Multinationals are exiting China in record numbers — and much of this is due to geopolitical uncertainty. But not all failures can be blamed on politics; poor strategic choices are also to blame. Too many multinational companies start by targeting China’s rich urban markets. But as a few, such as chip manufacturer AMD, have discovered, along with many of China’s most successful homegrown companies like Pinduoduo, starting in China’s rural communities cities may be a better entry strategy.
Multinationals have begun exiting the Chinese market in record numbers, including LinkedIn and Carrefour after a respective eight and 24 years of operations. Many others, Walmart and McDonald’s among them, are selling big stakes in their Chinese operations and closing stores.
There are some obvious reasons for this, of course: the growing political and economic frictions between China’s superpower ambitions and the traditionally dominant Western capitalist…
This article was written by Christopher Marquis and originally published on hbr.org