US firms in China feel sting of stricter checks and licensing

BEIJING • An American company that ships cherries to a coastal province in south-east China recently encountered a new hurdle at the border: Customs officers ordered a load into quarantine for a week, so it spoiled and was sent back to the United States.

American pet-food makers, meanwhile, say they are facing more rigorous inspections at ports, which delay goods from reaching shelves and ultimately hurt sales.

And a US manufacturer that exports vehicles to China recorded a 98 per cent jump in random border inspections over the past month, throwing the firm behind schedule.

American business leaders fear these are the "qualitative measures" China warned it would unleash if President Donald Trump imposed tariffs on its exports to the US.

Just before the first 25 per cent levy is slated to hit US$34 billion (S$46.4 billion) in Chinese products, US firms here say they are already feeling the sting in the form of stalled product approvals, worker visas and licensing applications.

In a country where regulation enforcement can vary widely by region, it is hard for analysts to know if these sudden administrative headaches are a coincidence or the Chinese government following through on threats to make life harder for Americans in business. But anecdotal evidence suggesting official sanction is building, according to veteran observers of the Chinese market. "There is enough of a trend to say this might be related," said Mr Jake Parker, vice-president of China operations at the US-China Business Council, which represents about 200 firms, including Pepsi, Apple and General Motors. "The tariffs won't solve the problem, but they will damage US interests."

Executives across industries have raised concerns about an increasingly hostile regulatory environment, he said. The companies wanted to remain anonymous to avoid angering the government. They also worry that the sparring between Washington and Beijing could fuel anti-American sentiment among Chinese consumers.

One sign of fraying relations: A notice posted by the Chinese Embassy in Washington last week urging tourists to "avoid going out alone at night" in the US, where "cases of shootings, robberies and theft are frequent". The White House did not respond to requests for comment.

US firms now have more than US$220 billion invested in China, as many scramble to serve the nation's exploding middle class, according to the American Chamber of Commerce in the People's Republic of China (AmCham China).

Chinese President Xi Jinping invoked this financial commitment at a meeting with US and European executives last month, telling the room that "we punch back", according to one person familiar with the discussion.

Last Friday, AmCham China, which represents about 900 firms here, called a meeting to discuss the effects of the ongoing negotiations.

Some dreaded the possibility of unusually burdensome fire inspections, said AmCham China president Alan Beebe. Others wondered if environmental regulations could suddenly get stricter. "It is a common concern for our members that these measures could be used as a form of retaliation," Mr Beebe said.

WASHINGTON POST

A version of this article appeared in the print edition of The Straits Times on July 06, 2018, with the headline 'US firms in China feel sting of stricter checks and licensing'. Print Edition | Subscribe