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Sean Heather, Jeremie Waterman, Aug 11, 2008
In preparing to write this piece on the Chinese Antimonopoly Law, one of us was reminded of a recent visit to a botanical garden. Among the collection of meticulously cared for plants was one extremely bent banana tree. The tree was close to 25 feet in length and full of bananas, but rather than standing erect it had arched itself completely over, nearly touching the ground. It looked straight from the imagination of children’s book author, Dr. Seuss. The garden’s botanist explained the reason for the contorted tree. Unlike banana trees found in their natural habitat, this tree has been nurtured in the closed environment of a greenhouse. While it looked like a perfect specimen (minus the bend in its trunk), it was actually quite weak and could not support the weight of the bananas. In their natural habitat, the botanist explained, the wind acts as exercise for trees strengthening their trunks. This tree, which had lived from infancy to maturity in the sheltered greenhouse, would be unable to withstand the first gust of wind. The banana story is an excellent metaphor for the application of competition policy. Countries that act as greenhouses by adopting competition policies that shelter prized domestic companies from the competitive winds of the open market create mature companies that fail when they try and compete in the global marketplace. In vivid contrast, countries that adopt policies that encourage rivalry among firms including foreign firms create a process through which domestic firms become more innovative and capable of succeeding both at home and abroad. Equally important, domestic and global consumers enjoy more choices and lower prices as a result of this dynamic process. Foreign governments and the global business community are closely watching how the People’s Republic of China will enforce the new AML. Clearly, the Chinese government fully understands the importance of fostering innovation in its economy. Under policy guidance set forth by President Hu Jintao and Premier Wen Jiabao, China is engaged in a comprehensive effort to build an innovative society by 2020. In advancing its approach, the government is attempting to place China on the map as a leading center for global innovation and reduce the technology gap between it and the developed world
