State’s Firms See Few Problems in Their Operations in China
Recent unrest in China has disrupted some Chinese operations of major California-based companies, as firms report slowdowns in Beijing and Shanghai but few problems anywhere else in that nation or in neighboring Hong Kong.
A few California firms surveyed this week reported that their Beijing offices had been temporarily shut down because of traffic jams or other problems. Some firms also have suffered slowdowns in sales in Beijing and Shanghai or in worker productivity, as employees take breaks to discuss or participate in the political upheaval.
But the U.S. Commerce Department’s China desk said it has received no reports of disruptions in the flow of goods into that nation. And firms reported virtually no problems with work slowdowns or delays in communications or transportation outside the major cities.
The companies also expressed confidence that the long-term business conditions for American companies in China will not worsen even if new leadership emerges, largely because of China’s need for Western investment and technology.
“As long as China needs professional services and has an economy that generates the financing for these kinds of things, we should be all right,” said Rick Laubscher, spokesman for Bechtel Group in San Francisco, which has three major construction projects in China. “We don’t see any argument developing about the need to continue modernizing the Chinese economy.”
“Nobody’s expressed any desire to pull out or real fears about China business in the long term,” said Karen Green, director of business advisory services for the U.S.-China Business Council, a Washington-based association representing about 300 American companies with business in China.
Of course, the situation could worsen if the unrest escalates into open violence or if protesters stage work stoppages or disrupt transportation and other vital services.
“If this escalated into violent confrontation, companies would begin to reconsider,” said Richard Brecher, investment manager for the U.S.-China Business Council. “Until now, foreign investors have been attracted by the political stability in China and its promise of economic reform.”
Much More Business
But so far little of those dire consequences has happened or is threatened. The current situation is expected to be short-lived, and some firms, such as Atlantic Richfield, report disruptions easing and business returning to normal. And there are no reports of anti-Americanism.
Growth of American business in China--primarily through joint ventures or trade--has risen considerably in the past decade as that nation pursues economic liberalization. The United States ranks as China’s second biggest foreign investor (after Hong Kong/Macao) and third biggest trading partner (after Hong Kong/Macao and Japan).
At least 460 American companies operate joint ventures in China, with a handful of others maintaining wholly owned ventures there. At least 80 California companies have operations in China or conduct significant trade with that Asian nation.
Most business interruptions seem to be confined to sales offices or other operations located close to Tian An Men Square in Beijing or to the waterfront in Shanghai, where the largest demonstrations have occurred and where traffic has been most disrupted by protesters.
Hewlett-Packard’s sales offices in Beijing and Shanghai remain open but report slower activity, fewer visitors and more workers taking time off, said Chi-Ning Liu, an international business development manager who has just returned from China.
Bechtel sent its three employees in Beijing to Hong Kong or Shenzhen in Southeastern China until things settle down in the capital city, spokesman Laubscher said. “It’s no secret that not a lot of business is getting done in Beijing at the moment,” he said.
Palo Alto-based Varian Associates said sales and marketing of its scientific and industrial equipment have slowed. “A large percentage of the population is in the streets rather than doing anything else,” spokesman Gary Simpson said.
No Problems for Some
Atlantic Richfield told its secretary in its Beijing office, located very close to Tian An Men Square, to stay home for a day or two while the office manager was away on business. The office, however, was reopened Wednesday, spokesman Al Greenstein said.
But several other companies with Beijing offices, including Fluor Corp. and Occidental Petroleum, said they have not experienced problems.
Outside of Beijing, Shanghai and other major cities where demonstrations have taken place, companies reported no problems. Transportation through airports and ports also appears to be running normally.
Mattel, which manufactures toys at two Chinese-owned plants near Canton in Southeastern China, reported no disruptions. Hewlett-Packard said its assembly plant in Shenzhen was operating normally. Bechtel, which operates three construction projects, and Flour, which has about 10, said they also are not affected.
“There is no effect on our operations, it’s business as usual,” said a spokesman for Occidental Petroleum, which operates a coal mine in Shanxi Province that it claims to be the largest foreign joint venture in China.
Similar quiet was reported by Long Beach-based Douglas Aircraft Co., which is jointly producing final assemblies for its MD-80 aircraft in a city just outside Shanghai.
Some Chinese-owned businesses in the United States reported that business is proceeding as usual, with no need to send executives back to China.
“Everything is on schedule, we have not experienced any problems,” said Wang Lu, president of Chinatex American Inc., a textile trading firm in New York.
CALIFORNIA IN CHINA
A sampling of companies based in the state having business activities in China.
Company Activity Atlantic Planning offshore oil Richfield drilling Bechtel Group Three construction projects Chevron Oil exploration Douglas Joint aircraft assembly Aircraft Fluor Several construction projects Hewlett- Manufacturing of analytical products Packard Mattel Two toy manufacturing plants Occidental Coal mine Petroleum Rockwell Joint manufacture of industrial computers International Varian Sales of electronic equipment Associates
Source: Survey of companies
