I’ve written before about some of the appalling practices of agencies that provide services to kids in China who wish to study abroad. With so many desperate students looking to get into the Ivy League, not to mention frantic parents in one-child families, hucksters, schemers and con artists are well represented in this industry. So what’s the best way to reform this sector? The latest approach doesn’t look right to me:
Foreign-owned agencies providing services for Chinese students hoping to study at universities overseas may soon be locked out of the Chinese market entirely as part of a government plan which will also strengthen supervision over domestic operators. (Global Times)
As the GT reports, local agents in China are quite pleased as this essentially amounts to eliminating foreign competition. I do have questions about how this would be enforced, but putting that aside, I fail to see how this can be justified.
Is the argument here that local governments, or the Ministry of Education, are unable to properly supervise licensed foreign enterprises? These agencies either have subsidiaries (JVs or WFOEs) or representative offices, both of which are not only subject to approvals by the Ministry of Commerce when they are established, but they also must pass regular annual inspections by the Administration of Industry and Commerce. If they are in the education field, there is probably a Ministry of Education approval of their business scope as well.
The draft regulation gives the provincial-level MOE approval authority over domestic agencies plus supervisory power and the ability to levy fines and require cash set-asides in case of fraud. Why not give MOE the same power with respect to foreign agencies? If the worry is that foreign agents will be hard to track down, simply require them to post a bond.
It seems that there are plenty of opportunities for oversight here.
The distinction between foreign and local businesses is unclear to me, and when we can’t find a reason to support such discrimination, that’s a good time to start wondering about protectionism.