Commentary: China is looking less attractive to foreign investment - CNA

HONG KONG: “No matter what you may be selling, your business in China should be enormous, if the Chinese who should buy your goods would only do so.”  Never did an “if only” clause carry more weight.

In the 85 years since Carl Crow, a Shanghai-based American advertising executive, wrote these words in his book Four Hundred Million Customers, China’s population has grown by 1 billion people. Their combined spending power is now second only to that of Americans.

Yet the gulf between promise and reality in China’s fabled market haunts foreign corporations as much today as when Crow was trying to market American lipstick and French brandy to the emerging middle class of the 1930s. A host of political and regulatory issues — exacerbated by Chinese President Xi Jinping’s strict zero-COVID policies and his stance over Russia’s war in Ukraine — are conspiring to eviscerate the dreams of many multinationals.

PESSIMISM IN BEIJING AND SHANGHAI

The result is that direct investment into China by foreign companies is falling off a cliff. Joerg Wuttke, president of the European Union Chamber of Commerce in Beijing, says the unpredictability is prompting the European business community to put investments into China “on hold”. 

“Many of our members are now taking a wait-and-see approach to investments in China,” he adds, citing an attitudes survey in May of the chamber’s 1,800 members. “Twenty-three per cent of our members are now considering shifting current or planned investments out of China, the highest level on record. And 77 per cent report that China’s attractiveness as a future investment destination has decreased.”

Pessimism has infected the United States business community, too. Michael Hart, president of the American Chamber of Commerce in China, warns that the travel hassles encountered by foreign executives seeking to visit their Chinese operations — including flight cancellations, visa complications and lengthy quarantines on arrival — will lead to a “massive decline” in investment “two, three, four years from now”.

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2022-05-22 22:08:59Z
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