Foreign businesses in China have new challenges to face as authorities are raising taxes and tightening controls on mergers and acquisitions and real estate dealings. Both small and big companies have experienced failure in China, including Avon and Carlyle, and late last year, Warner Bros. pulled out of its China joint venture to build movie theaters.
When China began allowing foreign investment 25 years ago, it required that foreign businesses go into joint ventures with local businesses, and many of the current troubles that businesses are facing today are related to those joint ventures. China no longer requires that foreign companies take on local partners, and today many foreign companies are opting not to do so.
The Renren restaurant in Shanghai, owned by Andy Ho, is the victim of a dispute between Ho's Hong Kong company and its mainland Chinese partners, who want Ho out. Ho's father opened Renren in 1987 in a joint venture with a local hotel company, the Shanghai Dadushi Co. When that company was sold, the new owners decided they wanted the Hong Kong partners out.
Ho's partners have threatened him and hired thugs who have fought with the restaurant staff. According to Ho, hotel managers have tried to force Renren to pay $6,450 allegedly owed in electricity bills going back 18 years, hotel staff sawed off fresh water connections and cut the electricity 10 times in 2006. And one morning in December of last year, thugs put "closed" signs in the restaurant windows, chained the doors shut, and forced their way inside. Ho's wife had her blouse torn, an assistant was kicked, and the watchman got a black eye.
The general manager of Dushi Urban Hotels, Lu Jinping, is suing Ho and the Hong Kong company to get Ho out of the restaurant, and Ho is suing Dushi for breach of contract. Police and the courts don't typically intervene when foreign companies get into feuds with local businesses, and Ho says that the police and government have done nothing to help him through his ordeal.
