Why its not in China's best interests to boycott US products
Experts highlight that many US brands in China are co-managed by local companies. Beijing's idea of boycotting US brands could hurt the local economy. In addition to the duties, Xi Jinping looks at hampering American companies business on Chinese soil. "No US product sold in China, or a US company investing in China, can be considered safe from retaliation."
Beijing (AsiaNews / Agencies) - Boycotting American brands does not convince Beijing. In fact, experts point out that many large US companies and brands on Chinese soil are co-managed by local companies. Some of these are supported by the state.
The list includes brands such as Coca-Cola, Walt Disney and McDonald's. Some economists highlight how these big brands are controlled by Chinese companies and investment funds.
For example McDonald's, based in Illinois, owns only 20% of the company that operates in China, since in July 2017 it sold 80% to Citic Ltd and other Chinese investors. In the wake of the fast food chain, Coca-Cola also sold the bottling department in China to Cofco and Hong Kong Swire Pacific in April last year. The same goes for Disneyland in Shanghai, where the American brand is only a minority shareholder. The park is managed by the Shanghai Shendi Group, a state-owned consortium, which owns 57% of the structure. Disneyland opened in 2016 and attracted over 11 million visitors the first year.
" The perfect Stars and Stripes corporate victim doesn’t exist,” said Tom Orlik, chief economist in Beijing with Bloomberg Economics. “The number of big clean wins in terms of striking against the other guy – without accidentally punching your own guy in the face – is extremely small".
The Chinese policy analyst for Gavekal Dragonomics Yanmei Xie states: " “No US product sold in China, or US company invested in China, can be considered safe from its retaliation”.
In fact, in addition to duties on US products, Beijing plans to punish US companies through increased administrative and bureaucratic expenditure. However, we must consider that Chinese exports to the United States last year reached 505 billion dollars, while imports from the United States amounted to 130 billion dollars.
Xi Jinping, however, would be inclined to risk boycotting the US brands. In fact, it would not be the only one to deal with the risk of collateral damage. Furthermore not all the American brands present in China have local participation. As a result, Beijing could choose to punish the latter and avoid hitting the co-managed brands of Chinese companies.