Date
22 April 2018
Customers sit inside a Starbucks outlet in Shanghai. The company has been criticized for charging higher prices in China. Photo: Bloomberg
Customers sit inside a Starbucks outlet in Shanghai. The company has been criticized for charging higher prices in China. Photo: Bloomberg

WEEKENDER: Doubts about openness loom as Party meeting nears

Two sets of events — one involving a mainland newspaper and the other two foreign companies — fueled more speculation this week about the chill blowing through China’s political and economic landscape as a policy-setting Communist Party meeting draws near.

On Thursday, Guangzhou-based tabloid New Express {新快報} ran a second front-page appeal to the authorities in central Hunan province for the release of reporter Chen Yongzhou {陳永洲}, who was detained the previous Friday for allegedly “fabricating facts in his reporting” and “damaging the commercial reputation” of a mainland firm.

Chen wrote a 15-part investigative series on alleged fraud by construction equipment maker Zoomlion, which is based in the Hunan capital of Changsha. The company denied the claims in the reports.

Although its is not uncommon for mainland reporters to be detained for their reports, the Chen case has drawn a rare reaction from the central authorities. The semi-official All-China Journalists’ Association called for a “legally sound and convincing” explanation from the Hunan authorities about the case. It followed a separate statement by the General Administration of Press and Publication and the State Administration of Radio, Film and Television, which said they were  concerned about the detention.

The New Express saga has drawn heated online discussion on press freedom in China at a time when memories of a standoff between the liberal Southern Weekly and the authorities early this year are still fresh. Employees of Southern Weekly, also based in Guangzhou, became locked in a tussle with the authorities over changes to its New Year edition.

Set against a nationwide ideological campaign this year to counter Western political ideas and constitutionalism, the New Express saga is the latest indication of the extent of the leadership’s appetite for political and ideological liberalization and openness.

Eleven months after Xi Jinping {習近平} was anointed party general secretary and seven months after Li Keqiang {李克強} was elected premier, there are growing signs that the Xi-Li pair has opted for a bolder approach to economic reform but a conservative, if not leftist, stand on political and ideological matters.

A chill was also sent through the foreign business community over what appears to be a tougher position towards foreign-funded firms. Two international brands were hit by negative publicity in the official media this week in what seem to be anything but isolated incidents.

On Thursday, South Korea’s Samsung Electronics, the world’s biggest smartphone maker, apologised to Chinese customers for problems with some mobile phones after China Central Television aired a program criticizing the company’s repair policies.

That report came the day after CCTV criticized Starbucks for charging higher prices in China than other markets. Starbucks dismissed the criticism as a failure to understand the company’s pricing policy on the mainland.

In a related development, Japanese diary giant Meiji announced on Thursday that it will suspend sales in China of three baby formula products and one milk line for pregnant women, citing tough competition and rising production costs for their pullout.

Market analysts said foreign infant formula makers face an increasingly difficult environment following Beijing’s tougher stand on alleged price-fixing by foreign makers and stepped-up efforts to support domestic diary firms.

Fears of risks for foreign firms operating in China grew in the summer when a leading drug firm, GlaxoSmithKline Plc, was accused by the mainland authorities of bribing doctors, hospitals and government officials to help sell more drugs at higher prices. The Wall Street Journal reported Wednesday the company’s pharmaceutical and vaccine sales in China fell 61 percent in the third quarter.

The details of each of these cases are obviously different and unrelated. But together they give a snapshot of the increasingly difficult, complex and sensitive business environment on the mainland.

Confronted with populist pressure over consumer rights, the central government has acted to crack down on what it has been construed in some mainland quarters as monopolistic practices and excessive profit-taking by some big international firms.

On Wednesday, Xi met with a group of top executives from leading companies including Wal-Mart, Coca-Cola and Pepsi. The executives sit on an advisory board of Tsinghua University’s business school and during the meeting, Xi highlighted the importance of deepening reform at the third plenum of the Party’s Central Committee next month.

The top executives of the multinational firms will no doubt be keeping their fingers crossed for what will be in store for their mainland businesses once the watershed plenum is over.

Chris Yeung is deputy chief editor of the Hong Kong Economic Journal. This column appears every Friday.

– Contact the writer at [email protected]

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He was editor-at-large at the South China Morning Post and, more recently, deputy chief editor of the Hong Kong Economic Journal.

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