Pie is growing, but foreigners` share is shrinking
Published on Sat, Oct 30, 2010 at 11:00 | Updated at Sat, Oct 30, 2010 at 14:36
Two years ago the chief executive of General Electric, Jeffrey Immelt, predicted that his company's annual sales in China would reach USD 10 bn by the end of this year.
And as recently as last December Mr Immelt praised Beijing's economic stewardship in a speech at West Point, where he gushed: "Man, these guys are good," and commended China's leaders for doing "exactly what they say they will do".
But his tone was very different in June, as he told an audience of Italian executives in Rome that GE was facing its toughest business conditions in China in 25 years.
"I really worry about China," Mr Immelt said, accusing Beijing of becoming increasingly protectionist. "I am not sure that in the end they want any of us to win, or any of us to be successful."
GE now expects revenues from China to grow about 10% this year to about $6bn for the whole of 2010, far below the USD 10 bn Mr Immelt predicted in 2008.
Mr Immelt's pessimism was echoed in later comments from the heads of German industrial groups BASF and Siemens and in numerous statements from China-based foreign industry groups.
Even as China's economy steams ahead and profits continue to grow for Chinese and multinational companies alike, many foreign companies feel they are being squeezed out of the market.
The European Chamber of Commerce in China recently issued its most downbeat assessment in years, saying there is not a single industry in China where European companies are gaining market share.
They say that while business continues to grow along with the overall pie, foreigners' share of it is mostly shrinking.
Executives at multinational companies in China say rules requiring that government procurement goes mostly to local businesses have hurt sales in many sectors.
Meanwhile, a host of regulatory barriers are designed specifically to slow the expansion of foreign competitors in industries such as finance and logistics.
Intellectual property infringement remains rife in China and new regulations supposedly intended to promote indigenous innovation are seen as highly protectionist and intentionally aimed at forcing foreign companies to hand over valuable technology to state-backed competitors.
But investors have faced these and a range of other challenges for many years and even Beijing's most ardent critics have difficulty naming specific new policies that have closed off markets or made life harder for foreign companies.
More compelling is the evidence that Beijing's appetite for reform has waned after the years of rapid liberalisation that followed accession to the World Trade Organization in 2001.
In other words, after a period of breakneck reform and opening, the current standstill feels like going backwards.
Chinese state media call the allegations of a worsening business climate "shaky" and officials point to a 19.6 per cent year-on-year rise in foreign direct investment to China in the first half of this year as evidence that Beijing still welcomes foreign investors.
The numbers suggest strong continued interest in investing in China. But some analysts say a large portion of what appears to be foreign investment is actually inward investment by large state-owned Chinese companies with operations abroad or inflows of speculative capital evading the government's tight capital controls.
The official line in Beijing is that the foreigners are just making excuses for the fact they are becoming less competitive vis-à-vis their Chinese counterparts.
One reason for the rising discontent in some western boardrooms is that many of the contracts companies such as GE, Siemens and BASF expected to get in China are now being snatched up by increasingly competitive and successful Chinese counterparts.
The Chinese rail industry provides a worrying case study for multinationals in many other industrial sectors.
The government has played European, Japanese and North American rail producers off against each other by holding out the promise of the world's largest rail market in exchange for transfer of foreign technology which Chinese companies then "digest" and "rebrand".
The multinational corporations have been shocked by how quickly China has emerged as a global competitor, using largely foreign technology to offer competing bids for high-speed rail contracts from Saudi Arabia to Brazil to California.
Pie is growing, but foreigners` share is shrinking - ft.com -
Westerner complaint just about everything. So if lenovo didn't make enough money in US, they should complaint as well
Published on Sat, Oct 30, 2010 at 11:00 | Updated at Sat, Oct 30, 2010 at 14:36
Two years ago the chief executive of General Electric, Jeffrey Immelt, predicted that his company's annual sales in China would reach USD 10 bn by the end of this year.
And as recently as last December Mr Immelt praised Beijing's economic stewardship in a speech at West Point, where he gushed: "Man, these guys are good," and commended China's leaders for doing "exactly what they say they will do".
But his tone was very different in June, as he told an audience of Italian executives in Rome that GE was facing its toughest business conditions in China in 25 years.
"I really worry about China," Mr Immelt said, accusing Beijing of becoming increasingly protectionist. "I am not sure that in the end they want any of us to win, or any of us to be successful."
GE now expects revenues from China to grow about 10% this year to about $6bn for the whole of 2010, far below the USD 10 bn Mr Immelt predicted in 2008.
Mr Immelt's pessimism was echoed in later comments from the heads of German industrial groups BASF and Siemens and in numerous statements from China-based foreign industry groups.
Even as China's economy steams ahead and profits continue to grow for Chinese and multinational companies alike, many foreign companies feel they are being squeezed out of the market.
The European Chamber of Commerce in China recently issued its most downbeat assessment in years, saying there is not a single industry in China where European companies are gaining market share.
They say that while business continues to grow along with the overall pie, foreigners' share of it is mostly shrinking.
Executives at multinational companies in China say rules requiring that government procurement goes mostly to local businesses have hurt sales in many sectors.
Meanwhile, a host of regulatory barriers are designed specifically to slow the expansion of foreign competitors in industries such as finance and logistics.
Intellectual property infringement remains rife in China and new regulations supposedly intended to promote indigenous innovation are seen as highly protectionist and intentionally aimed at forcing foreign companies to hand over valuable technology to state-backed competitors.
But investors have faced these and a range of other challenges for many years and even Beijing's most ardent critics have difficulty naming specific new policies that have closed off markets or made life harder for foreign companies.
More compelling is the evidence that Beijing's appetite for reform has waned after the years of rapid liberalisation that followed accession to the World Trade Organization in 2001.
In other words, after a period of breakneck reform and opening, the current standstill feels like going backwards.
Chinese state media call the allegations of a worsening business climate "shaky" and officials point to a 19.6 per cent year-on-year rise in foreign direct investment to China in the first half of this year as evidence that Beijing still welcomes foreign investors.
The numbers suggest strong continued interest in investing in China. But some analysts say a large portion of what appears to be foreign investment is actually inward investment by large state-owned Chinese companies with operations abroad or inflows of speculative capital evading the government's tight capital controls.
The official line in Beijing is that the foreigners are just making excuses for the fact they are becoming less competitive vis-à-vis their Chinese counterparts.
One reason for the rising discontent in some western boardrooms is that many of the contracts companies such as GE, Siemens and BASF expected to get in China are now being snatched up by increasingly competitive and successful Chinese counterparts.
The Chinese rail industry provides a worrying case study for multinationals in many other industrial sectors.
The government has played European, Japanese and North American rail producers off against each other by holding out the promise of the world's largest rail market in exchange for transfer of foreign technology which Chinese companies then "digest" and "rebrand".
The multinational corporations have been shocked by how quickly China has emerged as a global competitor, using largely foreign technology to offer competing bids for high-speed rail contracts from Saudi Arabia to Brazil to California.
Pie is growing, but foreigners` share is shrinking - ft.com -
Westerner complaint just about everything. So if lenovo didn't make enough money in US, they should complaint as well
