For years, foreign multinationals have relied on the Chinese market which, in turn, has always offered low cost of production factors, stable infrastructures and the promise of an endless market. However, the marriage between China and multinationals now seems to be finished. In a correspondence from Beijing, the Financial Times recounts facts that are polluting the entire business climate in China.
Many multinationals operating in strategic sectors such as information technology, automotive, food and pharmaceuticals have come under fire from the Chinese authorities with administrative procedures, press campaigns and consumer protests. BMW, for example, was denied authorization to open a new plant and 140.000 of its cars were recalled for mechanical defects; Apple has been subjected to a media pillory for charging high prices and offering poor service to Chinese customers; GlaxoSmithKline was sued for bribing doctors and public officials. The big names involved signal that an offensive is underway and that all this is no coincidence.
Although there is no evidence of what the multinationals said, several reasons can be distinguished for this attitude of China. The first is to regulate relations with force. Multinationals are useful when it comes to industrialising the country; in this case, in fact, one can turn a blind eye to violations of the law, labor standards, environmental standards as well as tax treatment. However, when the multinationals' task is now exhausted, when their technology is no longer absorbable, or when they represent a danger to local industry, self-defense mechanisms are triggered. To date, the country feels strong enough, it no longer wants to be considered the "corporate paradise”, but hopes to use them to build a global pole of excellence. This is why foreign companies are useful but it is necessary that they lose their technological and financial superiority.
All the multinationals have accepted the Chinese decisions, promising respect and apologizing to the country and its citizens. This appears to be a victory for Beijing, however, the decisions could hide an underlying weakness: China has not yet managed to win the battle of quality. With some exceptions (Huawei, Haier and Lenovo), Chinese products are struggling to conquer Western consumers. Moreover, even Chinese citizens themselves consider foreign products to be better: condensed milk is only imported, schools abroad are attended by Chinese, shopping trips are always crowded and, who can, buy real estate in New York or on the Côte d'Azur.
All of this seems to converge towards the party line which emphasizes the "China dream”, a useful tool for unloading the contradictions generated by Chinese development to third parties.
