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August 26, 2014

CHINA: Regulators targeting German suppliers claim

Chinese authorities have reportedly told three German suppliers they can no longer manage their units independently but need to form partnerships with local businesses.

Chinese authorities have reportedly told three German suppliers they can no longer manage their units independently but need to form partnerships with local businesses.

Stefan Wolf, chief executive of ElringKlinger, told the Stuttgarter Zeitung that the Chinese state has told several German suppliers that they are no longer allowed to operate their Chinese subsidiaries on their own but only as part of a joint venture in the future.

He added that he knew of three companies needing to look for a Chinese partner, but did not say which, although ElringKlinger was not affected.

He warned: “If that were to happen, it would be an attack on intellectual property. Fifty percent of the company is being taken away – this, effectively, is expropriation. I believe this is an attempt to make up leeway in terms of know-how and innovation.”

If true, this would add to concerns expressed earlier this month by the European Union Chamber of Commerce in China over recent antitrust investigations which it said unfairly targets foreign firms.

The chamber said it had “received numerous alarming anecdotal accounts from a number of sectors that administrative intimidation tactics are being used to impel companies to accept punishments and remedies without full hearings”.

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