US companies are leaving China.
There is a well-known saying that when elephants fight, smaller animals suffer. Recent geopolitical developments have shown that this need not be the case always and that quarrel between elephants can produce opportunities for smaller animals.
A case in point is the ongoing contest for world leadership between the biggest geopolitical elephants, the United States and China. Naturally, this contest between the world’s No.1 and No.2 economic powers has extended to the field of business, with the US accusing China of engaging in unfair and unethical business practices, including currency manipulation, lack of regulatory transparency, and appropriation of intellectual property rights. US President Joe Biden declared recently that the US will never allow China to overtake America and become the world’s No.1 economic power.
The conflict between their government and the Chinese government has placed in a very difficult situation the dozens of major American companies operating in China. But even before the intensification of the conflict, corporate America had become unhappy with the regulatory environment in Beijing. In particular, they were very unhappy with the Chinese government policy that requires foreign companies to make available the technology underlying their Chinese operations. Washington took up the complaint and made the technology-transfer requirement the centerpiece issue of its campaign against Chinese economic policy. Needless to say, the pushback against the technology-transfer requirement has been strongest among companies belonging to America’s Big Tech community, especially Apple, Microsoft, Intel, Dell, and Bose.
But it is not only the Big Tech companies that have been chafing at China’s regulatory requirements. Consumer-oriented companies like Whirlpool, Skechers, and Hasbro have also been making their displeasure known to both the Chinese and the American government.
The possibility that these and other American companies operating in China might consider relocating their operations elsewhere in East Asia is the land of opportunity that is opened up for smaller animals when elephants collide. Barring the likes of Microsoft and Apple relocating all or part of their East Asian manufacturing operations to the Philippines would be an enormous gain for this country.
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