A tirade against bureaucracy posted to social media by the operator of a famous ski resort has renewed discussion about the allegedly “hostile” business environment in China’s economically struggling northeast.
Mao Zhenhua, president of China Chengxin International Credit Rating Co., attacked the administration of the area where the popular Yabuli Ski and Tourism Resort is located in Heilongjiang Province, saying that his company has gone through “a dark period” due to local government harassment.
“Despite being a legally operated business, we have often been threatened with various inspections. One day it’s the police, the next day it’s the food safety enforcement officers and then inspectors in charge of boiler safety,” Mao said in a video posted January 1 to Weibo, the Chinese equivalent of Twitter.
Northeast China's Heilongjiang Province on Thursday ordered a local ski resort management committee to apologize to a private company in the sector and would punish its staff involved for "serious disciplinary violations.”
The latest contention once again has pushed the issue of hostile business environment in China’s northeast to the forefront. There is a widely held belief that people should refrain from investing their money beyond Shanhaiguan into the northeastern regions. And Shanhaiguan is a gateway into the three rust-belt provinces, Heilongjiang, Jilin and Liaoning, which have been burdened by growing debt and low growth for decades.
Northeast China was once the cradle for the country’s heavy industry, and is now one of China’s major agricultural bases. Rejuvenation has been in place for more than a decade, and yet the region’s economy has remained stagnant. For years northeast China has failed to attract investment, because it is known as a place where local governments frequently interfere in companies’ market activities.
The latest controversy of Yabuli ski resort is another typical example, in which local officials interfered heavy-handedly, seizing the land that the operator bought for future development, and coercing its employees to cooperate with police investigations.
As Pan Shiyi, president of property developer Soho China, suggests businesses operating in the northeastern provinces deserve a level playing field, the revival of the region’s economy not only hinges on new technological clusters, but also on whether local governments can change their planned economy mindset. A bad investment experience can scare off a fleet of enterprises looking to invest.