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Tougher government policies and intensifying domestic competition are making it difficult for foreign companies to prosper in China, reports the Wall Street Journal [8], citing executives of multinational corporations.

In interviews with the newspaper, executives and lawyers say new developments in China are making it much difficult for many foreign companies to succeed. For instance, authorities near Shanghai assailed the quality of luxury clothing brands from the West, such as Tommy Hilfiger and Dolce & Gabbana. Last year, Beijing issued new government procurement rules that favor local suppliers. Meanwhile, patent rules implemented last month threaten to increase costs in China for foreign innovators in industries such as pharmaceuticals.

The Journal says that many foreign executives see a rise in economic nationalism, expedited by China's good performance during the global financial crisis and contempt for Western economic management.

"I am pro-China and I am in favor of doing business in China, but I have some serious concerns about what has been happening in the last year," Fraser Mendel, an attorney with U.S. law firm Schwabe, Williamson & Wyatt, told the Journal.

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