Monday 20 November 2017

EU exporters' group hits out at China over raids on offices

A woman is reflected on the glass wall of a BMW showroom as she walks past it in central Beijing
A woman is reflected on the glass wall of a BMW showroom as she walks past it in central Beijing
Donal O'Donovan

Donal O'Donovan

THE main body representing European companies operating in China has taken what it called a "consolidated stance" against a spate of competition probes launched into overseas firms by authorities there.

Investigators have launched high profile raids on the Chinese offices of companies including Daimler, the maker of Mercedes Benz cars, and Microsoft in recent weeks.

Yesterday, in a rare intervention, the European Chamber of Commerce in China lashed out at what it called "administrative intimidation" of some companies.

The chamber represents 1,800 European companies that do business in the world's second largest economy.

The European Commission and the Chinese authorities recognise it as the official voice of European business in China.

The group said it is concerned about competition probes into overseas companies operating in China, saying authorities are using strong-arm tactics and appeared to be unfairly targeting foreign firms.

In some cases, domestic Chinese companies were not probed when the sector they operate in was reviewed, and the Chinese side of joint ventures was left out of investigations that only focused on foreign partners, the Chamber claimed.

It called on China to follow the European Commission's model for investigating potential competition concerns.

But China's National Development and Reform Commission (NDRC) said it applies the law equally to both domestic and foreign firms, and aims to protect consumers.

The NDRC has said it has targeted domestic telecoms companies, including China Unicom and China Telecom Corp, and domestic financial institutions for anti-competitive practices.

Since the NDRC began its investigations into the motor trade, companies including Volkswagen owned Audi, BMW and Mercedes-Benz have lowered prices for new cars and for spare parts.

The sector had been under scrutiny after accusations by state media that global car makers are overcharging Chinese consumers.

Here, President of the Ireland China Business Association Ken Duggan said Irish companies have proved adaptable when it comes to the evolving regulatory regime in China.

He said the market is "challenging" for overseas firms, however, he argued that a free trade deal between the EU and China would ultimately be a solution.

In its statement the body representing European exporters said higher prices for some goods in China reflect factors such as import taxes, high mark-ups by distributors and vendors, and the cost of red-tape.

But some analysts see the competition crackdown as a sign of a new era of regulatory scrutiny in the country where profits from selling everything from Audi cars to Starbucks lattes are greater than in London or New York.

In the past month, authorities have convinced at least seven car-makers to cut prices and raided the offices of software maker Microsoft.

(Additional reporting Reuters and Bloomberg).

Irish Independent

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