The furious reaction from China to the arrest of Huawei’s chief financial officer, Meng Wanzhou, in Canada at Washington’s request immediately raises the prospect of like-for-like retaliation against executives from North American companies, a fear reinforced by the arrests of a former Canadian diplomat-turned-NGO-researcher and a Canadian businessman.
How Western Multinationals Are Responding to the Escalating U.S.-China Trade War
Companies whose value chains depend on China now face increased political risk. Chinese suppliers and their sub-contractors are susceptible to pressure to behave ‘patriotically’ when authorities convey the message, however tacitly, that lack of cooperation with foreign multinationals is in the national interest. Companies need to take urgent steps to measure their potential exposure. Doubling up value chains, including alternatives outside China, would mitigate the risk of political and regulatory disruption. (It would also have the added benefit of providing insurance against ever-more-frequent natural disaster.) Some forward-looking companies, particularly those whose vulnerable to U.S. national security concerns because they incorporate Chinese technology into their end products, have started to reconfigure their value chains where possible.