Geopolitical Tensions Force China Operations Restructure by US Corporates
(8 May 2024 – China) As geopolitical tensions between China and the United States (US) continue to simmer, Shusi He reports for AsianInvestor that many US corporates are demarcating their China operations to maintain a presence in the market.
Venture capital firms GGV Capital and Sequoia have decoupled their Asia businesses entirely from the US and with the approaching US presidential election, the market is now on edge more than ever before.
Worsening sentiment is reflected in East & Partners latest “East on Demand” research which found that while a high proportion of the Top 100 revenue ranked corporates in each of eight countries globally are considering shifting all or part of their supply chain away from China to other markets, mainland China corporates themselves were surprisingly the most motivated to reshore operations to other markets.
“The latest East voice of the customer data provides valuable insight into specifically why corporates are considering recalibrating their supply chains, which markets they are switching to and where they most need support from their bank to successfully navigate increasing trade and supply chain finance uncertainty through H2 2024 and beyond” commented East & Partners Global Head of Markets Analysis, Martin Smith.
US enterprises have faced pressure to both operate locally and scale up foreign direct investment (FDI) in China, including offshore via Hong Kong after falling to the lowest level in 25 years in Q2 2023 amid geopolitical tensions, economic slowdown, regulatory crackdowns on tech and property sectors and tightened regulations under the new anti-espionage and data laws.
“I would say they are isolated cases but somehow coincide with similar outcomes. Firms would consider their own business strategy and risk management in making decisions about where they should have a presence and business exposures. There would be movements depending on market opportunities” a Hong Kong Asset Management Senior Executive quoted to AsianInvestor.
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