During the past decade, foreign technology companies have plowed billions into China in the hopes of tapping into a fast-growing market. Now that the country has the world’s most Internet users and its largest smartphone market, multinationals are bumping into a regulatory ceiling.
The starkest sign of that came on Monday, when the American chip maker Qualcomm said it would pay $975 million for violating China’s antimonopoly law. As part of the deal, Qualcomm will also offer its licenses for third- and fourth-generation communications systems, for high-speed wireless data to smartphones, at a sharp discount to what it charges companies elsewhere in the world.
“Although Qualcomm is disappointed with the results of the investigation, it is pleased that the N.D.R.C. has reviewed and approved the company’s rectification plan,” Qualcomm said in a statement announcing the decision, referring to the regulator, the National Development and Reform Commission.
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Still, Qualcomm’s experience shows that deep investment and cooperation with local players does not guarantee a free pass on regulatory difficulties in the country. Qualcomm has invested heavily in China since the 1990s and worked with Chinese telecom equipment manufacturers to develop new intellectual property in the country.
Qualcomm now makes almost 50 percent of its revenue from the Chinese market. Already in recent months, Qualcomm’s revenue has dipped, in part because of its admission that it has been unable to collect full royalties from companies in China.
