The aggressive use of anti-monopoly laws against foreign companies by the Chinese government is unprecedented and raises the risk for multinational firms operating in the world's second biggest economy, according to business leaders.
Over the last two weeks, China has accused at least 20 high-profile American, Japanese and German companies of breaching competition laws, while excluding Apple products from a government procurement list.
"We've never seen anything like this before," Geoff Raby, a former Australian ambassador in Beijing and now a company director, said.
"This is big and the stakes are very high. It would not be happening without senior level endorsement [from the Communist Party]."
China has opened up investigations against software giant Microsoft, chip maker Qualcomm, consulting firm Accenture and car maker Chrysler, all from the US. German car makers Audi, BMW and Daimler have also been targeted, as has Toyota from Japan and 12 of its compatriot car-parts makers.
"There are many foreign companies that believe they are being targeted by the Chinese government," Kenneth Jarrett, a former director of Asian Affairs at the National Security Council in Washington, who is now President of the American Chamber of Commerce in Shanghai, said.
"I'm more than just concerned" he said. "The [anti-monopoly] laws are not being applied equally to foreign and domestic firms."
AUSSIE FIRMS COULD BE NEXT TARGET
Australian companies have so far avoided the crackdown, but could be targeted if the probe spreads to the imported food sector, medical equipment makers, construction or mining.
The Chinese government has often accused the big global miners of colluding to keep the iron ore price artificially high, but has softened its rhetoric in recent months as a surge in new supply pushed the price below $US100 a tonne.
As the mining boom subsides, to be replaced by what many are calling a "dining boom", the Australian agricultural sector is becoming increasingly reliant on China and could be vulnerable to a crackdown.
The Chinese government banned imports of Australian chilled beef last August, in what many saw as a political decision to protect local producers and remind Canberra about its economic reliance on Beijing.
Foreign milk powder producers were also targeted by China's anti-monopoly laws last year.
Peter Arkell, chairman of the Australian Chamber of Commerce in Shanghai, said companies needed to remember that many shortcuts taken in the past were no longer acceptable. "Life is changing here and becoming more regulated. The authorities are no longer turning a blind eye to things they had in the past," he said.
Mr Jarrett, who spent 26 years with the State Department, mainly focused on China, said he'd never seen such a concerted campaign against foreign companies, who complained that enforcement of the law often lacked transparency.
"Every day you wake up and another big foreign company is being investigated. The biggest question is how closely this is linked to Chinese industrial policy," he said.
"Is China frustrated that its own auto industry is losing market share?"
Local car brands accounted for 20.9 per cent of sales in the June quarter, the lowest level since 2009 and their market share has been declining for the past 10 months.
AIMING TO PROMOTE FAIR COMPETITION
China's Ministry of Commerce denied on Saturday that its anti-monopoly probes were targeting foreign firms.
A spokesman for the department, Shen Danyang, said the probes aimed to root out monopolistic practices, promote fair competition and protect consumer interests.
China's anti-monopoly laws were enacted in 2008 and have the power to fine companies up to 10 per cent of their annual revenue.
"Over the past six years since the anti-monopoly law took effect, both domestic and foreign firms have been probed," the spokesman said.
Marc Waha, a Hong Kong-based lawyer at Norton Rose, said the number of anti-trust investigations into foreign companies had increased over the past two and a half years.
"There are aggressive investigation techniques being used in cases which typically don't lend themselves to these techniques," he said.
Mark Jephcott, head of the competition practice in Asia for Herbert Smith Freehills, said that until 18 months ago, China rarely used its anti-monopoly laws. "It's fair to say the sleeping giant has awoken," he said.
Mr Jephcott said the recent increase in the number of anti-trust investigations may be related to the sixth anniversary of the legislation's introduction on August 1.
STEALING INDUSTRIAL SECRETS
"There seems to be a spike in activity around the anniversary."
Mr Raby, who is a non-executive director of Fortescue Metals Group and vice-chairman of Macquarie Group in China, believes the targeted actions are less about a desire to promote domestic industries and more about geo-political tensions.
"This is probably the first time China has really flexed its muscles," he said.
"They realise there are many huge international corporations that are now dependent on the China market."
Mr Raby said relations between China and the US deteriorated sharply in mid-June when the Justice Department issued arrest warrants for five Chinese hackers it accused of stealing industrial secrets from the likes of nuclear power company Westinghouse and US Steel.
Mr Raby said China was reminding the US that it could impose heavy costs on foreign businesses if their governments spoke out strongly against Beijing.