China's neighbors are wooing American CEOs. The CEOs are listening.

[Boats]

China's neighbors are wooing American CEOs. The CEOs are listening.
By: Akiko Fujita and Ben Werschkul - Sun News , November 19, 2023 at 6:22 AM CST
Re: https://finance.yahoo.com/news/china...122205166.html

China’s neighbors are trying to capitalize on current tensions with the US by wooing American CEOs who are more open to making their goods in other parts of Southeast Asia.

The lobbying from China's Asian rivals was on full display this past week at the Asia Pacific Economic Cooperation (APEC) Summit in San Francisco, even as Chinese President Xi Jinping tried to make his own case for why the US business world should keep its money with him.

On a day when Xi and President Joe Biden huddled at a resort roughly 35 miles away, American CEOs and leaders from other Southeast Asian nations rubbed elbows inside a San Francisco convention center.

The global chair of PricewaterhouseCoopers International appeared alongside the prime minister of Malaysia. The CEO of Uber (UBER) was with the president of the Philippines. The CEO of Microsoft (MSFT) appeared in a session with three Southeast Asian leaders.

The heads of companies like ExxonMobil (XOM), Alphabet (GOOG), GM (GM) and Visa (V) were also on hand for conversations.

"This is the right time to invest," said Indonesian President Joko Widodo from the stage as he touted his nation’s efforts in areas like electric vehicles and clean energy. He called it "the right and promising choice to make," according to the official translation.

Philippines President Ferdinand R. Marcos Jr. also used his remarks at APEC this past week to push for tighter economic ties, saying "this opportunity to collaborate once more is light in the economic horizon in our efforts to preempt a prolonged downturn and its very negative consequences."

American companies have long been looking to diversify their supply chains beyond China thanks to a US-China trade war. The COVID-19 pandemic accelerated those discussions, with companies unable to get goods out of the world's second-largest economy as manufacturing hubs and ports within China shut down.

Now even more firms are considering such moves because of geopolitical uncertainty and opaqueness around the Chinese economy.

The diversification strategy received strong encouragement from the Biden administration this past week, with Treasury Secretary Janet Yellen encouraging companies to look at "friend-shoring" or focusing on countries that are trusted trade partners.

"There's no question that these other Southeast Asian countries are going to be making a strong pitch for why they need to be added to the supply chain basket," said Shehzad Qazi, managing director at China Beige Book.

"I think the question that the CEOs and their staff will be wondering about continuously is, do these other countries have the capacity to become big players."

The nations that stand to benefit!

Experts say tech manufacturing and the transition to clean energy offer the biggest opportunities for businesses that want to seek out opportunities in Asian countries outside of China.

It’s already happening in India. That country has emerged as a key alternative to China for companies like Tesla (TSLA) and Apple (AAPL), which has long relied on Chinese companies for its iPhone components. India is not a member of APEC.

Apple is also reportedly pushing for more investment in Vietnam, as are major chipmakers including Intel (INTC) and Global Foundries (GFS) that recently visited the country to reportedly discuss building out the country's semiconductor assembly and design capabilities.

Vietnam is trying to gain benefits from both the US and China, said Nicholas Lardy, an expert on the Chinese economy at the Peterson Institute for International Economics, setting up the nation as a middleman.

Chinese firms "are producing things [in Vietnam] and selling them into the US and avoiding the tariffs," he notes. "So this is a workaround."

But both Lardy and Rhodium Group Director Reva Goujon point out that these complicated arrangements could end up backfiring on the West.

"It's kind of ironic because the US is trying to pull these countries into our orbit and reduce their dependence on China, but their dependence on China is actually growing," Lardy notes.

Goujon adds that "dependencies are still very sticky so you can have investment move to Vietnam or Thailand or Indonesia but the inputs for those manufactured products are still likely coming from China."

Map link: U.S. TRADE WITH CHINA (Chart on this site) further down from on this post
U.S. imports from China and exports to China
Exports
Exports
Imports
Imports
SOURCE: U.S. CENSUS BUREAU • PHOTO: GETTY IMAGES

"Note: A China that isn't going away:!"

The Chinese president put on his own charm offensive this past week.

At a dinner Wednesday night that included Apple CEO Tim Cook, Boeing Commercial Airplanes CEO Stan Deal, and FedEx CEO Raj Subramaniam, he tried to reassure the CEOs in attendance by suggesting his political controls would be less restrictive going forward.

He also engaged in some panda diplomacy, suggesting new bears could be coming to the National Zoo in Washington, D.C., after the former residents were recalled to the PRC earlier this year.

China's President Xi Jinping claps as he speaks at a dinner with business leaders during the Asia-Pacific Economic Cooperation (APEC) conference on Wednesday, Nov. 15. (Jeff Chiu/AP Photo) (ASSOCIATED PRESS)
And in a second written statement, Xi alluded directly to the burgeoning rivalry with his neighbors, writing "China has become a synonym of the best investment destination, and that the ‘next China' is still China."

"Decoupling and supply-chain disruption are not in anyone's interests," he added.

China could also benefit in the months and years ahead from troubled efforts to get a trade framework across the Asian region in place.

Commerce Secretary Gina Raimondo acknowledged Wednesday at a dinner attended by CEOs as well as Xi that many American businesses remained keenly interested in China.

"I know that because half of you have come to see me to tell me that."

Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita. Ben Werschkul is Washington correspondent for Yahoo Finance.
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[Personal note: China has always had the knack of buying then selling same things American's used to make for less when made by China. This happened in the late 50's and has wiped out US Mom & Pop repair shops in the US and they've reverse engineered (aka: copied) just about everything the US used to make - for less money and that continues to this day!]
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So; Unemployed rose in the US and many industries shut down as they couldn't compete with China copied products. It took a while but they've knocked the hell out of many products and put many folks out of work. They are great manipulators and reverse engineered products - which seem to sell for less and rather then repair cheaper to buy new again. This! TOOK ALOT OF PEOPLE OUT OF JOBS!
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And the US just didn't do JACK about it! Any thing we could make to
would duplicate and sell for less - people still buy China stuff because
its so cheap throw it buy another - that's pretty much the whole picture.
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Korea - China and a few others have made billions of dollars that
should've been made in the US. But somehow the market couldn't
compete with their products and clothing - can you beat that!
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It makes me made - they reverse engineer just about anything that
we make - sell it for less - we did nothing!
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We are also buying foreign fuels - cars - and steel. We are no longer
a product of interest only users thereof and buy again from them
over and over.
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Wonder why the dollar's fallen - this is why! We are dependent on
foreign made products and service. What a shame we let ourselves
dig a ditch and we are still there.
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American CEO's groom them - get kick backs and higher less folks
to have those jobs - WE GOT NOBODY TO BLAME BUT OURSELVES
and those in OFFICE who allowed it to happen!
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Boats