Donald Trump risks big fight with US business over quit China order

US President Donald Trump risks picking a fight with the most powerful names in business, from Walt Disney Co. to Apple Inc., should he formally order American companies out of China as part of his trade war.

Trump and his aides argue he has the right to eject American firms from the world’s largest consumer market. In a tweet Friday, the president told US companies “to immediately start looking for an alternative to China.”

There are major doubts over the feasibility of such an order. While some US businesses have already moved manufacturing from China to Southeast Asia, most have no intention of abandoning the $14 trillion. A presidential edict to do so would unwind decades-old supply chains, reverse tens of billions of dollars of investments and wipe out a major growth opportunity.

“This is not a market from which American companies can withdraw,” said Ker Gibbs, president of the American Chamber of Commerce in Shanghai.

Here are some of the biggest brands with the most to lose:

Walt Disney

Disney has a bricks-and-mortar commitment to China: Shanghai Disneyland, a joint venture with the city government, opened in 2016. And it’s growing, with Disney announcing in January plans for a Zootopia-themed land based on the hit animated movie. So far, the trade war hasn’t hurt business at Shanghai Disneyland, Disney said earlier this month.

Caterpillar Inc.

Major sanctions by Trump’s administration could endanger profit growth at a company long-considered a bellwether for the US economy. The heavy equipment maker has factories in cities throughout China, where it makes tractors, soil compactors and other equipment to feed the country’s huge infrastructure push. With Caterpillar facing major competitive pressure in China, dealers this year have reported slumping sales.

Nike Inc.

Even after diversifying its supply chain, Nike depends on Chinese factories for many of its products, especially those it sells in China. That market has outperformed for Nike, and a forced pullback would benefit arch-rival Adidas AG and local competitors Li Ning Co. and Anta Sports Products Ltd. It would be especially painful for Nike at a time when Chinese demand is likely to grow in the runup to the 2022 Winter Olympics in Beijing.

Apple Inc.

Apple designs and sells most of its products in the U.S., but imports them from China after assembly. It’s a supply chain that has helped pump out hundreds of millions of devices, making the company one of the most profitable in the world. Apple gets about a fifth of its revenue from China.

Starbucks Corp.

The coffee giant has been in China for 20 years and any exit from what it calls its “second home” would be a major upheaval. Amid concern that the US is already saturated, Starbucks plans to more than triple its revenue in China by opening a new store every 15 hours through 2022. The company has more than a 50% market share in China and is targeting 6,000 stores by 2023.

Tesla Inc.

China is Tesla’s biggest market after the US and the world leader in vehicle electrification. Tesla is plowing billions of dollars into a factory on the outskirts of Shanghai -- partly to avoid import taxes on U.S.-built vehicles. The company is targeting production of half a million cars over the next 12 months from the new Chinese plant, depending on how quickly output ramps up, the company said in July.

Boeing Co.

China is on track to surpass the US as the world’s biggest air travel market in about 2022, and China will need 7,690 new planes worth $1.2 trillion over the next two decades, Boeing said last year. Boeing delivered the first 737 aircraft from a new completion facility in Zhoushan last December to Air China Ltd. Chinese authorities strive to maintain competition between Boeing and Airbus SE by buying planes from both manufacturers: Removing Boeing would hand the market to its French rival.

(The story has been published from a wire feed without any modifications to the text.)

First Published: Aug 26, 2019 17:12 IST