CEO's $40K Dinner With Xi Jinping: A New Way Of Establishing US-China Business Relations?

In a bid to secure a $69 billion deal, Broadcom Inc. AVGO CEO, Hock Tan, shelled out $40,000 to dine with China’s President, Xi Jinping. This dinner, held during Jinping’s recent meet-up with American business magnates in San Francisco, has sparked discussions over the future of U.S.-China corporate interactions.

What Happened: Tan’s costly dinner was aimed at getting the Chinese government’s approval for Broadcom’s takeover of software developer VMware, The Wall Street Journal reported. Since its announcement in May 2022, the deal has been hindered thrice by Chinese regulators.

In a surprising turn of events post the dinner, China gave the nod to Broadcom’s proposal, along with approving Mastercard Inc. MA to issue yuan-denominated cards in the country. These approvals are interpreted by some as China’s peace offering to U.S. firms amid the escalating geopolitical discord between the two countries.

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Following the dinner, Tan managed to secure a meeting with Chinese Foreign Minister, Wang Yi, to discuss the Broadcom-VMware deal. However, no comments were made by Broadcom or Mastercard on the issue.

Eric Zheng, president of the American Chamber of Commerce in Shanghai, warns against viewing these approvals as a new norm. He emphasized that these are isolated cases and should be evaluated in the broader context of bilateral relations. He also noted the importance of business activities adhering to existing laws and not becoming politicized.

While Mastercard gained much-coveted access, Boeing Co. BA continues to be shunned, with China refraining from buying passenger planes from the company since 2017. Despite the recent approvals, many business leaders caution that China still needs to do more to reassure multinational companies of their business-friendly stance.

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