More foreign firms feel unwelcome in China

By Christopher Bodeen - Associated Press | via UNCENSORED Yahoo! News
March 22, 2010

A growing number of foreign businesses in China feel shut out under new government policies promoting homegrown technology, according a survey released Monday.

Fully 38 percent of foreign firms questioned by the American Chamber of Commerce say they feel increasingly unwelcome to participate and compete in the Chinese market.

That marks a 12 percentage point rise from the last survey taken just a few months before. Over that period, the government has increasingly steered business toward state-owned companies, ostensibly as part of efforts to boost innovation among Chinese firms.

The chamber said it strongly supports promoting indigenous innovation, but believes current policies give an unfair advantage to domestic companies that enjoy strong government backing and political connections.

"Domestic innovation creates the potential for more partnerships between U.S. and Chinese firms in China and globally. However, limiting market participants and reducing competition does not encourage innovation," AmCham China President Michael Barbalas said.

The chamber's data, gathered earlier this year from 203 companies, portrays a steadily worsening environment for foreign companies in China over the past three years. Only 23 percent said they felt unwelcome in the chamber's 2008 survey.

The disquiet was most pronounced among foreign firms specializing in high-tech and information technology, with 57 percent saying they felt negatively affected by government policies. In that sector, 37 percent of foreign companies said they were losing sales as a result of Chinese government policies.

>> Complete Report