A recent Fortune headline may be a little misleading: “The corporate exodus from China is gaining momentum, study says” (November 19, 2024). What seems to be happening is that planning to get out of China or partly out of China may be gaining momentum.
“Based on a survey of 166 CEOs and COOs, Bain & Company found that the share of companies moving operations out of China jumped to 69% in 2024 from 55% in 2022.”
But what does “moving out” mean?
“The top destination was the Indian subcontinent, with 39% of execs saying they were headed there [emphasis added]. That was followed by 16% moving to the U.S. or Canada, 11% to Southeast Asia, 10% to Western Europe, and 8% to Latin America, rounding out the top five destinations.”
If you’re heading toward another country, you’re not in that other country yet. To be “headed” there could mean that a firm is in process right now of moving its operations; the planes and ships packed with company stuff are on their way to the new place. But this doesn’t seem to be what Fortune and Bain & Company mean. An actual in-process movement out of the country of 69% of the foreign companies in China would be remarkable enough to be more explicitly remarked upon.
Expressing skepticism about reports of impending departures from China in an October 2024 column for this site, James Roth observed: “The headlines portray companies leaving China. In some cases, they do…. More common, though, are reductions in operations, not complete shutdowns.”
Two years ago, Lisa Anderson, CEO of supply-chain firm LMA Consulting Group, said that there’s “no doubt that tech manufacturing wants to move out of China. They cannot afford the risk of continued disruption to supply, and they want to gain better control over their ability to serve customers.”
Two years later, the headlines keep coming. But so many foreign firms keep staying, headlines be damned.
If the scales are indeed tipping toward exodus of foreign businesses from China, that’s great. Planning to leave or planning to plan to leave is the first step. Foreign companies in China have motives to act. Among them: past and future U.S. tariffs on goods coming out of China, for one. Not wanting to fortify and enable the Chinese Communist Party for another. Yet another, the possibility of being raided or jailed by the CCP in “an environment in which collecting information about competitors is illegal.”
Also see:
StopTheChinazis.org: “Foreign Businesses to China: ‘Hurt me more!’ ”
