Leaders worry about Trump's policies, warn that they are hurting business and investments

DAVOS, Switzerland (Reuters) – From center stage in Davos last year, President Donald Trump told business leaders around the world that America is a great place to invest. It's not exactly like that.

Foreign Direct Investment to the United States Decreased in 2018, and Business at the World Economic Forum in the Swiss Alps this year is concerned about Trump's trade war with China, which will further curb the global economy and business investment.

A key complaint here this week: More and more consumer-dependent companies in China have had to reduce their revenue prospects with the slowdown in the world's second-largest economy.

And while the US administration has cut taxes and regulations to attract new investment, a wave of caution prevails in many sectors in the United States.

"The trade war has been very damaging to the US agricultural economy," said David MacLennan, general manager of US food and agriculture giant Cargill Inc., which announced worse-than-expected results in China earlier. in January.

"The longer it lasts, the worse it gets," he told Reuters.

According to the United Nations Conference on Trade and Development (UNCTAD), foreign investment in the United States, which includes cross-border mergers and acquisitions and intra-corporate loans, has fallen by about 18% in 2018 by compared to the previous year.

This equates to the annual decline of 19% in foreign investment worldwide. But this is notable given the deregulation and tax cuts that would otherwise have fueled foreign investment. In Davos last January, many leaders announced their intention to spend money in the United States in 2018.

While the US trade agency attributed global and US declines to US and Chinese tariffs imposed by the United States and China since mid-2018, foreign investment in China increased by 3% last year compared with the previous year. the previous year. Foreign investment in India increased by 7%.

Alan Jope, director of the consumer goods company Unilever (ULVR.L), said the US remains a good market for its products, including Dove deodorant, Magnum ice cream and Lipton tea.

But it's China where Unilever partnered last year with the online trading giant JD.com (JD.O) to move its products in the country, which has become the most resistant market.

Jope said that China was "one of our most reliable sources of growth. China offers a new stability to consumption. "

RIPPLE EFFECTS

The US-China trade war has hit industries all over the world in recent months.

Large Chinese companies such as Alibaba (BABA.N) have reduced their investment projects in the United States. The Taiwanese company Foxconn (2354.TW) has reduced its factory projects in Wisconsin and Chinese automaker GAC Motor has also delayed its entry into the US market.

In September, Austrian fiber producer Lenzing suspended its expansion in the United States because of higher tariffs between the United States and China.

Chinese exports of textiles to the United States are among the products subject to tariffs. Lenzing has launched a $ 322 million project in Alabama to focus on setting up a new production facility in Thailand.

Certainly, foreign companies continue to invest, especially in the automotive industry.

Volkswagen (VOWG_p.DE) announced earlier this month that it would invest $ 800 million to build a new electric car at its Chattanooga, Tennessee facility. Toyota and Mazda are working on a new badembly plant, while Daimler and BMW are investing in existing operations.

But the economic malaise caused by rising trade flows is hitting hard-tech companies because of both the disruption of the supply chain and the economic slowdown in China.

Apple (AAPL.O) warned of disappointing quarterly revenues, citing slowing demand for the iPhone in China. Samsung Electronics Co Ltd (005930.KS), the world's largest maker of smartphones and chip maker for other smartphone makers, including Apple and Huawei, said its fourth quarter earnings would likely have fallen 29 percent.

"In the long run … I'm afraid the trend will spread to many other countries and industries, and at that point … we'll all be negatively affected," said Ken Dav, vice-president of President of Huawei Technologies, China, Davos.

Huawei, the world's largest producer of telecommunication equipment, "is probably suffering the most now," because it relies on highly integrated and globalized supply chains, Hu said.

TRUMP LOOMS LARGE

As a result of this disruption, the trade war between Trump and Chinese President Xi Jinping weighs heavily on Davos this year, although no man is present.

The International Monetary Fund on Monday lowered its global growth forecast and a survey conducted by the auditing and accounting giant, PwC, among 1,400 executives, revealed growing pessimism among chiefs of finance. business.

PwC research has shown that 27% of executives outside the United States consider the United States as the first country with the highest growth potential, compared to 46% in 2018.

It's not just the economy that darkens the sky. Stuart Eizenstat, former United States Ambbadador to the European Union (EU), said Stuart Eizenstat, former United States Ambbadador to the European Union, to foreign, mainly Chinese, companies at the conclusion of agreements with the United States. now head of international practice at Covington & Burlington LLP.

CFIUS is an internal working group that examines acquisitions for reasons of national security.

The Chinese group Sinochem, which is in talks to merge ChemChina to create the world's largest industrial chemicals company, said it did not think it could win an acquisition in the US in the current context.

"You know what's happening today, so you'll find that foreign investment will be less important," said Sinochem President Ning Gaoning.

"The Chinese are more and more confused. They thought they were invited to invest in other countries. Now they realize that they are not always welcome. "

Takeshi Niinami, director of Japanese brewer Suntory Holdings Ltd, told Reuters in an interview that the world has "very big emotional leaders," including one in Washington.

"Davos is an organization that works with one voice, one message (which says):" Go, you have to be rational, "he said." It's the companies that should let them cool. "