Fewer loopholes for intl firms in China

Updated: 2013-08-08 13:53


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BEIJING -- China on Wednesday announced it has sent fine bills of $108 million to six mostly foreign infant formula producers for price-fixing.

They were the largest fines ever imposed for anti-trust infringements since China adopted anti-monopoly law in 2008.

The fine bills were not discriminative against foreign firms as hinted by some Western media. However, the case demonstrated that there are fewer and fewer loopholes for transnational companies to earn "easy money" in China.

Statistics has proven that China treats foreign companies and their domestic counterparts as equals in anti-trust probes.

Since the implementation of anti-trust law in 2008, the Ministry of Commerce have received over 700 complaints and it has investigated 690 cases.

Among those cases, a majority of them involved domestic companies and very few foreign firms have been targeted.

Apart from the current case, earlier this year, Samsung, LG and four Taiwan markers of LCD display screens were ordered to pay a fine totalling 353 million yuan (around $58 million) for price-fixing.

By comparison, the country's alcohol makers Kweichou Moutai Co Ltd and Wuliangye Yibin Co Ltd were ordered to pay a heavy price of 449 million yuan (about $73 million) for their involvement in price manipulation.

What's more, the latest anti-trust decision does not aim at boosting domestic brands as some foreign media speculated. Instead, it might help increase market share of international formula giants thanks to the ensuing price cuts.

The question is, what lesson could international companies draw from the punishment?

Chinese market is becoming more and more regulated and international firms should obey local laws and regulations. They should give up old mentality of making use of "loopholes" to earn "easy money".

Since China's entry into the World Trade Organization (WTO), China has enacted and amended a series of laws to make them in line with the WTO norms and international practice, so as to boost lawful, orderly and robust market competition.

In the meantime, China has enhanced law enforcement in a bid to create a clean business climate for both domestic and international firms, especially since this year.

What's more, China has tightened its efforts to fight corruption and malpractices in business and commercial operations.

Last month, Chinese authorities launched a probe into international pharma giant GSK for its suspected bribery and tax-related violations.

All in all, a clean, orderly and robust market with fewer and fewer "loopholes" is good for both domestic and international companies.

It is desirable for foreign firms to incorporate international practice into their Chinese business, and renounce old practice of seeking "loopholes" in the Chinese market.

Remember, there will be no "China exception" any more.