In the relentless pursuit of profit margins, many American corporations have turned a blind eye to the geopolitical risks of doing business in countries ruled by despots. They justify it with spreadsheets and quarterly earnings calls, but what they fail to understand—or conveniently ignore—is that authoritarian regimes are only loyal to their own survival. When the day comes that your factory becomes more useful to the regime than your contract, don’t expect a thank-you card. Expect a takeover.
History is littered with examples of nationalized industries, seized assets, and foreign investors left empty-handed. And if you think it can’t happen again—especially with rising tensions in Asia, Africa, and Latin America—you’re not just naïve. You’re gambling with America’s economic security.
Let’s walk through some hard lessons from the past—and a few from the present that should keep any sane CEO awake at night.
Chapter 1: Nationalization Isn’t a Relic of the 20th Century
Let’s start with what every MBA program should tattoo onto their course catalogs: authoritarian regimes do not respect private property rights when national interest or political expediency is involved.
Cuba, 1959–1960: After Fidel Castro’s revolution, Cuba nationalized over $1 billion worth of U.S. assets. Companies like Coca-Cola, Texaco, and United Fruit had their factories, sugar mills, and facilities seized outright. [Source: U.S. Department of State, Foreign Claims Settlement Commission]
No compensation. No appeal. Just a new sign hung on your gate overnight and a polite notice from the Communist regime: “It’s ours now.”
Iran, 1979: After the Iranian Revolution, the new Islamic Republic seized U.S. oil company assets, banks, and other businesses. Billions in contracts and infrastructure were erased in the blink of an eye, and the hostage crisis was just the beginning of Iran’s hostile economic shift. [Source: Council on Foreign Relations]
Venezuela, 2007–2012: Hugo Chávez’s Bolivarian Revolution brought a new wave of nationalizations—particularly in oil and telecommunications. ExxonMobil and ConocoPhillips lost multibillion-dollar assets virtually overnight. In 2012, the World Bank’s arbitration court awarded Exxon a fraction of its losses. Good luck cashing that check. [Source: Reuters, “Venezuela pays ExxonMobil $255 million for seized assets”]
Argentina, 2012: The government of Cristina Fernández de Kirchner nationalized YPF, an oil company majority-owned by Spanish firm Repsol. Repsol only got partial compensation after lengthy international arbitration. [Source: BBC, “Argentina seizes control of YPF oil company from Spain’s Repsol”]
Chapter 2: Red Flags Are Still Waving
Even today, foreign investors are learning the hard way that dictators don’t care about contracts. What matters is power.
Russia, 2022: After Putin invaded Ukraine and Western countries imposed sanctions, Russia passed laws allowing it to seize the assets of companies from “unfriendly” countries. McDonald’s, Starbucks, and many others found their stores shuttered or handed over to state-backed entities. McDonald’s had over 800 restaurants in Russia. Now? Gone. Rebranded as “Tasty and That’s It.” [Source: CNBC, “McDonald’s to leave Russia altogether”]
And if you think Russia is an anomaly, think again. It’s a playbook.
Chapter 3: China—The Greatest Risk of All
Now let’s talk about the elephant in the supply chain: the People’s Republic of China. American companies have been betting on cheap labor and massive infrastructure since the 1990s, hoping geopolitics wouldn’t get in the way. But now, that bet looks increasingly suicidal.
Taiwan Invasion Risk: If China invades Taiwan—a scenario that experts at RAND, the Pentagon, and CSIS warn is increasingly possible—do you really think the CCP will let Apple or Tesla continue operating as usual?
In wartime, manufacturing facilities are strategic assets. It’s not a question of if they’ll seize your plant. It’s how fast.
Legal Infrastructure for Seizure: The Chinese government already has tools in place. The 2020 “Unreliable Entity List” allows Beijing to sanction or seize assets from foreign firms it deems hostile to national interests. The 2017 National Intelligence Law compels all Chinese firms (and any foreign firms operating within China) to assist in intelligence gathering upon request. [Source: Congressional Research Service]
If you’re building your products in China, you’re already working with the party—whether you signed up for that or not.
Data and IP Theft: Let’s not forget the other quiet confiscation—your intellectual property. From Huawei to TikTok, from drones to chip designs, Chinese entities have been accused of copying or outright stealing American innovation. And American companies, desperate to stay in the market, often turn a blind eye.
The New York Times reported in 2023 that “more than 75% of U.S. companies operating in China reported significant intellectual property losses or pressure to transfer technology in exchange for market access.”
Chapter 4: The Moral Hazard and the Political Blowback
Let’s set aside the economic risk for a moment and consider the moral cost.
Manufacturing in countries that imprison dissidents, censor speech, and operate forced labor camps is not just a branding risk—it’s an ethical failure. Companies that promote “equity” and “justice” at home but turn a blind eye to Uyghur forced labor in Xinjiang deserve every bit of public scorn.
Nike. Apple. Coca-Cola. All have been implicated in lobbying Congress against the Uyghur Forced Labor Prevention Act. Why? Because verifying their supply chains might hurt the bottom line. [Source: Axios, “Big corporations lobbied to weaken Uyghur labor bill”]
You can’t have it both ways. You can’t put a rainbow logo on your Twitter profile in June and then outsource your supply chain to a regime that criminalizes LGBTQ expression the other 11 months of the year.
Chapter 5: What Happens When the Tide Turns?
Let me remind every boardroom in Manhattan, Palo Alto, and Seattle: the Cold War didn’t end because the Soviets became nice. It ended because we stopped funding their tyranny with Western capital.
Now we are at the beginning of a new Cold War—this time with China and a handful of their client states. If you think Washington will let this slide forever, think again.
Bipartisan legislation is already being drafted to limit sensitive technology exports, subsidize onshore semiconductor production (see the CHIPS Act), and penalize companies doing business in authoritarian states. [Source: U.S. Congress, CHIPS and Science Act of 2022]
The future is clear: a new era of “ally-shoring” is coming—where supply chains are moved to friendly nations or back to the U.S. entirely. And companies that fail to pivot will find themselves on the wrong side of both history and policy.
Conclusion: The Price of Cheap Could Be Everything
To the corporate leaders still clinging to your made-in-China spreadsheets and Venezuela-lite margins, I have this to say:
Your plant is only yours until the regime says otherwise.
Your contracts are valid until the dictator wakes up in a bad mood.
Your intellectual property is protected until it isn’t.
If you want to do business under despots to save a few bucks, don’t expect American taxpayers to bail you out when things go south. Don’t expect the U.S. Navy to protect your cargo ships. And don’t expect public sympathy when your brand becomes a punchline.
We’ve seen this movie before—in Havana, in Caracas, in Tehran, in Moscow.
And if you think Beijing won’t write the sequel, you’re not just wrong. You’re already late to the credits.
It’s time for American companies to wake up. To repatriate their manufacturing, or at the very least move it to democratic allies. Because if you build your empire on land leased from tyrants, don’t be surprised when they decide to keep the castle.
Sources:
- U.S. Department of State – Foreign Claims Settlement Commission Reports
- Council on Foreign Relations: Iran-U.S. Business Relations
- Reuters, “Venezuela pays ExxonMobil”
- BBC, “Argentina seizes control of YPF”
- CNBC, “McDonald’s to leave Russia”
- RAND Corporation – Taiwan Conflict Scenarios
- Congressional Research Service Reports on China
- Axios – Uyghur Labor Prevention Act Lobbying
- CHIPS and Science Act of 2022 – U.S. Congress
Carolyn Spencer is a columnist for Direct Line News. Contact at Carolyn.Spencer@mcgopclub.com
Direct Line News is a Maryland-based free-access publication committed to the Republican reform tradition.
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