Administrative Measures as a Political Tool and the Extraterritorial Reach of Anti-Trust Law

“Economic interests are a different story. Japanese companies doing business in China will be hit. There will be what amounts to an informal boycott of Japan-branded consumer products, and business [with] the national and local governments as well state-owned companies will be harder to secure than it already is. All in all, the economic backlash will be smaller than it was in the wake of the 2011 (fishing boat-Coast Guard vessel collision) and 2012 (Senkaku purchase) events.”

One of the points implicit in that segment of one of my previous posts was that I did not expect to see the kind of harsh administrative actions such as the crackdown on rare metals exports to Japan (how much retaliatory motives factored into actual Chinese will never be known since China had already been in the process of drastically reducing rare metal exports for commercial and environmental reasons) and the less coordinated but also pervasive delays in customs procedures for merchandise goods belonging to Japanese firms. Still, there are any number of ways in which the regulatory authorities in China can make life less comfortable for Japanese businesses doing business there without drawing much attention. They will be hard to detect, though, since there need not be any explicit instructions from the government/party leadership for them to happen. In fact, it could be freebooting by individual agencies acting on their own initiative, or even a single official, incensed by Prime Minister Abe’s visit to Yasukuni, who has decided to take things into his own hands and ask a few more questions, demand yet another certified document… indeed, the official need not even be angry at Japan, he may just be protecting himself from accusations that he’s going soft on Japanese businesses. And if he had been seen wining and dining with executives of Japanese affiliates before the Xi-Li regime got serious with its anticorruption campaign, well…

This effect will be hard to detect, and the evidence will almost surely be anecdotal and, for the most part, anonymously sourced. Which brings me to this Yomiuri article regarding M&A activities involving Japanese firms being delayed by Chinese and South Korean antitrust authorities that offers (unsourced) speculation connecting a Chinese slowdown of the administrative process after the 2012 Senkaku acquisition. Note that, unlike the ex-im cases, China and South Korea, indeed any one of more than 200 sovereign states or the EU could, hypothetically, put a damper on the global plans of multinationals if it decided to do so out of pique. Of course businesses can ignore the demands of a microstate and kiss that market goodbye, but they will be hard put to do so to China and, to a lesser extent, South Korea.

China has been on the other end of the stick in the somewhat analogous national interest-related cases involving acquisition proposals in the United States, Canada and Australia. Could they be doing the same to Japanese interests there? Yomiuri speculates.