In the US, inspections for new chemical plants may require reporting a range of temperatures at which a manufacturing process operates, whereas in China the specific temperature must be disclosed, according to Jacob Parker, vice president for operations at the US-China Business Council in Beijing. “Every new detail that’s required allows for the replication of the process by potential domestic competitors,” he says. Another issue is the dominance of state-owned enterprises in some industries. That creates a de facto cartel that can be used to extract concessions from foreign companies.
Groups representing US and European firms operating in China said in October that the new foreign investment law addresses some of their members’ core concerns, including around intellectual property protection, but questions remained about how it will be implemented. US-China Business Council Vice President Jake Parker said it also “falls short of specifying the types of disclosures of trade secrets that will be prohibited and clarifying the types of administrative organs to which the provisions on technology transfer apply.”