Discover the revolutionary new guidelines for navigating the business landscape in China
In the past, foreign companies struggled to penetrate the Chinese market due to bureaucratic barriers. However, the tide is turning, and many are now pulling out. Over the last year, several foreign law firms have closed their Chinese offices. Orrick, Herrington & Sutcliffe, an American firm, recently announced the closure of its Shanghai office, which had been in operation for 20 years. Similarly, Akin Gump Strauss Hauer & Feld is planning to exit China this year. Some global investment banks, large accountancies, and due-diligence groups are also downsizing their Chinese operations. In 2023, foreign direct investment in China reached a 30-year low.
The declining Chinese economy is a key factor driving this shift in sentiment among foreign companies. Out of the 18 largest multinational companies reporting earnings from China, 13 experienced a drop in annual revenues in 2023. Technology giants Qualcomm and Samsung saw sales plummet by over 20%. Apple sold nearly 25% fewer iPhones in the first six weeks of 2024 compared to the previous year. Tesla’s electric car sales in China dropped by 19% in February. Weak Chinese sales are also impacting Kering, the French owner of Gucci, which anticipates a 20% decline in sales in Asia in the first quarter.
Recognizing these challenges, President Xi Jinping and the Communist Party are actively addressing the situation. This was evident at the China Development Forum (CDF) and the Boao Forum, where the mood was notably more positive compared to the previous year. The presence of over 80 foreign chief executives, including a significant number of Americans, at these events signals a renewed interest in the Chinese market.
2024-04-03 12:09:52
Source from www.economist.com