Wednesday April 24, 2019


AMERICAN COMPANIES FACING NEW DIFFICULTIES IN CHINA

August 6, 2014

Between anti-monopoly probes, food safety scandals, and negative PR from Chinese media, Western companies have been facing increasing difficulty in China. While Chinese protectionism and different treatment of foreign companies is not new, in recent weeks such stories have filled up the news feeds of China watchers and definitely cannot be ignored.

Luxury car companies have become the latest in a recent string of high-profile Western corporations China has been investigating under its anti-trusty regulations. On Wednesday, China’s National Development and Reform Commission (NDRC) said it would punish car companies Chrysler and Audi for “anti-competitive” behaviors. Government raids were also conducted on the Shanghai office of Mercedes-Benz.

Before the car company raids, Microsoft was already a major target of Chinese government probes. Although not directly labeled as such, the scrutiny Microsoft has been receiving appears to be in large part due to supposed national security concerns. American wireless technology company Qualcomm has also been a target.

The Chinese government also announced recently that it left American software company Symantec off their approved list of government suppliers, along with a German security software company. This list also excludes various Apple Inc. products.  Earlier this summer, Chinese media warned that the iPhone was a “national security threat,” claiming the smartphone could be used as a means of accessing Chinese state secrets.

According to one analyst, “When the government stops the procurement of products, it sends a signal to corporates and semi-government bodies….The Chinese government wants to make sure that overseas companies shouldn’t have too much influence in China.”

The real Chinese motivation behind these attacks on Western brands is difficult to determine based on the little information provided. Whether there are real security concerns is unclear. However, many articles and experts commenting on these events are citing the information leaked by former NSA contractor Edward Snowden as a major turning point in the national security conversation as it relates to tech companies.

Perhaps it’s a backlash against U.S. indictment of members of the Chinese Army for hacking abd government probes into Chinese companies such as Huawai. Or perhaps it’s just as an excuse for Chinese protectionism. But whatever the purpose, “Growing information security concerns have given China a perfect reason to oust overseas-made IT products from key sectors such as energy, banking and government use.”

Based on how widespread these actions against Western and, specifically, American companies has been, however, it seems to go far beyond a backlash due to cyber security concerns, especially since software and tech companies are not the only ones being targeted. These seems to be part of greater protectionist efforts and a PR campaign against Western brands.

Several Western companies, including McDonald’s, Yum! Brands (KFC), Subway, and Starbucks, were just caught up in a food safety scandal. An undercover exposé showed expired meat being provided by the meat supplier for these fast food chains. While no one had gotten sick from the bad meat, the outrage and media coverage was still huge. Starbucks was only just recently hit by a widespread “shaming campaign” for its higher prices in China than in the West.

At the same time, a report just came out in China Daily detailing the rise of bribery in China by multinational companies. The piece details how Western companies offer cash bribes to government officials and managers at Chinese State-owned enterprises. Nowhere in the article is it mentioned that these cases are part of a larger systematic culture of bribery and corruption in China, despite the ongoing anti-corruption campaign headed by Chinese president Xi Jinping to combat this rampant problem in China.

According to some analysts, these efforts are all part of a larger propaganda war against Western influence in China. New York Times Reporter, Andrew Jacobs, described the current situation as “challenging days for foreigners in China, who in the past year or so have increasingly found themselves caught up in a war of words that paint Westerners as conscripts in the army of ‘hostile foreign forces’ seeking to thwart China’s rise.” He points to the rise of President Xi Jinping to power as the impetus for these shifting attitudes towards the West — a return to Mao Zedong’s “demonization of all things foreign.”

He doesn’t seem far off base. For example, the Chinese government is actively monitoring the number and type of foreign television programs aired in China. A main reason for this censorship of foreign media is that the Chinese government “wants to set the rules of morality and proper conduct in China — essentially to keep people behaving in ‘appropriate’ ways that support, or at least don’t threaten, the (party)’s rule or legitimacy — and foreign programs are generally perceived as a threat, often referred to as ‘cultural pollution.'”

Despite these efforts, however, Western culture and soft power continues to have an influence in China. Chinese students are rushing to American and other Western institutions of higher education. Disney is building its first Disney Resort in mainland China, set to open in Shanghai in 2015. The Hollywood film, Transformers 4, was a box office hit in China, becoming its highest grossing ever. The U.S. and China are already highly intertwined. China can’t to go back to the times of isolation and alienation of foreign brands, so we’ll have to see how it moves forward from here.

For more information about this topic, see the following news sources:

New York Times– “The War of Words in China

Time – “Next Up, Microsoft. McDonald’s, Apple, Starbucks, Already Know China’s Wrath

Businessweek – “Why China Is Investigating Microsoft and Symantec

Bloomberg News – “China Said to Exclude Apple From Procurement List

New York Times – “China Harasses U.S. Tech Companies

Reuters – “China says to punish Audi, Chrysler for monopoly behavior

Forbes – “Yum, Yum, Yum: Another Food Safety Scandal Rocks Multinationals in China

China Daily – “Multinational bribery cases on the rise

Deadline – “China To Limit ‘Cultural Pollution’ With Cap On Imported TV Shows?

For Chinese language news on this topic, see the articles below:

China Daily (中国日报)– “英媒:中国政府“抵制”外国软件

Deutsche Welle (DW) – “外国企业屡上北京“黑名单”

Worldwide News (环球网) – “梅新育:批中国打压外企是睁眼瞎说话

Radio Free Asia (自由亚洲电台) – “中国调查汽车行业垄断 特别针对美、德等外国车商

People’s Daily (人民网)– “国家工商总局专案组对微软公司继续进行反垄断突击检查

Compiled and edited by Ariane Rosen