The heads of General Electric, Siemens and BASF are known in Beijing as “foreign friends” of China. This hallowed title comes with certain responsibilities, chief among them defending the autocratic Beijing’s government policies from its critics abroad.
If foreign friends fail in this task or become openly critical of the Chinese leadership they can find themselves accused of being ignorant of China and its unique national conditions or, even worse, of “hurting the feelings of 1.3bn people”.
So how will China react to Jeffrey Immelt, Peter Löscher and Jürgen Hambrecht – chief executives of GE, Siemens and BASF, respectively – after their recent attacks on the difficulties of doing business in China? What have they risked by speaking out? So great is the fear of losing the special status of “friend of China” and being shut out of the huge and growing market that global executives almost never complain publicly about their hardships.
“It’s simple – we would never openly criticise the Chinese government because China is now the biggest car market in the world and we really need it to hit our sales targets,” one senior executive at a global car manufacturer told the Financial Times.
When Mr Hambrecht voiced his complaints about access to markets in a face-to-face meeting this weekend with premier Wen Jiabao, Mr Wen told him to “calm down”.
Later, Mr Wen said the foreign criticisms were “untrue”. Chinese state media calls the allegations of a worsening business climate “shaky”.
The official line in Beijing is that the foreigners are just making excuses for the fact they are becoming less competitive vis-à-vis their Chinese counterparts.
China has so far taken a pretty relaxed view of the foreigners’ grumbles. Mr Wen this weekend pointed to a 19.6 per cent year-on-year rise in foreign direct investment to China in the first half of this year as evidence that China is not less welcoming to foreign investors.
But the increase comes off a low base following the global financial crisis last year, and some analysts believe a portion of the rise in FDI is disguised capital inflows coming to China to speculate on the rising currency. Even taking this into account the numbers suggest a strong continued drive to invest in China, despite the difficulties.
While denying that the investment climate is worsening, officials recognise they need to do something to address rising discontent among foreign investors.
That is one reason why China has submitted a new proposal to join the World Trade Organisation Government Procurement Agreement, nine years after it promised to sign the agreement “as soon as possible”.
China’s government procurement market is estimated at up to $500bn and the exclusion of foreign businesses from many areas is a key complaint.
While Beijing’s latest offer to open its procurement market falls short of what the US, EU and other major trade partners would like and is likely to be rejected, the proposal marks a Chinese desire to at least appear to be making an effort to appease foreign investors. But such attempts to mollify critics may not be enough to head off a re-evaluation in western boardrooms and capitals over how open their own markets should be to China.
If that is the case, Beijing might be reluctant to add insult to injury by singling out GE, Siemens or BASF for reprisals. Such a move could be counterproductive. After all, China still needs its “foreign friends,” notably for their technology and expertise.
Was he worth it?
“Because you’re worth it” is probably one of the most ghastly, if successful, commercial slogans ever invented. It extols the dubious virtues of self-indulgence and conspicuous consumption. It is now backfiring on the company that embraced it, L’Oréal – poetic justice, at last.
The murky saga surrounding the company’s leading shareholder, Liliane Bettencourt, is starting to catch up with the world’s leading cosmetics group itself. It is unfortunate that a government minister caught up in the affair is called Woerth.
Now a small L’Oréal shareholder has filed a legal complaint alleging the misuse of company funds as a result of the 10-year artistic consultancy contract awarded to François-Marie Banier, the photographer at the centre of the unseemly drama.
Mr Banier, a close friend of Mrs Bettencourt and by the far the biggest recipient of the widow’s extraordinary largesse, has apparently also been paid €405,000 ($522,000) a year by L’Oréal. The company has confirmed that the consultancy contract lasts until next year. But was he really worth it?
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