Search
 
Analysis

New Foreign State Immunity Law Opens Door for China to Target Foreign Businesses

Unexpected geopolitical shifts can have disastrous consequences for businesses operating abroad. China’s new Foreign State Immunity Law may exemplify the risks.

By Benjamin Qiu & Sam Goodman | October 06, 2023 at 09:00 AM

“What makes you think we’re a German company?”

A Volkswagen AG executive was alleged to have asked this question at a recent private roundtable in the context of a discussion about de-risking the car manufacturer’s supply chain from China. The comment hints at the fact that around 25 percent of Volkswagen is owned by foreign institutional investors, and another 15 percent is owned by the sovereign wealth fund of Qatar. Of course, to some, the dismissive remark ignored the elephant in the room—that 25 percent of Volkswagen and 21 percent of the company’s voting shares remain in the hands of the German state of Lower Saxony.

Nearly half of Volkswagen’s annual earnings come from China, so the Lower Saxony government and its constituents could face significant negative consequences if Chinese laws stopped protecting their presumed rights. The problem isn’t hypothetical: China’s new Foreign State Immunity Law may end up intensifying de-risking discussions in the West.

NOT FOR REPRINT

© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

 

Recommended Stories

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2023 ALM Global, LLC. All Rights Reserved.