Quitting Chinese market will be suicide for US firms

By Hu Weijia Source:Global Times Published: 2019/8/25 21:25:29

US President Donald Trump has ordered US companies to "immediately start looking for an alternative to China." If US firms obey his dictate, such actions will have serious consequences.

China is now the biggest market for some US-based enterprises, such as US automaker General Motors (GM). The automaker's China sales came to 3.65 million cars in 2018, exceeding its total sales in the US market, where GM delivered nearly 3 million vehicles. Some statistics have shown that China's car market is even bigger than those of the US and Japan combined. GM is already facing weak sales in the US. The automaker will suffer a fatal blow if it loses the Chinese market.

GM is a big player in the US auto industry, an important component of the US economy that is particularly prominent in some Midwestern and Southern states. 

According to statista.com, motor vehicle and parts dealers in the US had about 2 million employees as of March 2019. If GM's profits fall or it loses money, the whole US auto industry will be affected, the country's auto supply chain will shrink and mass unemployment will result.

In China, the vehicle industry is a fully competitive market. If GM withdraws from China, homegrown brands and   automakers from countries outside the US will fill the gap in auto sales. As long as China has the world's largest vehicle market, there will be no shortage of auto-related investment. China has the initiative in this game. 

There's not much chance that GM will obey Trump's outburst. The automaker needs its factories to be close to its customers to survive in a fiercely competitive market. 

To keep its foothold in China, GM has to keep producing in China - despite Trump's order. 

If Trump pressures US companies to take sides between the US and China, many of them will probably choose the latter. US business groups have already expressed their fierce opposition to Trump's gyrating trade policy. 

"We do not want to see a further deterioration of US China relations," Myron Brilliant, executive vice president and head of international affairs at the US Chamber of Commerce, was quoted by media reports as saying.

US companies are welcome to invest and operate in the Chinese market, but if some US companies want to obey Trump's order and join Washington's trade war, the result is bleak. A decision to give up the Chinese market is just suicide.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn


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