the China market.
In addition, the U.S. Chamber of Commerce penned a letter to both Secretary of State John Kerry and Treasury Secretary Jacob Lew urging the federal government to crackdown on Beijing’s alleged abuse of the AML to promote Chinese industry over “the internationally accepted norm of using competition law to protect consumer welfare and competition.”
Authorities in Beijing beg to differ, proclaiming the AML is being applied equally to both domestic and transplant firms, citing investigations into local telecoms and financial institutions as proof of equal application of the law.
Seattle-based writer, blogger, and photographer for many a publication. Born in Louisville. Raised in Kansas. Where I lay my head is home.
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.....which suggests the law “is being used to discipline new entrants to the China market. Yup, that is exactly what this is all about. "Disciplining" a foreign company may mean to take a domestic partner. This will be difficult to achieve with software companies like Microsoft, which should be leery enough to share proprietary IP and next someone making Microsoft Office knockoffs.
The probe is aimed at foreign joint ventures in general,and applies to new cars, spare parts, and after sales service. Regarding new cars, to quote the Chinese press: "For a long time, the prices of luxury cars in China have been too high. Audi's R8 5.2FSI is priced at about 700,000 yuan (US$114,000) overseas, for example, but is sold for 2.6 million yuan (US$428,000) in China, more than triple its overseas price." Foreign automakers argue that the price difference is due to higher import duties, and various taxes. But an increase of three times seems to warrant some inquiry, considering that its been six years since the anti-monopoly law was passed.