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What companies face when doing business in China

Not everyone is pessimistic about trade relations between the United States and China. While American companies in China will definitely face challenges, China may still tread lightly when it comes to disrupting business.

China can take certain steps to make life difficult for American companies. This could include slowing down of imports during customs. China could issue additional regulations aimed specifically at American companies. The Chinese government could even try to dissuade consumers from buying from American companies.

Why China may hesitate to retaliate against American companies

While the Chinese government will likely punish American companies concerning actions taken by the U.S. government, Chinese officials probably understand the costs they will have to pay in doing so.

China would likely fear facing a boycott by American companies. Chinese companies already invest heavily in American products. Chinese backers own significant shares in large corporations such as McDonalds and General Motors. Boycotts would thus impact local jobs in China.

China remains greatly dependent upon the benefits American companies provide. While campaigns may motivate consumers to not purchase certain American products, this would mean local producers would have to supply these products instead. This may not be possible in certain sectors such as the production of software. And if Chinese officials seek products from other nations, this will result in delays.

Establishing a good relationship between Chinese and American companies is key when it comes to a sound investment strategy. It means having available legal counsel who understands the legal aspects regarding investment, and who can assist in the negotiation of contracts between businesses from the two countries. Chinese laws and culture are too complex for a company to attempt to go it alone.

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