China Growth

The Evolving Landscape of Western Businesses in China

For decades, American corporate leaders have viewed China as a money spinner. They talk about hundreds of millions of consumers. Call this “One of the greatest opportunities” and predicts this will be “China’s Century”

These executives have now emerged from their latest visit to the country with a more sober attitude. Western companies doing business in China face pressures that would have been unthinkable just a few years ago. The country’s economy was struggling and relations with the United States were strained. Three years of border restrictions and an effective commercial lockdown have opened cracks that have yet to heal.

Nine months after the country reopened from COVID-19, businesses are grappling with a harsh reality: China’s $18 trillion economy is fraught with danger. But it’s still impossible to ignore and difficult to log off. Withdrawal could mean the loss of future advantage over global competitors. Many Western companies still view their China operations as a long-term gamble. But the rewards are offset by the risks.

“CEOs recognize that they need to reduce some of their risk,” said Myron Brilliant, senior advisor at Dentons Global Advisors-ASG. “They don’t want to ignore the market. But everyone is taking a broader view in this environment.”

The list of concerns is long. Police raid Western company Huge fines failed deal Regulations limiting data transfer and comprehensive counter-intelligence laws. This causes the cost of doing business to increase. Other risks It’s called the gray swan. This is a rare but unimaginable event, such as a new pandemic. More economic sanctions or conflict across open borders These concerns have contributed to what U.S. Commerce Secretary Gina M. Raimondo Most recently mentioned is the feeling of U.S. companies that China “cannot invest.”

The consequences can be rapid. Reported this week that The Chinese government is banning iPhones for employees at government agencies and state-controlled entities. As a result, Apple’s shares fell 6 percent, wiping out nearly $200 billion from its market value.

About a dozen people sat on the steps in front of the windowless white wall of the Apple Store, with the colorful Apple logo on the wall.
Apple Store in Shanghai in June Apple shares fell after the Chinese government announced a ban on iPhones for employees at some government agencies. Credit…Hector Retamal/Agence France-Presse – Getty Images

The worsening economic outlook has increased concerns for organizations. This makes it difficult to invest more money in the country. After being locked out for three years Foreign business leaders are finally starting to visit their employees in China. Many expect the economy to recover.

On the other hand, some executives returned home worried that Chinese officials were overconfident of the country’s ability to weather the recession. Personally, Business leaders watch Chinese company investment dry up with concern Why, they ask, should we invest our money in China? If China’s private sector is not confident in the economy?

“The conversation about China in corporate boardrooms is shifting increasingly cautiously,” said Jude Blanchett, a China expert at the Center for Strategic and International Studies in Washington. He said the reason was the slowing economy but also “Beijing’s erratic and punitive regulatory behavior. The slide towards totalitarianism and the actions of the U.S. government to redirect technology and investment to other markets.”

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