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Foreign companies struggle in China

TEXT OF STORY

Bill Radke: China responded officially today to Google's threat to leave the country. The government said foreign Internet firms are welcome but they must obey the law. No hint there of changes regarding the blocking of Web content. Marketplace's Mitchell Hartman wanted to know, does Google's threat signal a trend -- American companies challenging Chinese censorship?


Mitchell Hartman: Whatever its policies on censorship, China's legal protections for foreign companies are much better than they used to be. But Gary Hufbauer of the Peterson Institute for International Economics says there are still big hurdles:

Gary Hufbauer: The entertainment companies, they've had endless trouble with piracy. We thought we had some understandings on opening banks, insurance business, selling mutual funds and so forth. Lots and lots of obstacles are thrown in their way.

Hufbauer says U.S. companies don't usually air these problems in public-they work behind the scenes to get a better deal. He doesn't think many will now follow Google's lead and complain in public.

But there have been recent hacker attacks and corporate espionage against U.S. companies. If it turns out the Chinese government is involved, Hufbauer says there could be a backlash.

Hufbauer: That's pretty damaging for China's reputation as a good place to do business.

Critics of China are urging more American technology companies to leave. They point out some of the censorship and surveillance software the government is using comes from the U.S.

I'm Mitchell Hartman for Marketplace.

About the author

Mitchell Hartman is the senior reporter for Marketplace’s Entrepreneurship Desk and also covers employment.

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