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Why Most U.S. Firms Are Staying in China Despite the Crackdown on Business
BY AMY GUNIA
NOVEMBER 5, 2021 3:12 PM EDT
A survey released in September by the American Chamber Commerce in Shanghai (AmCham Shanghai) found that of 338 respondents, almost 78% said they were optimistic or slightly optimistic about the five-year business outlook. More than 70% of respondents said they had no plans to move their supply chains out of China in the next three years.
But Ker Gibbs, president of the AmCham Shanghai said that regulatory changes enacted after the survey closed had “unsettled” companies. “To continue attracting U.S. businesses and investment, China must endeavor to create a stable business environment,” he said.
But industries outside of tech and gaming may actually be growing their China operations. Many financial institutions appear to be doubling down on their China interests. In August, BlackRock, the world’s largest asset manager, got approval from regulators to start a mutual-fund business in China. Banks like J.P. Morgan and Goldman Sachs have in recent years won approval to set up majority- or 100%-owned securities ventures—which normally house businesses including investment banking, equities and research—in the country.
Prasad, of Cornell, says that although China is still striving to convey the image of being welcoming to American businesses in some sectors, especially financial services, “the reality is that such businesses are facing harsher conditions on the ground, with tightening constraints of various sorts on their operations in China.”
Tsang, of SOAS, says that if the business environment continues to deteriorate, more companies are likely to leave. “But we are some way from the point when most U.S. companies see no future for them in China,” he says.
time.com
BY AMY GUNIA
NOVEMBER 5, 2021 3:12 PM EDT
A survey released in September by the American Chamber Commerce in Shanghai (AmCham Shanghai) found that of 338 respondents, almost 78% said they were optimistic or slightly optimistic about the five-year business outlook. More than 70% of respondents said they had no plans to move their supply chains out of China in the next three years.
But Ker Gibbs, president of the AmCham Shanghai said that regulatory changes enacted after the survey closed had “unsettled” companies. “To continue attracting U.S. businesses and investment, China must endeavor to create a stable business environment,” he said.
But industries outside of tech and gaming may actually be growing their China operations. Many financial institutions appear to be doubling down on their China interests. In August, BlackRock, the world’s largest asset manager, got approval from regulators to start a mutual-fund business in China. Banks like J.P. Morgan and Goldman Sachs have in recent years won approval to set up majority- or 100%-owned securities ventures—which normally house businesses including investment banking, equities and research—in the country.
Prasad, of Cornell, says that although China is still striving to convey the image of being welcoming to American businesses in some sectors, especially financial services, “the reality is that such businesses are facing harsher conditions on the ground, with tightening constraints of various sorts on their operations in China.”
Tsang, of SOAS, says that if the business environment continues to deteriorate, more companies are likely to leave. “But we are some way from the point when most U.S. companies see no future for them in China,” he says.
Why Most U.S. Firms Are Staying in China Despite the Crackdown on Business
Yahoo and LinkedIn are the latest U.S. businesses pull out of China amid sweeping regulatory crackdowns. But most firms are staying. Here's why.
