China’s new government promised foreign companies a more open economy, but the recent raids on China offices of Bain and Capvision consultancies leave foreign investors confused, says political analyst Victor Shih at Hong Kong FP. “It’s very puzzling considering Beijing says that it will boost foreign investment and entrepreneurial spirit. It seems like the right hand doesn’t know what the left hand is doing.”
Hong Kong FP:
Victor Shih, associate professor at UC San Diego and an expert on Chinese politics, said that the US and China are involved in tit-for-tat moves. Washington slapped sanctions on Chinese companies in the internet, bio-technology and pharmaceutical industries, while Beijing barred US arms manufacturers from investing in China. However, taking action against global advisory firms “took things to the next level,” he added.
Shih said the due diligence and advisory services industries are essential for both foreign and domestic investment in the Chinese market: “You can’t give away your money when you don’t have enough information. And we all know you will come across scams like the case of Sino-Forest Corporation or Luckin Coffee,” he said in reference to recent corporate scandals. “It’s important to invest carefully.”
“Why are there all these consulting companies in China trying to do research on China’s economy and Chinese companies? It’s not like a plot, it is just because China is important.” Shih added. “It’s very puzzling considering Beijing says that it will boost foreign investment and entrepreneurial spirit. It seems like the right hand doesn’t know what the left hand is doing.”
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