crackdown on law violations

One of the things I keep hearing while here in China is increased monitoring of laws by Chinese authorities. I am hearing this both from those who are happy about this change and those who are unhappy.

One of our clients complained how a bank yesterday would not allow it to engage in a transaction our client tells us he had done many times before. When we explained to him how the bank was only following the law, he rightly pointed out how the law it was following had been in place for nearly a year. In a discussion I had with Andrew Hupert last night, he told me of how much better Shanghai is now than when he first came here five years ago. I asked him what made it better and he put “increased enforcement of laws” right after “better restaurants.”

Today’s Asia Wall Street Journal hammers home China’s increasing crackdown on law violations. The article by Loretta Chao entitled, China’s Visa Crackdown Reflects Olympics Anxiety, discusses a recent crackdown on visa violators in Beijing. The article mostly ascribes the visa crackdown to the Beijing 2008 Olympics, but I see it as being more than that. I see this as very similar to the disallowed bank transaction. Both are attempts to reign in foreigners who violate China’s laws and is motivated at least in part by a desire to improve tax collection by cracking down on foreigners working without permission.

Bottom Line: The trend is clear, unrelenting, and unequivocal. The number of Chinese laws aimed at business is increasing and enforcement of those laws is increasing as well. If you are a foreign company doing business in China, you would be wise to take note of this.