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Official warns of monopoly by foreign companies
(Xinhua)
Updated: 2006-03-08 10:43
A Chinese official has warned of the acquisition of domestic promising
companies by transnational corporations to prevent the practical result of
monopoly.
"We have been welcoming foreign investment, but now we have to curb any
attempt to monopolize the Chinese market," said Li Deshui,director of the
National Bureau of Statistics and a member of the country's top political
advisory body, which is in an annual session.
Foreign investment in China has shown new features since 1995, Li said.
Transnational companies have launched a massive wave of purchasing Chinese
companies, especially those dominating a sectoror having big potential of
expansion.
More than 80 percent of China's supermarkets are in the hands of
transnational companies, and a few other sectors involving beerand skin-care
products are nearly under foreign monopoly.
"Any sovereign state will not allow such a thing to happen," said Li.
Some countries have enacted laws forbidding business acquisitions that would
result in monopoly. In Canada, merger and acquisition deals valued above 200
million U.S. dollars need government approval. The United States government and
Congress also set requirements on business acquisitions by foreign companies.
"If we allow hostile takeovers to happen without limitations, we would
gradually lose our domestic brands and innovation capability," said Li.
The consequence, said Li, is that China may become a link in international
division of labor with the least profits. Most corporate profits will be taken
away by transnational companies, leaving China with only nominal big GDP
figures.
Chinese Premier Wen Jiabao has mentioned in his government workreport,
delivered on March 5 to nearly 3,000 deputies to the National People's Congress,
that in opening wider to the outside world, China must "pay particular attention
to safeguarding China's economic security."
"The new circumstances require us to constantly improve our level of
opening-up and gradually improve our polices on using foreign investment," said
Li.
"Laws and regulations on business acquisitions by foreign companies should be
made as quickly as possible in line with international practices," he said.
"There should be severe measures to curb and punish hostile takeovers aiming to
monopolizethe Chinese market."
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