Western boards can try to contain some of the risk by building production slack or seeking alternative suppliers, perhaps in India, to allow continued manufacturing outside the People’s Republic. But that has limited impact. And there’s no upside to pre-emptive self-sanctioning.
If Western states decide to impose sanctions, boards would have their red lines decided for them. Until that happens, their main strategy is just to assume such a step won’t happen, as the ramifications would be too seismic. Western companies will keep betting on the Middle Kingdom, until their governments stop them.
German foreign direct investments into China totalled 5.49 billion euros during the first three quarters of this year, 15% up from 4.8 billion euros during the whole of 2021 and the highest level of investment in a single year since 2000, data from the Rhodium Group showed. China’s domestic sales of luxury goods grew 36% to 471 billion renminbi in 2021 from a year earlier, representing a 21% share of the global market, according to a report by Bain & Company. The report predicts China will become the largest global market for luxury goods by 2025.Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.