Shau Zhang, Americas leader of China overseas investment at Ernst & Young, said that Chinese companies had “no choice but to localise everything”.
She said, though, that Chinese companies operating in the US still hadn’t localised their high-ranking executives. She noted that more than 90 per cent of the “C-suite staff” in South Korean and Japanese companies were localised.
Yet it remains important to determine if this decoupling is merely a makeover or if these businesses are actually trying to create new supply chains, noted Ilaria Mazzocco of the Centre of Strategic and International Studies in Washington.
Some Chinese solar-panel manufacturers, for example, are assembling their products or partly making them in Southeast Asian countries – “re-routing”, but mainly to avoid tariffs.
“They may be able to diversify some of their assets or their image, but it’s going to be hard for them to actually sort of not be Chinese, right? Because in many cases, they built their entire business model on the cost savings that come from producing in China,” she said.
Neysun Mahboubi at the University of Pennsylvania’s Centre for the Study of Contemporary China said that a “combination of both new scrutiny from Western (and especially US) regulatory authorities and public opinion, as well as the tighter regulatory environment in China itself under Xi Jinping” was driving these moves.
“The precise balance of factors may be different in each particular case,” he added, “but the general challenge of having to navigate new pressures on both sides is widely shared among these companies”.
Andy Mok of the Centre for China and Globalisation, a Beijing think tank, reckoned that US-led efforts to “block China’s rise” would continue to pose challenges for individuals and Chinese companies “wherever they may be located”.
“It will require courage, determination and creativity to thrive in the face of this unrelenting hostility,” he said.
This article was first published on SCMP.
(Except for the headline, this story has not been edited by PostX News and is published from a syndicated feed.)
