Desmond Shum, a prominent businessman in China, utilized his strong connections with top government officials to establish a successful property development company during a prosperous era for entrepreneurs in the mid-1990s.
However, current discussions are dominated by tensions between China and the West, as highlighted by Treasury Secretary Janet Yellen’s criticism of China’s treatment of American companies during her recent visit to Beijing.
Amidst these developments, Mr. Shum left China in 2015 due to increased state control under the leadership of Xi Jinping. His former wife, Duan Weihong, also known as Whitney, disappeared two years later, possibly detained by Communist Party officials linked to a corruption case.
In his 2021 memoir, Mr. Shum sheds light on their rise, fall, and the complex realities of business in China. While some details remain unverifiable, his significant involvement at the intersection of business and politics is undeniable. He currently resides in Britain with their son, unable to visit China due to safety concerns.
Mr. Shum is scheduled to testify before Congress next week, focusing on the challenges faced by U.S. businesses operating in China. The following interview has been condensed and edited for clarity.
In what ways have things changed since the publication of your book?
Firstly, there has been a noticeable shift in the public perception of China, largely influenced by the negative impact of the Covid pandemic. This has expedited policymakers’ approach to dealing with China.
Secondly, the outside world tends to underestimate the severity of the economic decline in China. Conversations with Chinese businesspeople have revealed shocking insights, such as reduced milk consumption and an increase in internal theft due to a bleak economic outlook.
How does this affect governance and business?
These factors contribute to the growing sense of insecurity within the Chinese Communist Party, leading to tighter control measures implemented during the pandemic. Consequently, there have been raids on due diligence firms with Western ties and restrictions on access to Chinese data provider, Wind, as part of an effort to assert control over foreigners.
How are international companies adapting?
Most companies are actively reducing their dependence on China. This tendency is not just about “deglobalization,” but rather a shift towards “reglobalization minus China.” While no single country can replace China, operations are expanding to countries like Vietnam, Indonesia, Sri Lanka, and India. Additionally, there is a significant influx of Taiwanese manufacturers into Mexico, and the concepts of friendshoring and nearshoring are gaining momentum in Europe.
Does the U.S. approach, combining tough rhetoric with a desire for dialogue, complicate matters?
Despite variations in tone between the Trump and Biden administrations, there has been general consistency in U.S. policy towards China. Any slight changes do not alter China’s perception of the firmly established U.S. view. China seeks to alleviate tension to revive business confidence and attract more capital. If they can delay or mitigate U.S. measures, they will do so.
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