Fast-food chains are the exception as U.S. companies pull back from China

Shoppers walk by a Starbucks cafe at an outdoor shopping mall in Beijing on Saturday. “As you try to interpret the signals from McDonald’s and Starbucks” and other chains, says Phil Levy, chief economist at the supply chain management firm Flexport, “note what the industries are: These are not high-tech burgers.’’ And while some U.S. companies are increasing investments in the world’s second-largest economy, overall foreign investment began falling this year. Commerce Ministry spokesperson Shu Jueting said recently, “The U.S. side has repeatedly politicized economic, trade and technology issues and overstretched the concept of security, abused export control measures, and restricted trade and investment in China by its own enterprises, which is forcing enterprises to give up opportunities in the Chinese market and opportunities for win-win cooperation.” A survey released in September by the U.S.-China Business Council, which represents American companies in China, suggested that the uncertainty has taken a toll: 43% of its members said China’s business environment had deteriorated in the past year, and 83% said they were less optimistic about China than they had been three years ago. “We believe there is no better time to simplify our structure, given the tremendous opportunity to capture increased demand and further benefit from our fastest-growing market’s long-term potential,” McDonald’s CEO Chris Kempczinski said as the Chicago-based company announced in November it was increasing its minority 20% ownership of its McDonald’s licensed stores in China, Macau and Hong Kong to 48%. “It’s not like you’re investing in an auto plant or some kind of machine shop.” China’s vast market is vital for many foreign companies: At their annual investors day gathering this month, McDonald’s executives noted that 70 million of the 150 million customers active in its customer loyalty program are in China.