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News: Will U.S. businesses have to leave China?

On Behalf of | Sep 3, 2019 | Business Litigation

There is no doubt that the ongoing trade dispute between the United States and China is having a significant impact on established U.S. businesses in China. In a past blog post, we discussed how many of these businesses experienced a decrease in sales and profit because of this current situation. 

But in a new development, the U.S. federal government claimed that they would order U.S. businesses to leave China. These claims are leaving business owners with several questions. Namely: can the government make them move their businesses outside of China?

The short answer: Not exactly

There are federal laws that can halt U.S. businesses from operating in other countries. Though, these laws usually apply to specific situations, such as national emergencies. 

The Wall Street Journal reports that, at the moment, U.S. businesses will not have to move their operations or partnerships outside of China. After all, there is no official order. And even if there were, the situation would have to meet several legal criteria before applying to U.S. businesses in China.

Moving businesses would require extensive planning

U.S. business owners take great care when they expand their company into China. Whether it is a manufacturing plant or a retail branch, moving shop would be no easy decision or task.

Therefore, even if there were an order, it would still be a long process to move businesses, involving:

  • Finding and vetting other options
  • Ensuring all legal obligations in China are complete
  • Negotiating new contracts and agreements
  • Readjusting business plans and strategies
  • Measuring financial risks

These recent developments have only increased the uncertainty that U.S. businesses in China are facing. However, at the moment, the decision to keep operating in China depends on a business’ specific needs and longevity concerns.