Mar 23, 2023
Tim Cook and Ray Dalio Among Few US Chiefs Attending China Business Summit
(Bloomberg) -- China is betting on a high-profile corporate summit this weekend in Beijing to show the world that it’s back in business.
But a participant list that’s light on US companies is instead underscoring the growing delicacy of doing business in China in the current geopolitical climate.
Organizers of the three-day China Development Forum, which opens Saturday in the country’s capital, say that a hundred foreign representatives have registered to attend from sectors like finance, energy, biopharmaceuticals and consumer goods. It’s the first time since 2019 the event will be held fully in person after China’s three years of Covid isolation.
Some corporate leaders like Apple Inc.’s Tim Cook and Pfizer Inc.’s Albert Bourla are scheduled to be physically present, according to a preliminary list of attendees seen by Bloomberg, but the bulk of the confirmed companies aren’t from the US.
While US companies may not have been the biggest contingent in past editions either, this year’s tepid lineup is indicative of a desire by American companies to keep a low profile around their corporate activities in China for fear of drawing unwanted attention back home, according to one Beijing-based executive familiar with their thinking.
Specifically, companies don’t want to become a target of the Select Committee on the Chinese Communist Party, a new congressional body led by Wisconsin Republican Mike Gallagher, according to at least three people familiar with the matter, who asked not to be identified because they’re not authorized to speak publicly.
China hasn’t made the optics easier for American businesses. President Xi Jinping’s trip this week to Moscow, where he was greeted warmly by Russian President Vladimir Putin — freshly accused of war crimes by the International Criminal Court — is also weighing on the minds of executives, one of the people said.
“It is increasingly challenging for companies to navigate the expectations of consumers and stakeholders in China and abroad, and in some cases that may be weighing on decisions about visiting China at this time,” said Sean Stein, the chairman of AmCham Shanghai.
China Hawks Dine on Seared Branzino and Lament Threat to US
The organizers’ own marketing material is notable for its lack of American representation. They released upbeat video messages taped by 15 corporate executives from major companies like BHP Group Ltd., Rio Tinto Plc., HSBC Holdings Plc, Standard Chartered Plc and Nestle SA, with Boston Consulting Group Inc. the only US firm featured as of Thursday.
Lower Level Executives
Other US participants on the preliminary list of attendees include Bridgewater Associates founder Ray Dalio, Invesco Ltd.’s President Martin Flanagan, and Blackstone Inc. Chief Executive Officer Steve Schwarzman.
Some American companies are keeping their famous CEOs away and sending lower-level executives instead, according to other forum attendees. Henry Huiyao Wang, founder of the Center for China and Globalization, a policy research group in Beijing, said his organization will meet with several company representatives on the sidelines of the event, including at least one from Tesla Inc.
The fraught atmosphere around the return of China’s high-profile business forums — its Boao Forum for Asia is also slated to take place later this month in the southern province of Hainan — reflects how global business sentiment toward the world’s second-largest economy has deteriorated throughout its punishing experiment with Covid Zero.
Not only did the zealous efforts to stamp out the virus through strict lockdowns and mass testing send China’s economy into a tailspin, dulling the allure of what was once a booming consumer market for global businesses, foreign companies saw their Chinese operations disrupted for months at a time by the restrictions, creating global supply chain delays.
Apple’s main smartphone-making partner saw lockdowns, rampant infection and worker riots at its factory hub in Zhengzhou barely four months ago, causing a 6 million unit deficit in iPhone supply and accelerating plans to move its supply chain out of the country.
“US companies in China are frankly exhausted after three years of Covid Zero,” Michael Hart, president of the American Chamber of Commerce in China, said earlier this month.
Covid Zero’s reign also coincided with an unpredictable regulatory environment, as abrupt crackdowns on the technology, property and financial sectors led to losses for foreign firms. US asset management giant Vanguard Group Inc. will shutter its business in China, Bloomberg reported, giving up on a $3.9 trillion fund market.
Other companies are increasingly caught in the geopolitical crossfire between China and the US. Boeing Co., the American aircraft maker that sells 787 Dreamliner and 737 Max aircraft to Chinese airlines, saw its defense unit sanctioned by the Chinese government in October following the U.S. State Department’s approval of $1.8 billion in sales of new weapons to Taiwan.
Majority of US Firms Don’t See China as Priority for Investment
For the first time in about 25 years, China is not a top three investment priority for a majority of US firms, with geopolitical tensions and domestic economic issues driving businesses to focus elsewhere, said a March report from the American Chamber of Commerce in China.
Still, for all the talk of “decoupling,” business and trade ties between the world’s two biggest economies remains substantial. Total merchandise trade between China and the US edged up on year to around $700 billion in 2022 according to Commerce Department data, while major American companies from Nike Inc. to Starbucks Corp. are heavily invested in Chinese consumer demand.
After years of border closures, foreign executives are also keen to get on-the-ground insight into what’s actually happening in the country.
Companies want to figure out the Chinese government’s intentions when it comes to attracting foreign investment and fostering the private sector, said Alfredo Montufar-Helu, head of the China Centre for Economics and Business at the Conference Board, a research group.
“They want to know if it’s real and if so what the government plans to do specifically,” he said.
--With assistance from Fran Wang and Claire Che.
©2023 Bloomberg L.P.