There Are Very Good Reasons American Companies Choose China Over Everyone Else
There Are Very Good Reasons American Companies Choose China Over Everyone Else by Kenneth Rapoza for Check Point Asia
The reasons that make them desperate to remain there
For all-around emerging market manufacturing know-how, for reliability, for currency stability, for safety and for domestic market growth, China is No. 1. The rest are more like No. 100.
No one comes close in the developing world to China. And that is why U.S. companies are so headstrong about staying there. The trade war will have to get much worse before they are forced to source elsewhere.
Last week, one of the biggest lobby groups for American multinationals in China, the U.S. China Business Council, put out their annual member survey. China was still as profitable or more so than other emerging markets where they have set up shop or source supply.
Only 3% said they were relocating to the U.S. because of tariffs. Under 7% said they were leaving China.
Why do American companies love China so much? It can’t be just because of its size. India is comparably large and friendlier to the U.S. Brazil is pretty big—and closer. Mexico, even closer.
What’s so great about China?
Forget the politics. Forget that it is a one-party state that censors its population and now has religious minorities in so-called “reeducation camps” in far Western China.
Honestly, does any of that matter to a transnational corporation? Unless they run afoul of the Communist leaders or are doing business with the parties deemed responsible for a human rights violation, then it arguably matters little to them. Where is the company that has stopped doing business with China because of human rights matters?
In fact, many companies that source from China, like Apple, are part of so-called ESG mutual funds that invest in what that acronym stands for: companies good on the environment, good on social responsibilities, and with good corporate governance.