An economic slowdown at home has prompted Chinese firms to seek growth abroad, but the escalating US-China geopolitical tensions are getting in the way of doing business. Some are choosing to play down their connections to China. A few have gone too far.
The latest absurdity came from fast-fashion e-commerce retailer Shein Group Ltd, founded in China, but now headquartered in Singapore. In a speech at the Milken Institute Conference last month, Shein executive chair Donald Tang claimed it was essentially an “American company,” even though most of its suppliers are in China.
Shein has been trying to downplay this remark, wary of Beijing’s wrath as it still needs a regulatory green light to go public in the West.
The urge to pigeonhole a company — where it is from and the industry it belongs to — can be as ignorant as asking immigrants where their loyalty lies. However, sometimes these questions do matter. For instance, pitching itself successfully as a tech firm rather than a real-estate agent, WeWork Inc at its 2019 peak commanded a US$47 billion valuation. It filed for bankruptcy last year.
In Shein’s case, one can see why the e-commerce giant might want to cleanse its Chinese-ness. The retailer needs to go public and give long-time venture backers, such as Sequoia Capital and General Atlantic, an exit. Already, some investors have gotten impatient, selling shares in private markets at deep discounts. Being seen as a Chinese company limits demand for the initial public offering, especially from US-based pension and endowment funds, or global investors wary of Washington’s economic sanctions.
Is it even possible to erase one’s Chinese features? TikTok, an important marketing venue for Shein, spent years trying to distance itself from its Beijing-based parent ByteDance Ltd. It established a US headquarters and its chief executive is Singaporean. The social video app still faces a possible ban under a new law in the US.
Even some companies with no Chinese origins are under scrutiny simply because they want to capitalize on the country’s technology. For example, Anzu Robotics’ founding partners are American, its headquarters is in Texas, its drones are assembled in Malaysia and run on servers sitting in Virginia. However, since Anzu licensed the drone design from Shenzhen-based DJI, and about half of its parts came from China, lawmakers are frowning upon the start-up’s business model.
Nor would it be wise to downplay one’s ties to China. In Shein’s case, its main selling point is the expansive supply chain there. It contracts with thousands of factories across the nation that churn out tens of thousands of new styles daily. Shein and Chinese rival Temu are now attracting more repeat shoppers than eBay Inc, largely because their products are cheap.
To be sure, the anti-China sentiment is real. These days, whenever I write something slightly critical about the US economy or showcase positive things in China, I get e-mails accusing me of being a spy for the Chinese Communist Party. This kind of vitriol was not at all present when I was living in the US in the 1990s and 2000s.
I do not mind these comments, but some Chinese are genuinely hurt. Businesspeople just want to make money and keep investors happy. They do not agree with Beijing’s high-stakes jostle with Washington and certainly do not want to be the victim of it.
Some are also running away from Chinese President Xi Jinping’s (習近平) “common prosperity” drive, and want a fresh start abroad. Conscious of the political environment, the first instinct for many is to keep their heads down and pretend they are not Chinese.
It is a mistake.
From electric vehicles to smart home appliances and cross-border e-commerce, Chinese companies are gaining market share because of their access to the vast industrial catalogue and efficient supply chains at home. That gives them an edge, so they might as well celebrate it. There is no shame in being Chinese.
Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. A former investment banker, she was a markets reporter for Barron’s. She is a CFA charterholder. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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