US Commerce Secretary Gina Raimondo warned on August 30 that US firms could deem China’s business environment as “too risky” without changes to the regulatory environment.
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She cited a number of concerns, including:
- The lack of transparency & predictability in the regulatory process.
- The arbitrary enforcement of regulations.
- The theft of intellectual property.
- The forced transfer of technology.
- The lack of due process for foreign businesses.
Raimondo said that US businesses need to see “some action taken” to address these issues before they will be willing to invest more in China.
The Chinese government has denied these allegations, but it has also taken some steps to address them. In recent months, it has released a number of new regulations aimed at improving the business environment for foreign companies. However, it remains to be seen whether these measures will be enough to convince US businesses that China is a safe place to invest.
The US-China relationship is currently at a low point, and the issue of business investment is just one of many areas of contention. It is unclear how the two countries will resolve these differences, but it is clear that the business environment in China will be a key factor in any future deal.
Here are some other risks of doing business in China:
- The political risk of instability or conflict.
- The economic risk of a recession or financial crisis.
- The legal risk of being subject to Chinese law, which can be different from US law.
- The cultural risk of misunderstanding or conflict between Chinese and foreign business practices.
These risks can be eased by careful planning and due diligence, but they are always present when doing business in China.
