Why Firms Get Away with Murder

(Beijing) – The recent scandal involving drug capsules illegally made with industrial gelatin was the result of the fact that firms are immune to bankruptcy and protected by local governments. A market access mechanism exists in China, but one for market exit is lacking.

This is why China is the perfect place to do business for all companies, domestic or foreign, big or small. Government officials are decision-makers in terms of market access. The China Securities Regulatory Commission decides which company can launch an IPO or issue corporate bonds. The Ministry of Commerce judges whether a monopoly exists within a specific sector or if a company can conduct mergers and acquisitions. The ministries of health and education decide who can invest in the building of a hospital or school. The National Development and Reform Commission approves investment projects.