- Foreign companies leaving China, the ‘factory of the world’.
- Ningbo Shipyard, established in 1995, decided to withdraw due to a decrease in production efficiency.
- Criticism is also coming from within China.
- Alibaba, a key target of big tech regulations, announced its ‘Ten Common Wealth Actions’ plan.
- Foreign companies watching this situation are bound to be restless.
Foreign companies start packing bags from China’s business market. China tightens its regulations decreasing tax benefits for rent and tuition. Economists are concerned about the government’s shared wealth, as reported by Newsdirectory3.
Foreign companies quit China
Foreign companies are rushing to escape from China, which was once called the ‘factor of the world’.
This is because the Chinese authorities are tightening regulations, and the anti-foreign-funded business sentiment in China is strong due to the influence of the US-China hegemony, making it difficult for businesses to do business.
Among local businessmen, there are concerns that the theory of common-wealth, recently advocated by President Xi Jinping, may act to further expand the government’s intervention in the market.
Samsung Heavy Industries withdraws after 26 years
Samsung Heavy Industries announced last month that it would withdraw from a Ningbo Shipyard in Ningbo, Zhejiang Province, China, which had been operating for 26 years, by the end of the year.
Ningbo Shipyard, established in 1995, supplied ship blocks to Geoje Shipyard, but it was decided to withdraw due to a decrease in production efficiency due to ageing facilities and a strategy to improve the operational efficiency of overseas business sites.
When Samsung Heavy Industries’ withdrawal policy was announced, Chinese workers took part in sit-ins in the office, demanding more compensation than the company had planned.
Toshiba withdraws 33 factories, starting with the Dalian factory
Toshiba, a Japanese electronics company that operated a motor production base in Dalian, Liaoning Province, also decided to close its local plant last month.
Toshiba has decided to withdraw all 33 factories in 24 cities in China.
Toshiba decided to move its R&D functions and precision processing plants to Japan, and the remaining automotive electronics and home appliances to Vietnam.
Microsoft ends LinkedIn service in China
Recently, Microsoft (MS) of the United States decided to terminate the service of the SNS LinkedIn in China amid the Chinese government’s tightening Internet control.
While the use of Twitter and Facebook in China was blocked, the only major SNS operated by American companies in China was LinkedIn, but even this was pushed out of the Chinese market due to regulations.
After years of trying to accommodate the demands of the Chinese government, including content regulation, Microsoft has decided to close its doors.
Lotte, Nike, Adidas, etc. withdraw or reduce
Previously, victims of THAAD retaliation, such as Lotte in Korea, Nike in the United States, and Adidas in Germany, have also closed or reduced their business in China.
Experts analyzed that as the Chinese authorities emphasize economic growth through economic independence and domestic demand expansion, it is increasingly difficult for foreign companies to do business.
China strengthens various regulations
At the 5th Plenary Session of the 19th 5th Plenary Session (5th Plenary Session) of the 19th Session of the 5th Plenary Session of the 19th Plenary Session of the 5th Plenary Session of the 19th, China’s top leadership, including President Xi Jinping, presented the main policy goals to drive sustainable economic growth through the expansion of domestic demand.
Based on this trend, Chinese authorities have significantly tightened regulations this year on loans to large tech companies and real estate companies, bitcoin, popular culture, and private education.
An official from the business community said, “There is a lot of talk among expatriates in China that it is getting harder and harder to do business in China.”
Xi Jinping’s ‘Theory of Common Wealth’
Foreign companies expatriates in China are also feeling anxious about President Xi’s slogan of ‘shared wealth’.
Although ‘shared wealth’ ostensibly means to strengthen distribution, many economists are concerned that the government may increase market intervention, strengthen corporate regulations, and increase the wealth.
“It’s not as violent or emotional as it was in the 1960s, but it’s the start of the Cultural Revolution in a more sophisticated way,” said a Japanese executive working for a multinational corporation in Shanghai.
Criticism is also coming from within China.
Weiying Zhang, a professor of economics at Peking University, criticized the theory of commonwealth, saying, “If we lose trust in the power of the market and rely on government intervention, it will lead to common poverty.”
Chinese big tech companies, ‘Oath of allegiance’’
However, the big tech companies that are sensitive to the changes in the Chinese Communist Party’s policy stance are vying for an ‘oath of allegiance.
Alibaba, a key target of big tech regulations, announced its ‘Ten Common Wealth Actions’ plan at the beginning of last month and decided to release 100 billion yuan (about 18 trillion won) by 2025.
100 billion yuan is close to Alibaba’s half-year net profit.
Foreign companies watching this situation are bound to be restless.
During the week, the European Union Chamber of Commerce released its annual report in early September reflecting these concerns.
Decrease in tax benefits for rent and tuition
The fact that many foreigners have already left China reflects this sentiment.
According to Newsweek’s Japanese edition, the number of residents of Shanghai and Beijing holding foreign passports decreased by more than 28% from a year ago.
More foreigners are expected to leave China by the end of the year, the magazine said, as changes in China’s tax system no longer qualify for tax deductions on rent and tuition.
The EU Chamber of Commerce in China said, “The decline in the number of foreigners working in China’s large cities is a problem that cannot be overlooked.”
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Source: Newsdirectory3
