International Law

China Mining For Foreigners. Fuhgeddaboudit!

By Dan

Had the chance the other day to speak with the father of a friend whose very large company was for many years involved in various mining ventures in China. This person confirmed what I had been hearing for years, that the entire "system" in China is rigged against foreign companies involved in this industry. 

According to this person, whose company eventually left China after investing tens of millions of dollars there, the system is set up to encourage foreign companies to come in to China to work with Chinese companies. The Chinese companies are then encouraged to "milk" whatever expertise they can from the foreign company, while at the same time, "doing whatever they can to pull as little out of the ground as possible." This person believes that is China's policy in all industries, but obviously to a much lesser extent.

Is this really true for all of China's natural resource/mining industry? To what extent is this true of China policy as a whole? My view is that though China might in theory like this to be true for all industries, it realizes that it cannot act that way or it will get dinged by the WTO and all foreign companies will leave. It therefore goes to the edge where it can and then, just as it did with its indigenous innovation policy, backs down when it is politic to do so.  What do you think?

Full post as published by China Law Blog on February 04, 2011 (boomark / email).