China’s move to fine Qualcomm a record $975 million for tactics the government claimed hurt consumers hardly seems like a win for the San Diego-based chipmaker. Still, it’s a slap on the wrist for CEO Steve Mollenkopf’s company, which generated more than $13 billion in revenue in China last fiscal year and remains well-positioned to profit from the emergence of a huge Chinese middle class.
The real loser is China’s economy. Despite Beijing’s claims of unfair practices, the clear perception is that Qualcomm’s travails are part of an inquisition against foreign companies, particularly American ones. Over the last seven months, U.S. icon Microsoft has seen its offices in Beijing, Shanghai and elsewhere raided on vague charges of “monopolistic behavior.” Chrysler, Johnson & Johnson and non-U.S. firms such as GlaxoSmithKline, Samsung and Volkswagen have been hit with multimillion-dollar fines for arbitrary reasons that still baffle executives (Daimler, too, is under investigation).
Beijing’s nationalist impulses run deep. Back in 2009, after three decades in which the Chinese economy thrived by exporting to global markets, then-Premier Wen Jiabao took aim at Washington for sparking the global financial crisis, publicly demanding that the U.S. safeguard the $2 trillion of U.S. debt China owned at the time. People’s Bank of China Governor Zhou Xiaochuan rallied support around the globe for replacing the dollar as the reserve currency, a push that resonated from Moscow to Brasilia.
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