Continued from Part One.
While Johnson Controls claims China could be deterring their production via quotas, local officials are now saying the plant may not be given a new quota and, at best, Johnson Controls may be allowed to run some downstream activity like initial charging, rather than cell plate casting and battery construction work.
The Shanghai plant’s annual capacity at 2.6 million batteries is less than the firm’s Jiangsu Province plant that can produce 8 million units, and a plant being built in Chongqing with a capacity for 6 million batteries annually. To make up the shortfall, Johnson Controls imports batteries to meet local demand, but even the firm admits that this is of questionable economic benefit and merely serves to keep them active in what is seen as a massive and still-growing market.
Is this a case of local environmental health authorities simply jumping to the wrong conclusions? Or is it an indication of a more sinister anti-Western attitude toward foreign firms on the part of the authorities?
In the West, Chinese firms can sometimes find it hard to invest in Western firms or set up local manufacturing operations if the activity is considered sensitive in terms of national safety, local employment or for political reasons; but on the whole, once a firm is given approval, it exists side by side with domestic firms on an equal footing.
In China, though, the political winds can change — both nationally and locally — at short notice, and foreign firms can be targeted more harshly than local companies.
Last year, the BBC reported that China’s National Development and Reform Commission accused Wal-Mart, and its French rival Carrefour, of manipulating prices at 19 stores, while allegations that Wal-Mart had been mislabeling pork led to the closure of 13 stores and detention of 37 Wal-Mart employees. Last summer, the Chinese media roundly criticized the oil company ConocoPhillips over a June oil spill off China’s east coast. The State Oceanic Administration threatened to sue ConocoPhillips, but not its state-owned partner, CNOOC, which got off without censure.
Such stories underline the challenges facing Western firms looking to operate in China — it’s a culture that is unlikely to change anytime soon.