Companies See Rising Risks in Doing Business with China

The term competition has a different meaning in business than in the context of sports and games. In chess or baseball or parchesi, players follow defined rules to achieve objectives versus their opponents. In business, there is no standard for determining a winner among competitors – enterprises are ultimately trying to acquire enough resources just to stay afloat.

Not so in China, according to U.S. intelligence officials. A new CNBC documentary warns that Beijing wants to steal the intellectual property and trade secrets of U.S. companies to put them out of business. Consider it one of the growing risks companies are taking today by doing business with China.

The documentary delves into the FBI’s efforts to ensnare spy Xu Yanjun, a Chinese government officer who tried to milk information from employees at major aerospace companies in the United States. Prominent government figures such as FBI Director Christopher Wray and Sens. Marco Rubio (R-Florida) and Mark Warner (D-Virginia) appear in the film to voice grave concerns about China’s intentions when it comes to competing in the global marketplace.

At a time when diplomatic relations between China and the United States may have hit an historic low, the federal government is taking more aggressive steps to counteract nefarious Chinese tactics. This month, the Department of Justice announced the formation of a cyber unit within its National Security Division. The unit aims to neutralize online threats from rival countries and hackers sponsored by foreign nations. Read: China and Russia.

Meanwhile, some companies are learning about other downsides of operating in the world’s most populous country. Automaker Volkswagen, for instance, currently finds itself subjected to accusations of supporting what the U.S. government has characterized as genocidal policies by the Chinese government. The manufacturer of models such as the Jetta and Tiguan has a factory in Xinjiang, a region of China where the government is alleged to have executed mass detentions of the country’s Uyghur population.

Chinese companies doing business in the U.S. are on the hook, too, as watchdogs have started paying closer attention to their supply chains. Congressional investigators last week accused a popular Chinese e-commerce website, Temu, of brazenly disregarding standards intended to keep commercial goods made with forced labor from entering the U.S.

Some corporate executives have taken to wooing Chinese dignitaries like President Xi Jinping directly in hopes of bringing about some kind of détente in the hostilities. Those efforts ramped up in advance of Secretary of State Anthony Blinken’s talks this week with Chinese officials, which are intended to repair some of the latest damage done to relations between the two countries. At the very least, perhaps this week’s events will prevent the situation from eroding further.