Top US Companies Struggling to Operate in China

It's getting harder for Western companies to do business in China. On Monday, Chinese regulators announced an anti-monopoly investigation into NVIDIA. The U.S. company is one of the world's leading microchip makers. The move is being seen as retaliation after Washington launched new export restrictions on what chips can be sent to China. Amid rising tensions between the two countries, many major companies have found their operations struggling in China. China is American coffee chain Starbucks' second-largest market, but its new CEO Brian Nicole recently described running a business in China as tough, adding the company is facing extreme competition inside China. From July to September, Starbucks' sales in the country dropped 14 percent. Apple has also failed to impress Chinese consumers and saw its sales drop nearly 8 percent last year. Last month, Elon Musk's Tesla reported an over 4 percent sales decline in the Chinese market compared to last year. In recent years, two fast food franchises, McDonald's and Kentucky Fried Chicken, have both sold off notable percentages of their Chinese steaks. Why has China become a tough market for business giants? Firstly, the market is shrinking. Based on NDD's estimates, at least 100 million people died in the country due to the COVID-19 pandemic. Beijing is facing allegations on the world stage for covering up its true death toll. Secondly, a slow economy has played a key role in reducing Chinese people's purchasing power. Almost all the pillar sectors that usually drive the Chinese economy are sinking. Exports, domestic consumption and foreign investment. The real estate crisis has caused huge financial losses for many Chinese families over the past few years. What's more, Beijing revised its anti-espionage law last year. The new policy gives Chinese authorities power to raid offices or arrest executives if the regime labels them as threats to its state security. The arrest power does not require other reasons. And it's sparked fear of arbitrary arrests and charges among foreign businesses operating in China. Zooming out, multinationals are feeling the heat as tensions roar between the U.S. and China. The U.S. has been ramping up tariffs and sanctions against China's exports since President-elect Trump's first term in office. President Biden kept most of the Trump tariffs in place, and even expanded some of them. Now Trump is threatening Beijing with even higher tariffs. That's to counter the flow of Chinese goods entering the U.S. border through other countries like Mexico, a tactic for evading U.S. tariffs. In response, China has launched investigations into multiple leading foreign companies like Nvidia. Beijing also issued several export bans targeting the U.S. On the other hand, some experts say that tariffs and sanctions could lead to higher costs for American businesses and might decrease trade volume with China.