Dr. Jean-Marc F. Blanchard's blog

China has been a World Trade Organization (WTO) member for almost thirteen years. The titanic battles over its admission to the globe’s leading international economic organization have long passed. While some were anxious about China’s WTO accession, many were exuberant. They foresaw new markets for the goods they manufactured outside and inside China, new opportunities to invest in China’s automobile, banking, insurance, telecommunications, and wholesaling sectors, and better protection of their intellectual property (IP).

The first US-Africa summit took place in August. It afforded the US an opportunity to show it was not completely distracted by events in Gaza and Ukraine. It also gave US businesses, encouraged by US President Barack Obama, a chance to strike deals with giants like Coca-Cola, General Electric, and IBM and investors like Blackstone pouring $14 billion into Africa. Not surprisingly, Western media seized upon the summit to raise the issue about the US-China competition in Africa (even Chinese media jumped on this bandwagon) and whether or not the summit showed the US was catching up.

The Libya uprising in 2011 cost Chinese multinational corporations (MNCs) billions. Now, the story seems poised to repeat itself, albeit this time in Iraq where Sunni radicals belonging to the Islamic State of Iraq and Levant (ISIL) now control large portions of western and northern Iraq. While ISIL has yet to endanger Iraq’s most valuable oil fields, its onslaught still poses multiple threats to Chinese interests. These include higher oil prices, disruptions of oil shipments from Iraq (no small matter given Iraq is China’s fifth largest oil supplier), damage to multi-billion dollar investments by Chinese MNCs such as CNPC and Sinohydro, harm to Chinese nationals, and the validation of radical Islam.

Foreign firms have now found themselves confronting a challenging operating environment in Vietnam tied to violent demonstrations that involved thousands of protestors venting their displeasure with China’s deployment of an oil rig near the disputed Paracel/Xisha Islands, claimed by both China and Vietnam. Although protestors targeted “Chinese” firms, they also lashed out at plants owned or operated by firms from Hong Kong, Japan, Taiwan, Singapore, and South Korea. Indeed, factories with “any Chinese writing or names became targets of destruction.” Foreign companies suffered millions in losses from arson, looting, and vandalism, shutdowns, and damage to support facilities.

At the beginning of April, Japanese pharmaceutical giant Daiichi Sankyo dumped its multi-billion US dollar investment in India’s Ranbaxy, losing billions of its US $4.7 billion investment in this prominent Indian generics firm, not to mention lost management time. Daiichi made its original investment because it saw the deal as a way to broaden its distribution channels, to gain new products, and to tap into the Indian market. Signs were abundant soon after transaction was announced, however, that the deal might encounter serious problems.