Concern of foreign companies doing business in China increased
At the China Development Forum conference in March, China tried to win back the trust of foreign businessmen. On this occasion, China’s Commerce Minister Wang Wentao had said, we do not consider companies from other countries as foreign but as part of the family. Chief Executives of many companies including Apple, Pfizer, Procter & Gamble were present in the conference. For the first time after the Kovid epidemic, well- known personalities of the business world had reached Shanghai. Wang declared 2023 as the year of investment in China. But, this goodwill did not last long. Recently, consulting companies having links with foreign companies have been targeted. Their offices were raided and killed. employees arrested.
This has increased the concern of foreign companies doing business in China.
Companies considering how to save their business
China has been one of the most popular foreign direct investment destinations. But big and medium companies are considering how to save their business. China has never been as friendly to business as it has been in the last few years. Some companies and investors have started wondering whether the risks of investing in the country outweigh the benefits. Even so, after the supply chain was disrupted due to the zero covid policy, companies have decided to reduce their dependence on China. And started thinking about it. Due to the tension between America and China, many multinational companies are also looking for an alternative to China. President Xi Jinping has taken steps to prevent foreign governments and companies from passing on information.
Dan Harris, a Seattle- based attorney who works for foreign companies in China, says he’s heard recently from a large number of companies looking to reduce their presence in China without leaving the country. american furniture
The manufacturer is contracting to sell its products through a Chinese company so that American workers can be removed from the country. An American education company wants to close its unit in China and license its technology to its current employees.
The raids & security checks on US companies
The raids and security checks on US companies such as Mintz Group, Bain & Company in the last few months have raised concerns. A few days ago the office of consulting company CapeVision Partners was inspected. Such companies provide important information to foreign businesses regarding the investment situation in China. CapeVision had told in a regulatory filing two years ago that most of its researchers were paid Rs 16,000 per hour and some as much as Rs 8 lakh an hour. China’s new law related to espionage has also rung alarm bells. Anyone gathering business information can be arrested on charges of espionage. At a US Chamber of Commerce conference in Washington on Wednesday, chamber CE Suzanne Kluck said the threat from anti- espionage legislation and crackdowns on consulting companies and the uncertainty has increased.
American companies reduced business in China
Doing business in China has never been easier. Here, new business deals have decreased for some time. Also American companies have made 25 deals in 2022. Whereas in 2021 there were 56 agreements. The companies focus is on Japan, South Korea and Singapore. Last year, American companies may have been thinking about setting up 28 deals in Singapore, 24 in Japan and 21 in South Korea, but it is not easy to leave China completely any time soon. No other country has manufacturing like China. Apart from this, companies do not want to move away from the market of 1.4 billion people.
Also read: Tech company layoffs 2023
Conclusion
While China is an attractive market for foreign firms, but China has never been as friendly to business as it has been in the last few years. That’s why many small and big companies considering how to save their business.
