In a story this morning that it claims as exclusive, Reuters says the Chinese have met with business leaders of foreign firms, European firms according to the report, to "express concerns" about the growing interference of local officials in the management of their businesses. This story also confirms that 70% of businesses in China have Party organizations (all of them are suppposed to have them) and at issue is the revision of agreements to allow the Party to have final say in business arrangements. We all got to see one of those when CBS' Sixty Minutes visited Foxconn in China several years ago. The Chinese handlers moved the crew quickly past the office - which seemingly was closed - and said nothing about its function. This is an area the Chinese do not like the foreign press to see.
This is going to shatter the illusions of a number of businesses operating in China who thought they owned the companies they had in China, even though the "joint venture" agreements require Chinese to be in charge of some business units. This has been tightening up for the past 10 years but business leaders have ignored it because they get so much money from Chinese customers. Now, it looks like they are going to pay the piper.
Don't look for any sympathy from anyone who has studied what the Chinese have been doing. They have joint ventures through a series of laws that dictate management oversight and the control of technology (intellectual property) that clearly are a "legal" way to steal from those companies. When they can't get that IP through the front door, they steal it. Business leaders have known that for a long time yet their Boards continue to allow them to make money in China, a clearly short-sighted strategy for business.
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