Taming the "foreign tigers" : China's anti-trust crusade against multinational companies

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

2 Citations (Scopus)

Abstract

Thirty years after the launch of the “reform and opening up” policy, China finally implemented its first anti-trust law in 2008, a move lauded by an international law firm as a “tremendous leap forward” that brought the country “squarely into the modern world of antitrust and competition law.” Yet, given the law’s novelty on Chinese soil, few would have expected China to suddenly begin aggressively enforcing it. Since 2013, Chinese anti-trust regulators have become active in deploying the anti-trust law to initiate probes and impose hefty fines on industry associations, foreign carmakers, eyewear makers, and baby formula manufacturers, meanwhile justifying “dawn raids” on selected firms. Many of their high-profile targets are multinational firms that until then enjoyed a comfortable presence in China. Facing tightened enforcement, foreign companies and chambers of commerce are complaining that regulators are using the law selectively against foreign firms and that investigations lack transparency and respect for the rule of law. Chinese regulators, on the other hand, argue that they are impartial towards domestic and foreign companies, and that they are merely enforcing the anti-trust law in order to create a level playing field for both domestic and foreign companies, benefit Chinese consumers, and bring China closer to the rule of law. Drawing upon this controversy, this article argues that China’s rising antitrust activism is explained by at least two factors. First, the Chinese state is pursuing an industrial policy to encourage indigenous innovation and grow national champions through a palette of regulatory tools. In this context, enforcement of anti-trust law emerges as an important policy tool not only to foster fair competition, but also to serve as a de facto interventionist measure to pressure foreign enterprises to cut prices and oblige them to contribute to the Chinese market and domestic companies. Second, the growing aggressiveness of anti-trust enforcement is possibly fuelled by internal competition and political infighting among the three regulatory bodies, which are all striving to gain political capital under the current uncertain political climate. The article will demonstrate that the resulting complaints from foreign companies and trade associations that they are being selectively targeted are not totally unfounded. To show that the enforcement of the anti-trust law is impartial, Chinese regulators must demonstrate its strength and willingness by striking hard against the monopolistic practices of domestic companies – particularly the powerful state-owned enterprises.
Original languageEnglish
Pages (from-to)53-59
Number of pages7
JournalChina Perspectives
Volume2014
Issue number4
Publication statusPublished - 25 Nov 2014
Externally publishedYes

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crusade
antitrust law
foreign company
China
firm
state owned enterprise
industrial policy
constitutional state
international law
aggression
Law
transparency
chamber of industry and commerce
trade association
innovation
probe
aggressiveness
foreign trade
market
enforcement

Cite this

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title = "Taming the {"}foreign tigers{"} : China's anti-trust crusade against multinational companies",
abstract = "Thirty years after the launch of the “reform and opening up” policy, China finally implemented its first anti-trust law in 2008, a move lauded by an international law firm as a “tremendous leap forward” that brought the country “squarely into the modern world of antitrust and competition law.” Yet, given the law’s novelty on Chinese soil, few would have expected China to suddenly begin aggressively enforcing it. Since 2013, Chinese anti-trust regulators have become active in deploying the anti-trust law to initiate probes and impose hefty fines on industry associations, foreign carmakers, eyewear makers, and baby formula manufacturers, meanwhile justifying “dawn raids” on selected firms. Many of their high-profile targets are multinational firms that until then enjoyed a comfortable presence in China. Facing tightened enforcement, foreign companies and chambers of commerce are complaining that regulators are using the law selectively against foreign firms and that investigations lack transparency and respect for the rule of law. Chinese regulators, on the other hand, argue that they are impartial towards domestic and foreign companies, and that they are merely enforcing the anti-trust law in order to create a level playing field for both domestic and foreign companies, benefit Chinese consumers, and bring China closer to the rule of law. Drawing upon this controversy, this article argues that China’s rising antitrust activism is explained by at least two factors. First, the Chinese state is pursuing an industrial policy to encourage indigenous innovation and grow national champions through a palette of regulatory tools. In this context, enforcement of anti-trust law emerges as an important policy tool not only to foster fair competition, but also to serve as a de facto interventionist measure to pressure foreign enterprises to cut prices and oblige them to contribute to the Chinese market and domestic companies. Second, the growing aggressiveness of anti-trust enforcement is possibly fuelled by internal competition and political infighting among the three regulatory bodies, which are all striving to gain political capital under the current uncertain political climate. The article will demonstrate that the resulting complaints from foreign companies and trade associations that they are being selectively targeted are not totally unfounded. To show that the enforcement of the anti-trust law is impartial, Chinese regulators must demonstrate its strength and willingness by striking hard against the monopolistic practices of domestic companies – particularly the powerful state-owned enterprises.",
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Taming the "foreign tigers" : China's anti-trust crusade against multinational companies. / YUEN, Wai Hei, Samson.

In: China Perspectives, Vol. 2014, No. 4, 25.11.2014, p. 53-59.

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

TY - JOUR

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AU - YUEN, Wai Hei, Samson

PY - 2014/11/25

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AB - Thirty years after the launch of the “reform and opening up” policy, China finally implemented its first anti-trust law in 2008, a move lauded by an international law firm as a “tremendous leap forward” that brought the country “squarely into the modern world of antitrust and competition law.” Yet, given the law’s novelty on Chinese soil, few would have expected China to suddenly begin aggressively enforcing it. Since 2013, Chinese anti-trust regulators have become active in deploying the anti-trust law to initiate probes and impose hefty fines on industry associations, foreign carmakers, eyewear makers, and baby formula manufacturers, meanwhile justifying “dawn raids” on selected firms. Many of their high-profile targets are multinational firms that until then enjoyed a comfortable presence in China. Facing tightened enforcement, foreign companies and chambers of commerce are complaining that regulators are using the law selectively against foreign firms and that investigations lack transparency and respect for the rule of law. Chinese regulators, on the other hand, argue that they are impartial towards domestic and foreign companies, and that they are merely enforcing the anti-trust law in order to create a level playing field for both domestic and foreign companies, benefit Chinese consumers, and bring China closer to the rule of law. Drawing upon this controversy, this article argues that China’s rising antitrust activism is explained by at least two factors. First, the Chinese state is pursuing an industrial policy to encourage indigenous innovation and grow national champions through a palette of regulatory tools. In this context, enforcement of anti-trust law emerges as an important policy tool not only to foster fair competition, but also to serve as a de facto interventionist measure to pressure foreign enterprises to cut prices and oblige them to contribute to the Chinese market and domestic companies. Second, the growing aggressiveness of anti-trust enforcement is possibly fuelled by internal competition and political infighting among the three regulatory bodies, which are all striving to gain political capital under the current uncertain political climate. The article will demonstrate that the resulting complaints from foreign companies and trade associations that they are being selectively targeted are not totally unfounded. To show that the enforcement of the anti-trust law is impartial, Chinese regulators must demonstrate its strength and willingness by striking hard against the monopolistic practices of domestic companies – particularly the powerful state-owned enterprises.

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JO - China Perspectives

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