Passing through the Era of Happiness

Transitioning from the era of good relations

American companies one after another are adjusting their workforce and reducing their activities in China.

IBM is the latest example of these companies, announcing that it will adjust its workforce and change the position of its research and development teams in China.

Previously, Microsoft had officially announced to its employees in China to prepare for changes in their work positions. Reports from economic publications and research institutions about the changing trend of activities of Western companies, especially American ones, in China are not new.

The official announcements and decisions of the ruling party in China, amid escalating tensions with the US, declared serious policies of self-sufficiency and maximum independence from the influence and dominance of technology, which were primarily for domestic propaganda purposes.

Nevertheless, increased security restrictions on major Western companies, in some cases accompanied by security forces raiding the offices of financial and commercial institutions, have made conditions tougher than before.

The competition between China and the United States has resulted in new sanctions and restrictions by the Biden administration against China. Particularly, Biden’s foreign policy team is strongly opposed to Chinese technological assistance to Russia’s invasion of Ukraine, and recently added other Chinese companies to its blacklist in this regard. The Chinese are seriously angered by this trend and yet always rely on the United States for assistance in various fields.

The Chinese need to reduce this perpetual dependency, and amidst this tense atmosphere, relations between the two countries have made it harder for large companies.

In 2023, IBM recorded a noticeable 20% decline in revenue in China, which is significant.

The Chinese market for electric vehicles produced by American and European companies has become more challenging than before. The era of easy gains for large Western companies in China is coming to an end.

China needs the United States, and Chinese companies can hardly afford to lose the vast Chinese market. Navigating in these conditions requires special skills and tactics.