How China has lost its attraction to foreign businesses

How China has lost its attraction to foreign businesses 3

How China has lost its attraction to foreign businesses

Seagate – the world’s largest computer hard drive manufacturer last month closed its factory in Suzhou, leaving 2,000 people unemployed.

At the World Economic Forum (WEF) in Switzerland last month, Chinese President Xi Jinping reassured the world that China remains open to foreign investment.

However, Seagate has just joined the wave of foreign companies ceasing operations in China in the past few years.

Many foreign businesses have had to leave China due to business difficulties.

For example, Panasonic had to stop all TV production here in 2015, after 37 years of operation in China.

However, after nearly four decades, the situation has changed.

Names also on this list are Metro, Home Depot, Best Buy, Revlon and L’Oreal.

`China doesn’t really need foreign companies anymore. Before, they just needed to get advanced technology and capital,` commented Chong Tai-Leung – Professor at Chinese University of Hong Kong. `So of course

Last year, Shen Danyang, a spokesman for the Chinese Ministry of Commerce, said that foreign companies just want to `make money quickly` and are too dependent on preferential policies from the Government.

Keith Pogson – Asian financial services expert at Ernst & Young commented that the main reason foreign firms have to leave China is competition from domestic competitors.

Last year, Chinese TV brands surpassed their Korean rivals for the first time, ranking first in the world in terms of global revenue.

Since 1994, foreign companies have been given tax incentives.

However, in recent years, Beijing has gradually tightened these policies, with a new corporate income tax law, effective since 2008. This law stipulates that both domestic and foreign enterprises must pay 25% tax.

In addition, many unclear regulations and inconsistent explanations are also said to be the reason foreign businesses leave China.

A quarter of AmCham-China members surveyed said they had moved or were planning to leave China late last year.

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