Geopolitical Risk & the Impact on MNCs

July 1, 2023

‘The number one issue for our clients is geopolitical concerns – in a way that it never has been in the past. It’s been a concern for HQ, but those who run businesses in China and the rest of Asia got on with their operations and generally ignored geopolitics.’

‘Can the US pause its criticism of China long enough to get a bilateral dialogue going? If a dialogue can get going, is it sustainable? Can it result in tangible benefits to companies, farmers, workers, and ranchers? It’s not clear. Strap yourselves in and put on your helmet for an exciting six months.’

‘We know that an imported product won’t be treated the same as a domestically made product. But will a product made in China by a foreign company or JV be treated equally with one made by a private Chinese firm or an SOE? The jury’s out on that.’

‘Could a competitor analysis, buying satellite imagery for business purposes, or conducting due diligence of SOEs be problematic? This is a slippery slope that we must watch to see what is being connected to the new [espionage] law.’

As geopolitical dynamics shift, companies are reevaluating their presence in China and looking toward markets like Vietnam, Indonesia, and the Philippines for expansion. However, these markets, while promising, do not match China in terms of scale and labour availability. Further, the impact of geopolitical tensions has not been uniform, with European teams reporting challenges in China that differ from those faced by those headquartered in the US.

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