Beijing's COVID-19 policy pushing multinational firms to consider exiting China: Report

China's zero COVID policy and stringent lockdowns have resulted in multinational companies considering shifting their operations out of China and moving to other nations, ANI cited Financial Post report. The EU Chamber of Commerce released a report in September where it stated that companies were viewing China as being less predictable, reliable and efficient. In addition, there is a rise in geopolitical tensions. 

It is pertinent to mention here that since the onset of the pandemic, China continues to follow a zero-COVID policy. Chinese authorities have been conducting mass testing and imposing lockdown and travel restrictions in the regions where COVID-19 cases are reported.  According to the report, China was able to rebound rapidly from the COVID-19 pandemic in comparison to the world. As Beijing rebounded quickly from the pandemic, the country was regarded as a "safe haven" for investment. However, the COVID-19 policy of China has caused disruptions to business and affected pre-existing challenges. As per the report, factors like favouritism towards state-owned enterprises and increased politicisation of business have further impacted China's position as an investment destination. The inbound investment flows from Europe have demonstrated a changing trend. Earlier, the World Bank had said that China has "lost momentum" due to its COVID-19 restrictions to contain the virus.

"Factors such as favouritism towards state-owned enterprises and increased politicisation of business have further eroded China’s standing as an investment destination. Companies are increasingly viewing the country as less predictable, reliable and efficient, and with geopolitical tensions on the rise, its future is less certain," the EU Chamber of Commerce said in the report. 

Report claims some firms have put their operations in China in 'wait & see mode'

The EU Chamber of Commerce in the press release further said, "Over the past four years, the bulk of European FDI into China has been contributed by just a handful of large companies, while the rest have put their China operations in wait-and-see mode as they evaluate alternative markets that can provide greater certainty." Vice President of the European Chamber Bettina Schoen-Behanzin in a statement stressed that an increasing number of European businesses were putting their Chinese investments on hold. Furthermore, Behanzin informed that they are reanalysing their positions in the market as they wait to see how long the uncertainty will continue, ANI cited Financial Post report. The change in the stance of multinational companies shows that they is a decline in trust. Earlier on October 3, the search engine Google disabled access to its translation feature in mainland China citing "low usage." Earlier, Amazon, Yahoo, LinkedIn and Microsoft also ended their operations in China. 

Inputs from ANI

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