China is imposing more and more restrictions on foreign-owned companies. Therefore, in addition to concerns about data security, managers of multinational companies are considering traveling to the country at all. Travel agency ATG Travel Worldwide reported that the number of canceled flights has risen by 25 percent in recent weeks, as company executives prefer not to travel to the country.
All of this is a result of increasing scrutiny by Chinese authorities of Western-owned companies, especially in the technology, financial, and entertainment sectors. Due to strict government regulations, which often seem ambiguous and unpredictable, many leaders have to deal with the dilemma of whether to leave their interests in China behind, or travel to the country, assuming the risks and annoying the authorities.
With Beijing’s strict data protection laws and recent cyberattacks attributed to Chinese actors, multinational companies fear their sensitive information could be at risk. This concern is not only keeping new investment away from China, but has led to a rethink of existing trade relationships, forcing executives to reassess the risks associated with doing business in the country.
Geopolitical tensions between China and many Western countries have exacerbated the situation. Ongoing disputes over trade, human rights, and regional issues have strained international relations. As a result, managers are choosing more stable and predictable markets and directing their investments away from China.
With China becoming a “no-go zone” for executives, this could have a profound impact on the global business environment. Companies are forced to diversify their supply chains, search for alternative markets and strengthen their cybersecurity measures.
Cover image credit: Ken-Ishii-Pole/Getty Images
