'Targeting' by Beijing sees foreign firms limit China investment plans
US chamber says its members will reduce investment amid fears of 'unequal treatment'
Multinationals worried about being targeted in government investigations are scaling back mainland investment for the first time in a decade, according to a report on foreign-owned operations in southern China.
"High-level executives in the West are very concerned about 'unequal treatment' and/or 'targeting' be it perceived or real," said Harley Seyedin, president of the American Chamber of Commerce in South China, which published the report.
"This has lowered their confidence to a point where they would rather wait and see," he said.
Twenty-four per cent of companies planning to invest more than US$250 million last year either cancelled or postponed their plans, while total US dollar investment projections for the next three years dropped 16.9 per cent compared to earlier estimates, the report found.
The report's findings mirrored those from other foreign business chambers, as executives reappraise their spending commitments on the mainland in the face of a slowing economy, leaner competition and a tougher regulatory environment.
In a survey last month by the American Chamber of Commerce of China, whose members are in northern China, one third of respondents had no plans to expand investment this year, the highest number since 2009.
Likewise, the European Chamber of Commerce reported a slowdown in spending plans among members, with the majority blaming the mainland's restrictive internet access for choking business growth.
Rules were being enforced more stringently than in the past, said Jonathan Fenby, head of China research at consultancy Trusted Sources, and foreign companies should not expect the special treatment they received when China first courted them.
"China can do more things itself," Fenby said. "It wants to build up national champions. This has a knock-on effect on foreigners who enjoyed their market position to make some pretty big margins."
Complaints about unfair treatment escalated last year after several high-profile multinationals, including Microsoft and Qualcomm, were left reeling by antitrust probes and hefty fines imposed by mainland regulators. This prompted other foreign companies to review business strategies and tighten compliance oversight.
"The government needs to do a great deal to convince the corporate executives in the West of equal treatment before the investment numbers go up again," Seyedin said.
