This week, the CEOs of Tesla, Starbucks and JPMorgan are all in China, as the country reopens after nearly three years of pandemic.
Tesla's Elon Musk, Starbucks' Laxman Narasimhan and JPMorgan's Jamie Dimon are all visiting China this week. In recent months, the leaders of Apple, Samsung, Saudi Aramco, Volkswagen, HSBC, Standard Chartered and Kering have also visited the world's second-largest economy.
Their presence underscores the importance of the Chinese market to the world’s leading companies, and comes amid an increasingly complex business environment in China, rising political tensions and uncertain investment prospects.
As of December 2022, China still had its Zero Covid policy in place, prompting calls from the foreign business community to reduce dependence on the country. China later lifted the policy, helping the economy recover in the first quarter.
But the recovery is showing signs of derailment. To revive business, Chinese leaders are urging foreign companies to invest more in the country, promising them an open and level playing field. This was evident during Elon Musk’s meeting with Chinese Foreign Minister Qin Gang on May 30.
Elon Musk (left) and Chinese Foreign Minister Qin Gang on May 30. Photo: Reuters
Mr. Qin called for a “healthy relationship” with the United States, asserting that this “benefits both countries and the whole world.” Musk also supported this view, saying that Tesla does not want to “decouple” from China.
“The interests of the United States and China are intertwined,” Musk said. He later said at a meeting at China’s Ministry of Commerce that the relationship between the two countries is not a zero-sum game.
Tesla has been slashing prices on its electric vehicles in recent months after losing market share to Chinese rivals such as BYD. The price cuts have sparked a price war in China, the world’s largest electric vehicle market.
For many CEOs, these visits are an opportunity to reconnect with employees in China and strengthen relationships with officials after years of being absent. According to CNN , this is the first time in four years that Dimon has set foot in China.
Dimon met with Shanghai officials on May 30. He was asked to use JPMorgan’s “international influence” to promote investment in Shanghai, China’s financial hub. Dimon later said the bank would act as a “bridge” for global companies to better understand the city and invest there.
However, in a later interview with Bloomberg , he also admitted that working in China is "increasingly complicated". He predicted that over time, "US-China trade will gradually decrease", but affirmed that this is not a separation, but a reduction in risk.
Western companies have been under pressure in recent years to diversify their supply chains away from China. Apple, long a symbol of American investment in China, has begun to take steps to reduce that risk.
Apple CEO Tim Cook in Beijing in March. Photo: Reuters
The CEOs’ visit also comes as China tightens its grip on foreign consulting firms. This month, Chinese authorities said they raided the offices of Capvision, a research firm based in Shanghai and New York. Authorities earlier closed the Beijing office of Mintz Group, a legal consulting firm, as part of a broader crackdown on data deemed to be related to national security.
This has caused concern among many American and British businesses, according to the leaders of the two countries' chambers of commerce. The uncertainty has caused many companies to delay investing in China. A survey by the British Chambers of Commerce last month found that 70% of businesses said they were "waiting and watching" before deciding to invest long-term there.
Beijing and Washington are stabilizing relations, but tensions remain. This month, China banned U.S. chipmaker Micron from selling products to the country, citing cybersecurity concerns. The move was seen as retaliation for a U.S. ban on Chinese chipmakers.
“Businesses are increasingly confused about the limits of the Chinese government. They don’t know what they need to do to avoid being seen as violating regulations,” said Nick Marro, global trade director at the Economist Intelligence Unit.
Still, some companies are choosing to increase their investments. Last month, Tesla announced it would build a second factory in Shanghai to produce large-scale batteries, while Volkswagen announced plans to invest $1 billion in a new electric vehicle research center in China.
Marro is not surprised by the decisions. The interests of the United States and China are intertwined. “This shows how policy goals like decoupling or risk reduction are challenged in practice,” Marro said.
Ha Thu (according to CNN)
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