Companies That Want To Do Business With China Are Facing This Frustrating Hurdle

china beijing food court

Photo: By HerryLawford on Flickr

State-owned Chinese oil company CNOOC is trying to merge with Calgary-based Nexen, and it’s facing political hurdles in both Canada and the United States.  Nearly seven out of 10 Canadians opposed the deal in a recent poll, adding pressure for the government to reject it.

Opponents in the United States argue that Chinese control of energy assets in the Gulf of Mexico would cause national security issues.

This pinpoints one of the most important geopolitical issues businesses are dealing with today: Western governments have not figured out how to deal with Chinese foreign investment.

They’re are sending mixed signals, which makes things more difficult for business. The message is that trade with China is good, even essential, but investments like these are discouraged or prevented. 

It’s arguable that state-owned companies have an unfair advantage as they’re subsidized and protected by the Chinese government, and the country’s voracious appetite for natural resources make people wary of attempts to consolidate control. 

The past decade was about investment flowing into China. The next one will see more money flow out. It’s up to both business and government to figure out how to this process into a two way street rather than a wrestling match. 

Otherwise, Western companies will be cut off from an increasingly important source of investment, and may see themselves cut off from an enormous market in return.

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