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Skip to main contentFebruary 26, 2025
The problem: Business leaders in the US and China are facing an uncertain economic and political landscape over the next four years.
Why it matters: The two countries are in vastly different positions than they were eight years ago, and an escalation of tensions could hurt them both.
The solution: Experts say there are opportunities for collaboration in the form of partnerships, joint ventures, and even acquisitions in certain sectors.
It’s the one word that makes business leaders anxious, and it’s the one word that keeps coming up in discussions of the relationship between the United States and China: uncertainty.
As the new US administration enacts an ambitious domestic and foreign-policy agenda, the tension, competition, and security concerns that arose between the two countries eight years ago have not only remained but have also escalated. Witness the panic among investors after a Chinese company emerged to challenge US supremacy in generative AI, for instance. “Business leaders know there’s not going to be any certainty for a while between the US and China,” says Audrey Tan, Director of the Asia Pacific region for Korn Ferry. She says strategic competition is more likely in the near term as the two countries compete globally. “Leaders hope that the worst is behind them, but they are adjusting to uncertainty as the new normal.”
Both countries are in vastly different positions than they were in 2016. After years of hyper-growth, their respective economies are both leveling off, with the US’s projected to grow around 3 percent this year, slightly behind China’s, at 4 percent. China is exporting more, by about 6 percent last year to $3.6 trillion, in part to stay ahead of US tariff threats—which creates an opportunity for both sides to find mutual business interests. “Neither country is in a clearly stronger position than the other,” says Daniel Balazs, who studies Chinese foreign policy and other topics as a research fellow at the Nanyang Technological University in Singapore.
Indeed, despite the rhetoric around tariffs, sanctions, and national security, the leaders of both countries have signaled a willingness to find common ground. China’s large and aging population relies on healthcare, agricultural, and food products from the US, for instance. Potential tariffs on Chinese goods exported to the US have fallen from an opening salvo of 60 percent to 10 percent. Balazs says that this move—which comes in the wake of the US’s relocating of its former Chinese supply chains and operations—is meant to signal to American businesses that the country wants them back. On the US side, he says the takeaway is that the US wants Chinese investments to help create jobs. “Each side has something that the other wants,” he says. “China is open for business, while the US is open to making deals.”
Experts say the possibility of compromise can unlock hidden business opportunities in both countries. Here are some areas that stand to benefit from a more cooperative relationship over the next four years.
Nowhere is the interdependency between the US and China more evident than in the auto industry. While US auto companies rely on Chinese manufacturing for production, China (which doesn’t rely on the US to produce its cars) would like to sell more of their brands in the US. China is the third-largest market for American automobile exports, with $5.5. billion in sales a year, but for now, the US is only a small part of the Chinese export automobile market.
Georgetown University teaching professor Arthur Dong says opportunities for automakers in both countries hinge on a combination of consumer demand and regulatory policy around electric vehicles. China accounts for about 60 percent of the global EV market, with sales this year expected to overtake those of gas-powered cars. Despite the pullback in EV production, US automakers could look to growing demand in China to boost sales.
Similarly, even though the new US administration revoked the previous administration’s mandate that EVs must account for 50 percent of all car sales by 2035, tax and other incentives to drive EV sales are still in place and consumer demand for EVs in the US is growing, albeit from a small base. Last year, 1.3 million EVs were sold, a 7 percent increase from 2023 and the highest annual total ever. “China would love to penetrate the US market in EVs,” says Tao Li, leader of Korn Ferry’s Industrial practice in Greater China based in Shanghai. Among the ways Chinese automakers can do that, he says, are by increasing exports, building manufacturing capabilities in the US, and partnerinbased in Shanghaior acquiring a US automakerbased in Shanghai. a US automaker.
If the automotive sector is an example of US-China business interdependence, the technology sector represents the most obvious area of derisking, if not decoupling, between the two countries. Companies operating in certain parts of the technology sector—such as semiconductor manufacturers, data-driven businesses, and applications both commercial and military—will undoubtably be in a difficult position due to national security and other concerns.
But experts say opportunities do exist for consumer-facing, cloud-computing, and even AI companies. They point to the ban and restoration of social-media platform TikTok as an example of how the two countries are trying to find points of compromise. Li says joint ventures, partnerships, and licensing deals can help both US and Chinese technology companies navigate regulatory challenges and trade restrictions in their respective markets. Moreover, the massive Chinese market for storage and computing power could create opportunities for US firms operating there in those sectors. As evidenced by the rise of Shein and Temu, Chinese e-commerce platforms are relying for growth on strong consumer spending in the US.
Moreover, despite restrictions on foreign investments, companies in both countries would benefit from more robust funding. In China, for instance, start-ups have sharply declined, from more than 50,000 in 2018 to about 1,000 last year. In the US, venture-capital and private-equity firms are sitting on a record amount of cash—roughly $2.5 trillion at last count—that needs to be put to work. Norman Zhou, a managing director in Korn Ferry’s Professional Search practice in China, says companies from both countries are operating with more caution and delaying decision-making because of the higher risk levels. “Securing funding is more difficult, but not impossible,” he says.
Over the last eight years, few sectors in the US-China relationship have been transformed as much as manufacturing has. Trade sanctions, tariffs, and the pandemic have all combined to radically alter the manufacturing landscape. In their efforts to mitigate supply-chain disruption, US companies have brought manufacturing back home or shifted it to countries like India, Vietnam, or Thailand. The Chinese government, seeking to focus manufacturing domestically, has enacted a combination of stimulus and regulatory policies, such as the “Made in China 2025” and “Green Manufacturing Upgrade” initiatives, notes Joyce Gong, a senior client partner in the Global Industrial and Consumer Markets practice sought to bolster partnerships with emerging countries and markets outside the US. “Uncertainty, and the need to create jobs, has led both countries to grow domestic manufacturing capabilities,” says Gong.
Given that they are the world’s top two manufacturing leaders—China accounts for about 30 percent of the world’s output, and the US about 16 percent—a complete withdrawal of one country from the other is impossible. “Despite trade and security tensions, China and the US are still highly dependent on each other for manufacturing,” says Kevin Zhang, a professor of economics at Illinois State University who focuses on international trade and the Chinese economy. He cites several possible drivers of collaboration, including the need for both countries to create jobs, as well as possible (if not likely) joint ventures and mergers and acquisitions between US and Chinese companies. Gong agrees, saying that in the medium to long term, “China and the United States may form a pattern of competition and coexistence in manufacturing.” The sectors that could benefit include biotechnology, healthcare and pharmaceuticals, and renewable energy.
Consumer behavior in the US and China differs radically, which presents both challenges and opportunities for consumer companies in both countries. Consumer spending in the US remains robust and confidence in the economy is still high, despite a recent dip. Conversely, even with a spending surge during the Lunar New Year, Chinese consumers have been in saving mode, maintaining a dour outlook on the economy. For instance, a recent Korn Ferry survey showed that 88 percent of consumer-goods CEOs in China are either neutral or pessimistic about the outlook for their sector this year. “The focus in China has been on getting consumers to spend,” says Claudia Wu, leader of Korn Ferry’s Consumer practice in Asia Pacific.
Though US and Chinese consumers are at opposite ends of the spending spectrum, opportunities can be found in the vast ground between them. For instance, though luxury brands declined by 10% to 20% in China in 2024, they grew decently in the US. Chinese consumers spent money on necessities instead of luxury brands, giving fast-moving consumer-goods companies a major boost. Fifty-two percent of fast-moving consumer-goods companies grew revenue last year, according to Korn Ferry’s survey, while 45 percent of traditional retailers saw revenues decline. Illinois State University’s Zhang says rising middle-class wealth rising patriotism in China can also benefit strong brands domestically. For their part, US consumers, particularly 18- to 24-year-olds, are heavily influenced by social media and price point, creating opportunities for Chinese companies—from Lenovo to TikTok to Shein—to gain market share from US counterparts.
Reciprocal tariffs can also benefit consumer-goods companies in their home territories by reducing competition and providing a price-point advantage. Further, Chinese companies can establish manufacturing facilities and autonomous operations in the US, and vice versa, to circumvent tariffs and fuel growth. “This is a real opportunity for consumer-goods leaders to show they can adapt to market uncertainty and master cyclical volatility,” says Wu.
Due to the aging population of both countries, life sciences may be the most fruitful sector for US-China collaboration over the next four years. To be sure, earlier this year, the two countries renewed an agreement governing scientific cooperation on research and data sharing in critical areas, like drug development and biotechnology. In particular, potential exists for partnerships and other ventures in healthcare services—in areas such as chronic disease management, biotechnology innovation, medical-device development, and more—says Jonathan Zhu, APAC regional managing partner of the Global Life Sciences practice for Korn Ferry. Industry experts and financial analysts go one step further, predicting cross-border merger-and-acquisition activity between the two countries will pick up in 2025. Recently, for instance, a Chinese life-sciences company sold two manufacturing facilities, one to a US counterpart and another to a US private-equity firm.
Heavy research-and-development costs, strict regulations, and differences between the Chinese and American healthcare systems also open avenues for life-sciences companies in both countries to work together to share costs, navigate policies, and deliver care, say experts. Or, as Zhu says, “Life-sciences companies in the US and China are more aware of each other’s markets, and know that they need local organizational support, local relationships, and local talent to drive growth.”
For more information, contact Audrey Tan at audrey.tan@kornferry.com;Tao Li at tao.li@kornferry.com; Norman Zhou at norman.zhou@kornferry.com; Joyce Gong at joyce.gong@kornferry.com; Claudia Wu at claudia.wu@kornferry.com; or Jonathan Zhu at jonathan.zhu@kornferry.com.
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