China Makes Life Hard for Multinationals

China fired a warning shot for foreign business in late July. A senior official in a closed-door meeting in Beijing admonished the in-house counsels of more than two dozen European and U.S. multinationals, saying their China operations may be investigated for anticompetitive behavior. Come clean and confess, the official from China’s planning commission advised his audience. Shortly afterward, Chinese authorities announced a record $110 million in fines on five overseas baby formula makers for price fixing. One Chinese company was penalized.

Pharmaceutical giant GlaxoSmithKline is being investigated for alleged corrupt practices; the company says it is cooperating. Bayer and Eli Lilly have been visited by regulators, but they aren’t aware of active investigations. Chinese media has recently reported that the pricing practices of foreign carmakers may be next. “Chinese customers are expecting a fall in prices following the announcement of the inquiry,” the China Daily wrote on Sept. 16.