Foreign firms face environmental whip first

Follow the Money: CleanBiz.Asia

The crack of China’s environmental whip was heard across the foreign investment community when BMW was told to pick up its environmental game. “Drinking polluted water while driving BMW sedans is certainly not the type of industrialization we are looking forward to,” China’s environment minister, Zhou Shengxian, told the People’s Daily.

The environment ministry criticized an application to double capacity at a joint-venture factory, saying there had been insufficient investment in environmental protection measures. While BMW remains optimistic the expansion will go through after an appropriate delay, industry observers are asking what the public move means for business in China.

The Shenyang joint venture of BMW Brilliance Automotive wanted to double production capacity to 400,000 cars a year but an “opinion” published on the environment ministry’s website was reflected unhappiness with the idea.

As the State Council has become increasingly vocal on environmental issues, generally following up with legislation, it is well aware that companies have been able to ignore what rules there are with the collusion of local or provincial authorities.

Possibly by giving a prestigious international partner like BMW such a public admonishment, the ministry hopes it will get the attention of more provincial firms that it is becoming serious on environmental issues.

On the other hand, some worry that it is a matter of cyclical xenophobia that hits foreign businesses sporadically. In the light of how much an example the government has made of GlaxoSmithKline, the UK pharmaceutical group over bribery and corruption charges, the government may see the time as coming for a cleanup.

As national growth rates have stalled, debts risen and the country facing a slowdown, the government may regard it as an optimum time to clean house of the twin perils of corruption and environmental disaster. With the ministry’s “opinion” echoing Mao-era calls for self-criticism, the follow-on could signal tougher times of polluters.

 

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