Shanghai – Tan Hock-Kee, controller of Chinaoperations for multinational animal health company Merial Corp.,shakes his head as he recounts the challenges of trying to raisefunds in China. He began his career working in his native Malaysia,where any ethnic-Chinese-owned companies by law must hire a Malayexecutive, who may not have a real role to play, just in orderto do business. But he says things have become stranger in Chinafor foreign-owned companies like his own.

London-based Merial owns a factory in Nanchang, China, thatmakes animal vaccines, including a widely used vaccine for thedomestic chicken industry. The product line is so successful thateven running full-out, the factory cannot meet demand. Building anew plant will cost some U.S. $70 million, an amount about equal tothe company's annual sales in China.

In years past, the parent company, a $2.7 billionbusiness, would just wire over the money, and local contractorswould set to work building the new plant. No more.