From Apple to VW, CEOs Gradually Returning to China After Its Reopening, Wall Street Journal, Feb. 12, 2023.
By Dan Strumpf and Yoko Kubota
Despite growing geopolitical tensions, companies pursue business opportunities
Top executives from multinational companies are trickling back into China with the country’s reopening, even as U.S.-China tensions grow following the appearance of a suspected Chinese surveillance balloon over the continental U.S.
Volkswagen AG’s VOW 1.71%increase; green up pointing triangle chief executive visited China from late January to early February, the company said, while Apple Inc.AAPL 1.39%increase; green up pointing triangle CEO Tim Cook and Pfizer Inc.PFE -0.91%decrease; red down pointing triangle CEO Albert Bourla are expected to visit next month, people familiar with the matter said. Ola Källenius, Mercedes-Benz Group AG’s MBGYY 0.88%increase; green up pointing triangle chairman, also plans a visit to China, the company said.
For many senior executives, it will be their first visit to the country since the Covid-19 pandemic began, after China—a top manufacturing hub and consumer market for many of the world’s largest companies—deepened its isolation for three years by slamming the door to international travel. As its economy struggles, Beijing is counting on such visits to attract investments from multinationals.
For some executives, site visits to local operations and meetings with managers are a priority, while others are looking to meet local business partners and government officials. Dozens of executives are expected to attend business conferences planned for the coming months in the country after China’s pandemic restrictions were dropped.
The executive visits underscore how, despite the heightening geopolitical tensions, Western companies are looking to the business opportunity presented by China’s reopening.
Still, many are also cautious and looking for more clarity in U.S. policy toward China. “Everybody’s waiting to see which ways the political winds blow,” said Michael Hart, president of the Beijing-based American Chamber of Commerce in China.
Earlier this month, the U.S. indefinitely postponed a scheduled visit to Beijing by Secretary of State Antony Blinken after a suspected Chinese spy balloon was found drifting over the U.S. The U.S. shot down the balloon on Feb. 4 as well as three more airborne objects over North America in recent days. China protested the Feb. 4 U.S. military action.
Meanwhile, in recent weeks, China has been sending messages that it is open for business. Concerns linger among some companies about the health of China’s economy, which expanded 3% in 2022, one of its slowest rates in decades.
Volkswagen CEO Oliver Blume was among the first top executives from a major multinational company to visit China since it scrapped most of its border restrictions in early January. Mr. Blume was in China for five days from late January into early February, where he met with the German auto maker’s joint-venture partners, government officials and local employees, a Volkswagen company spokesman said.
China is Volkswagen’s single biggest market and has been a cash cow for years, but the company has seen its market share there slide by nearly a fifth over the past three years as it faces rising competition from a raft of local automotive brands.
Mr. Blume, who took the helm at Volkswagen five months ago, last visited China in November as one of the handful of business executives making a short trip with German Chancellor Olaf Scholz, the spokesman said.
The latest visit “is a very strong signal to our partners in the region. It makes clear how important the Chinese market is for us,” said Ralf Brandstätter, who heads Volkswagen in China, in a message to employees seen by The Wall Street Journal. “The fact that the new CEO came here so quickly and sat down at the table with them is seen as very great appreciation,” he said.
A handful of business conferences planned in China in the coming months are also expected to be a draw for company leaders. They include the China Development Forum, an annual global economic conference sponsored by the Chinese government and scheduled for late March, as well as the Boao Forum for Asia in the southern Hainan province, a government-backed gathering of business and political leaders modeled after the World Economic Forum in Davos.
Top executives weighing a visit to the China Development Forum in Beijing, China’s showcase global business event, include Apple’s Mr. Cook and Pfizer’s Mr. Bourla, according to people familiar with the matter. Mr. Källenius of Mercedes-Benz plans to attend the forum, a company spokesman said.
Meanwhile, the Boao Forum will draw top business leaders from other countries, including Fortescue Metals Group Ltd. Executive Chairman Andrew Forrest, according to a Fortescue spokesman, who said the Australian iron-ore company is committed to engaging with customers in China.
For Apple, Mr. Cook’s expected visit comes as the company accelerates its plans to shift some of its production outside China following violent protests in November at the world’s biggest iPhone assembly factory, where workers were upset about wages and Covid-19 restrictions. Mr. Cook has served as co-chairman of China Development Forum in the past.
Apple and organizers of China Development Forum as well as the Boao Forum didn’t respond to requests for comment. A Pfizer spokeswoman declined to comment.
Other big business events in the coming months include the Shanghai International Automobile Industry Exhibition set for April.
Business leaders say that to date, the volume of business trips to China remains well below its prepandemic clip and will take time to increase again as airlines slowly add flights.
Despite bilateral tensions, U.S. commerce with China has been on the rise. Policy and business experts said major trade and investment ties tend to withstand political ups and downs.
In 2022, U.S. imports of goods from China totaled $536.8 billion, up 6.3% from the prior year, while U.S. exports to China rose 1.6% to $153.8 billion, pushing the total commerce between the world’s two biggest economies to a record $690.6 billion. The figures aren’t adjusted for inflation.