U.S. business owners commonly face several challenges in operating in China. The two countries’ economic relations share a long-standing connection. As such, many business owners have taken advantage of the benefits of operating in China, such as the market demand for U.S. products and services, product and component availability and cost, and research and development innovation and opportunities.
Knowing the potential roadblocks to successfully running a U.S. business in China may aid in developing strategies to help limit their interference.
Restrictions
According to a Barron’s report, owners who run businesses in China commonly face wide-ranging restrictions. For example, this includes equity and ownership caps imposed on U.S.-owned businesses. Limitations on travel to and within China also complicate operations for some companies.
Diplomatic relations
According to The American Chamber of Commerce in the People’s Republic of China, increasing diplomatic tensions between the countries also affect the operation of U.S. businesses in China. Administration policy changes and the implementation of regulations and industry and operation constraints play a role in difficulties with developing clear engagement and long-term strategies.
Issues hiring workers
Issues drawing workers to leave their homes in the U.S. to live and work in China have played a role in the successful operation of American businesses abroad. The COVID-19 pandemic has exacerbated these issues in recent years, with 35% of U.S. business owners who participated in a recent survey by the chamber reporting the effects as large or severe.
Despite these potential challenges, many American businesses remain committed to operating abroad and focused on the benefits that doing so provides. Therefore, U.S. owners seeking to run their businesses in China find it helpful to obtain legal representation to help them understand their rights and obligations and to aid them with regulatory compliance.