serious. If a divestment really occurs, the outcome facing American and Japanese companies is to lose far more than win.
We analyze from two perspectives: manufacturing and market.
① Manufacturing end
First, withdraw the company to its home country and re-manufacture its production capacity.
There is a huge price to pay for building manufacturing capacity, one is the cost of time and the other is the cost of capacity. Coupled with the two factors of the industrial chain and industrial workers, if you want to recover, the cost will be relatively high.
Second, after the withdrawal of the home country, due to rising costs, the sales price will inevitably increase, and the welfare of the domestic consumers will be affected.
If you move to other developing countries, on the one hand, the industrial cluster is incomplete, and the industrial chain will take a long time to build up, and you cannot get rid of the dependence on Chinese companies in a short time;
On the other hand, the quality of the local labor force is far less than that of Chinese workers, and the cost is not necessarily low, so it is not cost-effective to withdraw from the manufacturing side.
② Market side
Obviously, the cost of multinational companies ignoring the Chinese market must be very high.
Multinational companies withdraw their factories and sell their products to China through imports. Among them, tariffs and the high cost of manufacturing in the United States will lead to higher product prices and weaker market competitiveness.
Assuming extreme circumstances (which you don’t want to see, and unlikely to happen), US and Japanese companies withdraw all their capital, and China prohibits the import of their goods. You can imagine how much damage this would cause to the divested multinational companies.
As long as the demand in the Chinese market is still there, there must be room for the market to withdraw. This will be a huge development opportunity for Chinese companies and an opportunity for other multinational companies outside the United States and Japan.