The government’s recent intensive antitrust investigations were conducted following Chinese laws and never purposefully targeted any enterprises, Lu Wei, minister of the Office of the CPC Central Leading Group for Cyberspace Affairs, told a panel during the World Economic Forum in Tianjin.
“China’s governance of the Internet follows the ‘bottom line’ approach, and all foreign Internet enterprises in China must follow the ‘bottom line’ of abiding by Chinese laws. There are two points. The first point is safeguarding the interests of China, which is very clear. The second point is safeguarding the interests of Chinese consumers, which is also very clear. Foreign investors, if they follow the two points, will be OK and welcome,” Lu said.
Hey, you learn something new every day. Imagine that, 15 years practicing law in China, and only now they’re telling me that foreign firms have to follow the law. If I knew that back in the day, I could have done a much better job for my clients. Explains so much . . .
There is an important point to be made here. If you’ll notice that bit in the quote about “safeguarding the interests of China,” don’t make the mistake of passing that over as empty fluff. It isn’t.
In many Western countries, and particularly in Common Law nations, companies have very few restrictions, and for the most part can do whatever they want as long as they don’t break the law, and they certainly do not have to align their interests with those of the country they are in.
Not so here. Although it’s not always stated up front, and not in every law that pertains to company behavior, most folks know that if corporate interests are in sync with government priorities, that’s a huge benefit.
Example: Company A sells a clean coal technology to power plants. China is trying to fight pollution. Result – Company A, all else being equal, will do pretty well in China, at least in the short term. In contrast, Company B sells luxury watches that most people can’t afford, but the watch has been a preferred way of gifting government officials. But China is fighting corruption. Result – the watch company’s sales are going to tank, at least in the short term.
Now, the context of the above quote is all the whining about antitrust investigations and enforcement. Foreign firms feel like they are being singled out, while Beijing is saying: 1) most of our targets are domestic firms; and 2) but you broke the law. I’m no competition law expert, so I won’t weigh in on any specifics, but I will say that domestic firms have been hit in a variety of sectors. This is not just a foreign company thing, although it wouldn’t surprise me if there was some selective enforcement going on in certain sectors.
Bottom line here is that in the minds of regulators, these foreign firms have run afoul of local law and must face the consequences. As they are going to avoid commenting on specific cases, their only response is to say “Hey, follow the law and do what’s good for the country, and everything will be fine.” And if you don’t . . . well, bad things can happen.
So when a government official here says that foreign companies must safeguard the interests of China, you best pay attention. That is not the usual blah blah blah, but a very clear statement of reality.
© Stan for China Hearsay, 2014. |
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