The Chinese regime’s stringent zero-tolerance policy toward COVID-19 has scared foreign investors away from China, according to international law attorney Dan Harris.
“The way China handled COVID-19 scared the heck out of a lot of people,” Harris, founder of law firm Harris Bricken and co-editor of China Law Blog, recently said in an interview with NTD news, an affiliate of The Epoch Times.
“They’re terrified. They see what’s happening in China. And they worry, and many of them believe things are only going to get worse, even much worse,” he added.
He referred to one of his clients who had two factories in China, saying, “they have not gotten a single product since January.”
Analysts at Japanese bank Nomura estimate that 26 Chinese cities were implementing full or partial lockdowns or other COVID-19 measures as of May 23, accounting for 208 million people and 20.5 percent of China’s economic output.
After more than two months of heavy restrictions, the financial hub of Shanghai lifted its lockdown on June 1 but in Harris’s opinion, disruption to manufacturing would persist as “China is not going to change its zero-COVID policy for political reasons and medical reasons.”
As a result, given the long-term risks associated with such a policy, quite a lot of companies have been looking for other destinations such as Vietnam and India, the attorney said.
“For most of them, it’s difficult. For some of them, it’s impossible. And for many small companies, the cost of leaving is just very high relative to their revenues,” Harris said.
Even though Vietnam has advantages over China given its lower rate of intellectual property theft, fewer employee problems, and lower overall costs, Harris pointed out that companies looking to the Southeast Asian country still face numerous challenges.
“Vietnam does not have the same infrastructure as China,” Harris said. “It doesn’t have the same logistics as China.”
“A lot of companies that move into Vietnam still need to get components from China, and shipping components from China to Vietnam increases costs,” he added.
“That’s why there is no country that’s perfect for every company.”
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