Anti-trust move is market-based

Updated: 2014-08-12 11:10

By Xin Zhiming (

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It seems the number of Chinese companies investigated in anti-trust moves is smaller than that of foreign companies. But regulation should only be based on facts, not mathematics. It would be ridiculous to claim that China is in favor of domestic players simply by comparing the number of companies under investigation.

Far more foreign companies are in a leading position in various domestic industries, such as auto-making, milk powder production, computer software and hardware, edible oil, cosmetics and high-end pharmaceuticals, to name but a few. It would not be surprising if some have taken advantage of their positions for illegal benefits.

The victim mentality reflected in the willful accusation of China's normal regulatory moves could have resulted from the changing business landscape in China in recent years.

In the 30 years following China's launch of its reform and opening-up drive in late 1970s, foreign companies have been widely welcomed as their investment can bring much-needed capital to cash-thirsty local governments. As a result, "introduction of foreign capital" has become a crucial factor in evaluation of the career performance of local officials and local governments competed fiercely with each other in releasing preferential policies, such as free or low-cost use of land and tax exemption, to woo foreign investors.

Only in recent years have authorities realized that such investor-wooing policies are not sustainable and have put domestic enterprises at a disadvantage.

In a landmark move, China unified its corporate income tax rate for foreign and domestic companies at 25 percent in 2007. Previously, the rate for both types was 33 percent, but in reality, local governments have offered various preferential tax treatments to foreign companies, giving them an edge when they compete with Chinese rivals.

The move is a crucial step for China to build an equality-based market for all, but by depriving foreign enterprises of their super-national treatment, it has inevitably aroused protests from those spoiled foreign players.

In the same vein, the current anti-trust move, which is also an indispensable step for China to build a real, mature market economy, is set to make the scrutinized foreign companies uneasy.

Instead of complaining like cry babies, they should rethink their way of operation in the maturing Chinese market.

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