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Interdisciplinary Committee on Organizational Studies - ICOS pres.

Chinese Co - optation: Doing Business in the Era of Xi Jinping

Doug Guthrie Arizona State University

The cost of doing business in China today is a high one, and it is paid by any and every company that comes looking to tap into its markets or leverage its workforce. Quite simply, you don’t get to do business in China today without doing exactly what the Chinese government wants you to do. Period. No one is immune. No one. As someone who has lived and worked in China, advised companies about investing there, and quite happily been described as a China bull, I have struggled to accept this fateful conclusion in the era of Xi Jinping. Like some other China Bulls, I had believed the early promises of Deng Xiaoping, Jiang Zemin, and Zhu Rongji about China’s fair and open future, open markets, the emergence of a rule of law system. To be clear, I am still very bullish on the strength and trajectory of the Chinese economy – China will continue to grow and it will surpass the US as the largest economy in the world. However, the current era is just a much darker period for everyone, including Multinational Corporations (MNCs). There is no free lunch for doing business in Xi's China – especially for technology companies. China will get its pound of flesh as the cost of operating there: you get to operate here and gain access to the the most innovative supply chain in the world and world's largest marketplace; and China gets what it wants in terms of benefits to Chinese economy and society (as defined by the Chinese Government). Based on three decades of China research — including thousands of interviews — and, most recently, my time as an executive for Apple in China (2014-19), this talk attempts to lay out what my views on how China has co-opted the business community in the era of Xi Jinping.

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