Why foreign companies are betting on long-term success in China

Ding Gang

The findings of a Wednesday-released report from the American Chamber of Commerce on the state of business in southern China reveals a fascinating trend: Despite ongoing geopolitical tensions and weakened confidence in the future of China-US relations, American companies are reinvesting in China. They are expanding operations in the world’s second-largest economy and aiming for more outstanding market share.

But why is this happening? Is it just because of the size of the Chinese market? The answer is simple: While the market size is undoubtedly a factor, the real reason runs deeper.

Without the cooperation of Chinese manufacturing, some of the most iconic American industries and globally leading high-tech products would struggle to survive. Take a closer look at the rapid evolution of Chinese manufacturing in recent years, and you’ll see that the US and Chinese industries have developed a unique relationship of “having complementary advantages and moving forward together,” offering a promising future for both parties.

Let’s start with a story that perfectly illustrates this point. US tech company Apple is set to launch its highly anticipated iPhone 16e series on February 28, and China’s BOE Technology Group will supply over 15 million flexible LTPS OLED displays for the lineup. This milestone marks a significant breakthrough for the Chinese company, solidifying its position as a major player in the high-end OLED display market. BOE has not only caught up with traditional giants like Samsung Display and LG Display, but in some areas, it has even surpassed them.

However, this success didn’t come without challenges. Back in 2021, BOE attempted to supply Apple with OLED screens, but only secured a small batch order due to issues with production stability and yield rates.

Nonetheless, over the years, through sheer determination and relentless effort, the Chinese display panel manufacturer finally met Apple’s demanding standards and, in the process, significantly improved its own technological capabilities.

This story demonstrates why foreign companies can’t simply walk away from China: China is the only place where cutting-edge technological requirements can be broken down into scalable manufacturing processes.

For decades, the prevailing narrative was that foreign companies couldn’t leave China because of its massive market. However, the Apple-BOE story offers a new perspective: China is not just a market for foreign companies; it is their “technological survival partner.”

China’s supply chain ecosystem covers every step of the production process, from raw material procurement to semi-finished goods processing to precision mold manufacturing. Most importantly, these processes are constantly being upgraded and integrated.

What sets Chinese manufacturers apart is their ability to “follow orders” and their capacity to drive independent innovation through partnerships with foreign companies. Chinese manufacturers can quickly adjust their processes and respond to shifts in market demand or upgrades. Their adaptability and commitment to innovation make them reliable partners for foreign companies and this partnership cannot be easily severed by policy or replaced by a single alternative market.

Washington has called for companies to “decouple” from China, but business leaders understand that leaving China entails more than just losing access to its market. It also means sacrificing supply chain efficiency and technological partnerships – losses that can’t simply be offset by “adjusting operations.”

Companies like Apple and Tesla choose China not merely for short-term convenience, but because it fosters global industrial specialization. This is not something that can be replaced by policy or replicated elsewhere.

As China continues its push toward manufacturing upgrades, this relationship will become more substantial and inseparable. For American companies, staying in China is not just a choice – it’s a necessity.

The writer is a senior editor with the People’s Daily, and currently a senior fellow with the Chongyang Institute for Financial Studies at the Renmin University of China