Is China really cracking down on Foriegn companies ?

There was an article this morning in one of the Chinese newspapers about the increasing scrutiny global corporations face when they operate in China. And I have seen the same topic addressed recently in several popular China blogs. The obstacles come in the form of investigations into product safety, allegations of price-fixing, new labor laws. Some examples of big companies that have been under investigation are IKEA, KFC and Yummy Foods, Nestle and Danone, Tetra Pack, a Swedish food packaging company that has been in the headlines recently because it is acting as a monopoly. The Tetra Pak case is interesting. Tetra Pak has been in China since 1972. But even that pedigree has not protected it.

However, as you can see most of these are food related companies. Even IKEA’s problems in China were food-related. Some of its cafes were found to be selling expired product. In China food safety has become a much–debated issue and many Chinese consumers have come to favor international companies because they perceive that foreign companies have more reliable supply chains and deliver safer product. Infant formula and milk provide good examples. There have been several well-publicized product safety incidents involving Chinese manufacturers of infant formula and now many Chinese will go to great lengths to buy safe infant formula, including travelling to Hong Kong. Ditto with milk, where imported milk is one of the fastest growing items on the shelves in supermarkets throughout China. I am not sure but I suspect one reason the Chinese Govt has targeted some of these global food corporations is to show Chinese consumers that foreign companies also sell bad products. It is not just Chinese companies who are to blame for China’s food safety issues.

In any case, if you see headlines about problems foreign firms face in China now, don’t be too worried. Unless you deal in food or pharmetucials it shouldn’t concern you. Chinese vendors still want your business and the Government does too.



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