FOREIGN FIRMS VOICE CONCERNS
Europe executives wary of party organisations’ increasing demands, say sources
LATE last month, executives from more than a dozen top European companies in China met here to discuss their concerns about the growing role of the ruling Communist Party in the local operations of foreign firms, according to three people with knowledge of the discussions.
President Xi Jinping’s efforts to strengthen the party’s role throughout Chinese society have reached the China operations of foreign companies, and executives at some of those entities don’t like the resulting demands they are facing.
The presence of party units has long been a fact of doing business in China, where party organisations exist in nearly 70 per cent of some 1.86 million privately owned companies, the official China Daily reported last month.
Companies in China, including foreign firms, are required by law to establish a party organisation, a rule that had long been regarded as more symbolic than anything to worry about.
One senior executive whose company was represented at the meeting said some companies were under “political pressure” to revise the terms of their joint ventures with state-owned partners to allow the party final say over business operations and investment decisions.
He said the company’s jointventure partner was pushing to amend their agreement to include language mandating party personnel be “brought into the business management organisation”, that “party organisation overhead expenses shall be included in the company budget”, and that posts of board chairman and party secretary be held by the same person. Changing joint venture agreement terms was the main concern, said the executive,.
The State Council Information Office (SCIO), which doubles as the party spokesman’s office, said in a faxed statement that there is no interference by party organisations in the normal operating activity of joint venture or foreign-invested companies.
However, it added, “company party organisations generally carry out activities that revolve around operations management, can help companies promptly understand relevant national guiding principles and policies, coordinate all parties’ interests, resolve disputes, introduce and develop talent, guide the corporate culture, and build harmonious labour relations. They are widely welcomed within companies,” said the SCIO.
Of the 13 executives, all from different foreign companies, interviewed for this story, eight expressed concerns about increasing demands from the party or noted increased activity from party groups.
They all spoke on the condition that they and their companies not be identified given the sensitivity of discussing relations with the party. Reuters