Desmond Shum is one of China’s most connected businessmen. She and her ex-husband, Duan Weihong, used their relationships with high-ranking government officials to build a multibillion-dollar property development company during a golden age for entrepreneurs beginning in the middle of the 1990s.
Today, tensions with the West dominate the discussion, with Treasury Secretary Janet Yellen sharply criticizing China’s treatment of American companies during a trip to Beijing this week.
Mr. Shum left China in 2015 as Xi Jinping, the country’s leader, insisted on greater state control of the country and its businesses. Duan, also known as Whitney, disappeared two years later. (It is believed that the officials of the Communist Party stopped him after a high-ranking political ally is held on suspicion of corruption.)
Mr. told Shum chronicles their rise and fall — and the dark reality of doing business in China — in his 2021 memoir. Many details cannot be independently verified but his role at the intersection of business and politics is certain. He now lives in Britain with the couple’s son (neither of whom has seen Duan since his disappearance) and says it is not safe for him to travel to China.
Mr. will testify. Shum next week Congress about the challenges for US businesses operating in China. This conversation has been shortened and edited for clarity.
What has changed since you published your book?
First, the perception of China has become more negative. Covid has a lot to do with changing public perception. That has helped to speed things up in terms of how policymakers deal with China — they now have water flow.
Second, the outside world underestimates how bad China’s economic slowdown is. Many things surprised me in my conversations with business people in China. A large dairy company produces more milk powder because people buy less milk. It’s usually one of the last things you cut.
Many executives also say that staff have been outright stealing and stealing from companies since the pandemic. Why? They have lost hope because the economic outlook is so bad.
How does it affect management and business?
This adds to the growing insecurity of the Chinese Communist Party, so the government is tightening control using measures it introduced during the pandemic. Business affected: Raids on Western-related due diligence companies and access restrictions Aira Chinese data provider, is part of an effort to control foreigners.
How are international companies adjusting?
Companies are drastically reducing their exposure. People talk about “deglobalization,” but the correct term is “reglobalization minus China.” You don’t have one country to replace China, but operations are spread across Vietnam, Indonesia, Sri Lanka, India and elsewhere. See how many Taiwanese manufacturers are moving to Mexico on a large scale. And then you have friendshoring and nearshoring in Europe.
Is US messaging — tough talk while also saying it wants to maintain dialogue — complicating matters?
After four years of Trump and three years of Biden, you can see a general consistency in China policy. A slight change or variation in tone will not affect China’s view that the US view on it is set. They need some de-escalation for the sake of reviving business confidence and bringing in more capital. If they can mitigate or delay US measures, they want to do so.