| Anit-monopoly law passed!!! | |
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| Aug 30, 2007 22:29 |   |
 | Source: Xinhua and China org.cn. On August 30th, the standing committee of NPC passed the Anti-monopoly law and declared that the law will take effect on August 1st in 2008. And it aims at ensuring the fair competition and regulating the market order. The law has set some rules for those foreign giant companies. It requires: "Foreign mergers and acquisitions of domestic companies or foreign capital investing in domestic companies' operation in other forms should be examined according to relevant laws and regulations if the cases are related to national security." The purpose is to ensure China's ecnomic security. According to official statistics, the number of foreign merger and acquisition cases reached 20 percent in 2005. Moreoever, foreign companies have begun to acquire major state-owned enterprises or companies with famous brands in recent years, arousing concerns about China's economic security. The regulation set by MOC (Ministry of Commerce ) last year requires: Foreign investors should apply for approvals from the Ministry of Commerce (MOC) if their purchases of domestic companies affect national economic security, take place in key sectors or cause a transfer of the operating rights of famous domestic brands. All companies seeking mergers or acquisitions would have to notify the anti-monopoly law enforcement departments if the actions meet the standard set by the State Council. On the issue of Anti- monopoly law, some people doubt whether it will take effect. They think that it is hard to make these monopolising giants such as Sinopec, China Mobile,China Unicom, China Telecom and China Net abide by the laws. What do you think? |
| Aug 31, 2007 21:51 | #1 |
| Do hope this law can take effect very well. Why do the food prices keep soaring? It is partially due to some sellers' monopolization. Such cases have been exposed to media publicly. The rising of the price of instant noodles is one example. For these monopolising giant companies, the government should pay much effects to regulate them. Indeed, they have mad many profits and are the impetus of China's economy. However, other enterprises' benefits also need to be taken into consideration. It is not good for the long-term economic development. |
| Sep 2, 2007 22:17 | #2 |
| The intention is good. However, I doubt it can be enforced very well. Many laws have been established in China. But usually they are not enforced very well. What should be emphasized is the enforcement of the laws. If they can not be enforced well, how can they take effect? |
| Sep 4, 2007 23:22 | #3 |
| "Foreign mergers and acquisitions of domestic companies or foreign capital investing in domestic companies' operation in other forms should be examined according to relevant laws and regulations if the cases are related to national security." The rules set for these multinationals might scare these multinationals away. At present, China need not 'invite' these foreign companies and bring in the investment blindly. Many multinationals have eaten up Chinese companies and some brands have disappeared. This is the side effect. |
| Sep 5, 2007 02:51 | #4 |
| NO, I don't think China should 'invite' multinationals blindly. The large population is already a lure to them, we don't need to pay extra money and respect. What we shall do is to build a clear and strong law system to protect the legitimate profit of them. And that's enough. |
| Sep 18, 2007 02:13 | #5 |
| Recently, the ministry of Commerce of China has promulgated China Foreign Invesment Report 2007. The report said that no foreign corporation has monopolized the certain industry in China. It is the stated owned corporations that monopolize the market and industries. Also it indicates that China should continue to attract more foreign investments. But the foreign mergers and acquisitions shuold be guided and regulated. On contrary, the government should find ways to deal with those monopolistic stated owned corporations. The staff of those corporations or enterprises ean high salaries compared with their counterparts in some other private or small companies. The high salary of those monopolistic corporations is one of the main reasons that attribute to the widening income gap. |
| Sep 20, 2007 05:30 | #6 |
| yes,it is right that our country needs to make some powerful laws to guarantee the national security. Only the government controlsthe key enterprises in the major field ,their policy can carry out smoothly. and they can effectively regulate the microeconomy. if the government let the foreign merges and purchase our domestic companies freely ,which will surely serious influent our economy order.finally it will disturb the life of the public. if the legislators do not make such laws ,the foreign companies espesially the transnational companies, they possess the financial , technical ,management and market advantages .they will defeat our weak domestic companies in many field. after they win such battles ,the control the market and certain industry field , then they become the market policy makers,they will try their best to earn money from our chinese people .because the chinese population is so large and our consuption capactity is tremendous. even the price rise 1or 2 cent ,they still will make big fortune. till the common pulic can not bear it ,the government is in trouble . on the other side , the law protects the weakness.without fierce market competition ,our domestic company can not make progess.because they always enjoy the govenment's support and the momoply the market.such company like china mobile, china unicom, sinopetro, the railway department etc. they control the market and earn lots of money but their servis is bad and unbearable.recently the food price rises nearly 46%,a big part of the common public can not afford to eat the meat .the goverment does not take useful measures to control such a chaos condition .they should kick the ass of the market manipulator to protect the publie from the merchants' hurt. so the anti-monoply law should not only aims at the foreign companies but aslo our domestic market controllers. |
| Sep 20, 2007 18:46 | #7 |
| Warcraft what you said is right but you forgot something. These companies are hold by the friends of those who promulgated this law. Do you really think they ll "kick their friends ass"? I doubt about it. Competition law has never been respected in China, it won't begin today. For what you said about foreign companies and its consequences: "till the common pulic can not bear it ,the government is in trouble". By now, foreign companies are not aiming especially at the entire Chinese population, later maybe if the standard of living increases. For now only the rich population living on the coasts are targeted because they are solvent. You said: "our consuption capactity is tremendous". I would say the potential consumption capacity of China is tremendous. For now the most interesting part for foreign and Chinese companies, is that a great part of the Chinese people stays in this poor living condition to exploit them. What you said on the effect of monopoly is true except in one case. It s better, if an activity is not profitable, that the state takes it in charge (even if it becomes a monopoly) because no private company can accept to do it in its place. The problem here is that the Chinese government only decided to monopolize very profitable sectors, which is really far from the basis of Communism ;). Still the major loophole in the Chinese law system is not the central government but the local ones, more sensible to corruption. It is the local government responsability to implement the laws taken by the Beijing's authorities. Some studies say that under 7% growth a year, China will implode because of social unrest, I guess we'll see. If it is really unbearable the population will react, but I doubt the government is in danger, they are completely isolated from the real world and they are not legitimate neither. Why shall they care about people's fate ? They just care Chinese glory no matter the costs and especially if they can save some money on the side. |
| Sep 21, 2007 05:07 | #8 |
| E, I think you have said it all on this subject. A very good reply. I am not sure that it will be understood though. Dodger. |
| Sep 24, 2007 04:10 | #9 |
| Some sectors such as resources and energy should be controlled by the government because it has something to do with national security. |
| Sep 27, 2007 06:06 | #10 |
| Yes Iceberg, you pinpointed what i mentionned. Energy... Yes energy can be controlled by the state, no matter who actually, but is oil really a matter of national security ? Exploiting oil in other countries is not, this shall be left to private companies it is a very profitable field. And the state doesnt need to get involved in it. What can be seen as a national security criterium is the reserve in oil, a sector that is definitly less profitable but capital in case oil cannot be supplied for a short term. This has to be increased by China by the way, since its reserve in oil wont be enough for 7 days consumption by now. But they can let the market decide freely for the price of it. To end these monopoly situations would bring development of competition in every single sector, potentially lowering prices and clarifying the market a bit. |
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