The past several years have been an unrelenting challenge to multinational CEOs determined to profit in China. Covid laid bare the vulnerabilities from overreliance on the country as a supply hub. Western governments, which increasingly see the country as an adversary, have made it more difficult to do business. Beijing, with its mix of targeted capriciousness and self-destructive macroeconomic policies, has been little help. And Russia’s invasion of Ukraine has made the prospect of conflict over Taiwan tangible enough to prompt hedging.
Some CEOs are even becoming more outspoken in their frustration about doing business. “There is growing political interference in the way we do business as a Western company in China,” Carlos Tavares, CEO of carmaker Stellantis, recently complained. While a refreshing change from vapid boosterism, remarks such as these still betray a fundamental ignorance about multinationals’ presence in China. From the vantage point of the CCP, multinationals have always been political instruments.
Multinationals know why they are in China – to profit. But ask why their businesses are permitted to operate there and their answers may be less assured. The CCP scoffs at the invocation of trade reciprocity. Advancing China’s development may have once been an acceptable answer, but no longer. Yet it at least acknowledges a degree of heightened conditionality that differs from nearly every other market in which multinationals operate.Continue reading “What CEOs don’t get about China”