Feeling like 'scapegoat' not to help foreign firms win in Chinese market

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Feeling like 'scapegoat' not to help foreign firms win in Chinese market

(Xinhua) 08:17, August 13, 2013

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China's crackdown on business malpractice in efforts to build a healthy economy has drawn complains from certain foreign media as the move involved probes into and penalties on some foreign multinationals.

The Washington Post said in a recent article that foreign companies in China said "they feel like scapegoats" as the Chinese government is, in part, attempting to "deflect attention from China's own domestic food-and drug-safety concerns."

Beijing's determination to create a better investment climate, followed by effective measures, can indeed make some foreign companies feel the pain, but only those who ignore the laws of China.

Given their wrong-doings were verified with hard evidence, those companies that have been probed and punished are not in a very strong position to complain about it, and "feeling like scapegoats" will not help them correct their malpractices and make a healthier and more robust development in China.

More importantly, the "scapegoats," which can hardly be proved innocent, are not the victims here, the Chinese consumers are.

Probes showed that British pharmaceutical company GlaxoSmithKline (GSK) used travel agencies to offer large bribes to government officials, medical associations and doctors while doing businesses in China in order to expand its market share and boost the prices of its medicines.

As a result, consumers were paying about 30 percent more for drugs because of the bribery. The British drugmaker has admitted that its executives had broken the Chinese law.

Chinese authorities have also fined six baby formula producers a total of 670 million yuan (108 million U.S. dollars) for price-fixing.

An anti-trust probe launched in March showed that those milk powder makers, including Mead Johnson and Dumex, set minimum resale prices for distributors and punished distributors who sold their products at lower prices by suspending supplies or ending contracts.

The infant milk producers all said they respected the penalties and would take remedial measures and strengthen law-abiding consciousness.

Foreign companies in China are not "scapegoats" as described by the Washing Post. Instead, they were punished because they took advantage of the loopholes in the Chinese law to pursue high profit. If these unlawful acts happened in other countries, they would also face punishment.

Just one year ago, the U.S. Department of Justice said GSK had agreed to plead guilty and pay 3 billion U.S. dollars to resolve its liability from the unlawful promotion of certain drugs, its failure to report safety data and alleged false price reporting.

Unlike what the Post quoted a leading U.S. businessman, who asked not to be identified, as saying that foreign companies are "an easy target," China launched probes into these multinationals in an attempt to fight business corruption and market monopoly.

Any companies, if they break the law, have to pay the price no matter they are foreign or domestic ones.

The six baby formula producers that will pay fines for price fixing and anti-competitive practices also include Chinese infant milk company Biostime International Holdings.

Yes, China is still a developing country, where failure to abide by the law happen occasionally and "hidden rules" are sometimes more effective than regulations. But laws and regulations have been gradually improved since the reform and opening-up in the late 1970s.

China's probe into multinationals issues a warning to both foreign and Chinese companies that the country's market order will become more fair, standard and clear.

If a company wants to do long-term business in China, it should comply with the regulations here and give up the dream of challenging the Chinese law for profiteering.