Advisor insights: Doing business in China

Multinational Corporations in China: Managing risk amid rapid change

The complex, ever-shifting relationship between China and the multinational corporations (MNCs) that do business on the Chinese Mainland has reached a watershed moment. Rapid change on the diplomatic, political, and economic fronts in both China and the United States is bringing new policy priorities to the fore—and leaving the rules vague in the process. While this increases risk for MNCs, those able to anticipate events, appropriately adapt, and respond quickly can continue to reap benefits.

This article explores forces driving change in China and will examine how these forces are playing out today in two illustrative sectors, technology and life sciences. It will also describe practices that can help MNCs in all sectors navigate the opportunities and risks presented by these turbulent times. The objective is to provide guidance for a sustainable C-suite process to support optimal decision-making on growth opportunities and risk mitigation.

This C-suite process calls for executives to anticipate a range of scenarios, from an easing of current pressures to a rupture that leads to a complete withdrawal from the market. This scenario planning requires more than simply framing a static set of potential world states. Instead, executives should develop a process to regularly renew scenarios and strategies as events unfold.