Chinese prosecutors have filed bribery charges against officials of the British drug giant GlaxoSmithKline in China. Photo: Bloomberg
Tight regulation is new normal for foreign firms in China
For many multinationals operating in China, the good old days of preferential treatment and lax regulation are finally over, as authorities launch a series of investigations into suspected wrongdoings by foreign companies.
From Britain’s drug giant GlaxoSmithKline accused of bribing officials to dairy makers and fast-food chains that use dubious ingredients, foreign firms are realizing that they cannot violate the country’s laws and regulations without having to face the consequences of their actions, the Hong Kong Economic Times reported Monday.
They used to enjoy supra-national treatment from the Chinese government, but now they have to compete with local firms on an equal footing. This means previously unimaginable experiences such as tight supervision, investigation and even punishment will be the new normal for many of them.
Experts say the days when multinational firms can do as they please without constraint no longer exist as China tries to regulate the market by establishing rules that apply to both local and domestic players.
Zhiwu Chen, professor of finance at Yale School of Management, said China does not need foreign capital and expertise as badly as it did back in 1980s and 1990s, leading to the government’s change of attitude toward foreign firms.
Zhao Zhongxiu, vice president of Beijing’s University of International Business and Economics, said China had ignored safety and monopoly issues in the past in order to attract foreign investors. But stopping bad practices will help improve the country’s business environment.
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