February 11, 2015 / 7:04 AM / in 3 years

U.S. business lobby survey warns of China protectionism

BEIJING (Reuters) - China’s regulators are targeting foreign firms, a majority of respondents said in a survey by an American business lobby, citing protectionism among the top concerns for their operations in the world’s second largest economy.

A Qualcomm sign is pictured in front of one of its many buildings in San Diego, California, in this November 5, 2014 file photo. REUTERS/Mike Blake/Files

Fifty-seven percent of the 477 respondents included in an annual survey by the American Chamber of Commerce in China said they believed recent government investigations “singled out” foreign companies.

The survey results, published on Wednesday, also said increasing protectionism had become the fifth greatest concern for businesses in China for the first time since 2010.

Labor costs, unclear laws and regulations, and shortages of qualified staff and managers, remained atop the list of business challenges.

“There are concerns that China will take an approach, that when the economy slows down, they become more protectionist,” Chamber chairman James Zimmerman told reporters.

On Monday, U.S. chipmaker Qualcomm Inc agreed to pay a $975 million fine, the largest in China’s corporate history, ending a 14-month government investigation into anti-competitive practices.

In recent months, four international business lobbies have raised alarms over how China’s antitrust regulators carried out investigations. At least 30 overseas firms, including U.S. software giant Microsoft Corp and South Korea’s Samsung Electronics Co Ltd, have come under scrutiny.

The National Development and Reform Commission (NDRC), which conducted the Qualcomm investigation, has defended its practices and said it does not target foreign companies.

Cyber security, the risk of intellectual property leakage and data security threats were greater in China than in other markets, according to 60 percent of survey respondents.

Business lobbies have also warned that foreign technology vendors could be locked out of China business or forced to disclose sensitive intellectual property as the country implements new cyber security regulations.

Despite the concerns cited in the survey, the majority of Chamber members were positive about the China market over the next two years, with 73 percent saying their businesses were profitable or very profitable.

Corruption ranked 13 on the list of most serious challenges, down from sixth place in 2014, amid President Xi Jinping’s ongoing anti-corruption campaign.

Reporting by Michael Martina

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