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Politics

Foreign multinationals caught in Chinese corruption crossfire

Ren Yong served as the face of Nissan in China.

SHANGHAI/BEIJING -- President Xi Jinping's fight against corruption has fanned out from the "oil clique" to autos, steel and other industries. And for multinationals, this only adds to the risk of operating in China.

     On Friday evening, executives at Dongfeng Nissan Passenger Vehicle gathered for a hastily called meeting in Guangzhou. They were dumbfounded to learn that Vice President Ren Yong of Dongfeng Motor, another Nissan Motor joint venture, would lose all his posts as a result of being put under investigation by the Communist Party's disciplinary investigation commission.

     Ren was suspected of "serious law and discipline violations," the Xinhua News Agency reported. The news came as a shock to those who had known him as the driving force behind the Japanese automaker's operations in China.

     Nissan President Carlos Ghosn is said to have had full confidence in Ren and entrusted him with day-to-day management. Chinese executives at the joint venture were more likely to look to Ren for leadership than to the Japanese managers dispatched from Nissan headquarters.

     "Nothing moves forward unless Ren gives the go-ahead," said one.

     The party has not revealed specific allegations. But some suspect that Ren may have abused his accounting expertise and authority at the company to enrich himself.

     Nissan says the investigation will not affect its Chinese strategy. But given Ren's connections and skill in doing business here, he leaves big shoes to fill. He also served as the face of Nissan in China, appearing at auto shows around the country.

Casting a wider net

Xi has made fighting corruption a hallmark of his leadership. Senior figures in the party and state-owned enterprises have fallen like dominoes. The epicenter of this shake-up has been among figures connected to the oil industry -- most notably Zhou Yongkang, a political enemy. But the scope has quickly widened.

     A senior executive at Volkswagen's Chinese arm laments that he no longer knows whom to talk to at China FAW Group, the German automaker's joint-venture partner. One executive after another on the Chinese side has gone missing. Some were led away at the airport, and others in the middle of business meetings, under the pretext of an investigation by authorities.

     In all, 150 China FAW executives have been questioned. A current and a former executive at FAW-Volkswagen were put under investigation in August for "serious violations of the law." The loss of contacts at its Chinese partner is taking a toll on VW's business planning, according to the local executive.

     Claiming to uphold the "rule of law," Xi has also sicced the party's watchdogs on airlines, shipbuilders, shipping lines and other state-owned enterprises. Nor are alleged cases of commercial bribery involving foreign multinationals being overlooked. British drugmaker GlaxoSmithKline was fined 3 billion yuan ($489 million) in September.

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