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Ex-Cisco CEO discourages start-ups to invest in China

by | Jul 27, 2021 | Business Issues

The deteriorating relationship between the U.S. and China continues, remaining tense and is expected to be that way for some time. With Washington and Beijing trading barbs and making demands of each other, that leaves little room for cooperation. Those tensions have affected U.S.-China business relationships in the past decade.

The unpredictability in China’s regulatory methods and bullying business tactics has at least one U.S. business leader discouraging certain start-up companies from investing in that country. This is not an overall good sign for companies seeking partners or hoping to lay down stakes in the world’s most populous market with a growing middle class.

Beijing crackdown on U.S., Chinese companies

John Chambers, the former CEO of Cisco, as well as other U.S. business leaders, remains concerned about the business environment in China. On July 26, Chambers said that he has warned off any start-up companies in which he has invested from operating in China. Chambers knows the business environment well as he has had four decades of corporate dealings in China.

His comments came on the heels of China’s continuing crackdown on its own technology companies. Recent targets include China-based ride-sharing company Didi, which just had an initial public offering in the U.S., and technology conglomerate Tencent, which the government fined for anti-competitive behavior and ordered it to relinquish exclusive music licensing rights.

Chambers noted that in the past decade Beijing has sought and gained more control over U.S. high-tech companies doing business in China. The government’s heavy-handed tactics also have carried over to Chinese start-up companies, too.

However, Chambers continues to hold out for optimism, noting the business environment between the two countries will improve, but it will take time.

Patience, timing and adaptation continue to remain crucial attributes for any global company seeking to operate in China. While the current business environment remains troubled, the scenario can only get better.