Bitter China: now delocalized companies take a big risk

Last week, the Chinese congress approved an "anti-sanctions law" created ad hoc to counter the Western sanctions against Beijing. With this rule, any company that comes to comply with sanctions imposed by another country can suffer a thoughtful punishment, practically at the discretion, by Beijing. So, if, for example, the United States bans the export of certain products to the People's Republic and a company stops its exports, it must expect legal action in China. However, if this company fails to comply with these sanctions and is headquartered in a Western country, it risks being heavily sanctioned by the US.

This is the reward for a world that is moving more and more bilaterally, so that if you are on one side, economically, you cannot be on the other. Who has invested the most in China in recent years? The German companies, which in this war risk, as Welt notes, to end up the proverbial end of the earthenware pot among those of iron .

“All activities abroad that conflict with China's economic and political interests become,” says Wolfgang Niedermark of the leadership of the Federation of German Industries (BDI) WELT. It was nice to think of being the smartest in the world and playing with your feet in two shoes, but every dream comes to an end and now German companies, but also all European companies that have heavily invested in China thinking of taking advantage of that market, have to change their mind and having to choose whether to abandon the market of origin or the eastern one.

For now, Brussels and Berlin are lulled by the hope that this rule will remain only on paper, but it is evident that they are wrong: the interests of Western companies are of no interest to the CCP, which could indeed fatten national officials and companies with forced sales of European assets. It will be very funny to see what the lovers of the “Global Supply chain” are saying now; those who ten years ago said that it was necessary to go to produce everywhere, provided that at that moment there was a competitive advantage. Now this risks becoming the biggest boomerang in the world.


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The bitter China article : now delocalized companies risk big comes from ScenariEconomici.it .


This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/cina-amara-ora-le-aziende-delocalizzate-rischiano-grosso/ on Tue, 15 Jun 2021 09:00:08 +0000.