"Paying attention"- Shark Tank investor Mark Cuban discusses doing business with China during a 2019 interview

Billionaire entrepreneur and Shark Tank investor Mark Cuban shared insights into doing business with China in an interview with FOX Business in September 2019. When asked about the intricacies of doing business in the Chinese market, Cuban said:

"If you do business with China or would like to do business with China, you need to be paying attention."

During the interview, Cuban covered a variety of topics surrounding China's manufacturing dominance, including the country's efficient supply chains and unique manufacturing infrastructure.

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Shark Tank investor Mark Cuban's 2019 business insights with China: Manufacturing strengths and challenges

China’s manufacturing infrastructure

China Manufacturing Industry Piston Export (Image via Getty)

Mark Cuban explains that China has an already existing and efficient supply chain as one of the reasons why it still remains at the top of global manufacturing. He indicated that for most businesses, even his venture, Guardian Bikes, the parts that cannot easily be sourced are obtained in China.

The Shark Tank investor shared that one specific part used in Guardian Bikes can only be made in China.

"That’s the only place we can get this one part. It’s not like we [can] move to Vietnam; we can’t move it back to the United States," Cuban stated.

He pointed out that China's manufacturing infrastructure in terms of its factories and logistics network is almost impossible to replicate elsewhere. All this gives China a competitive advantage. It is the first address for many companies, especially smaller ones that do not have the resources needed to diversify their supply chains.

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Challenges of doing business with China

Huai'an Port (Image via Getty)

Despite China’s manufacturing strengths, Cuban acknowledged the challenges that come with doing business there. One of the main concerns he raised was the impact of tariffs on imports from China. Cuban noted that his company, Guardian Bikes, is facing higher costs due to these tariffs.

The Shark Tank investor mentioned in the interview that at that time, his company had applied for tariff waivers but had yet to receive a response. Cuban also emphasized the issue of intellectual property (IP) theft, which remains a significant concern for businesses operating in China.

He explained further that even if the ties of trade agreements are supposed to be tightened, "espionage just moves to a different location," inferring that the problem of intellectual property theft might shift but surely not disappear. This means a business needs to be watchful, taking precautions for their products' intellectual property.

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Global supply chains and trade negotiations

During the interview, The Shark Tank investor also touched on broader trade concerns, particularly those related to global supply chains. He highlighted the complexity of managing a global supply chain and how businesses need to carefully monitor their operations in China.

Cuban’s comments came in the context of discussions on trade negotiations and market access, particularly during the last Trump administration. He pointed out that while President Trump believed American companies would benefit from increased market access to China, Cuban expressed concerns that this could lead to more factories moving to China. He raised the question:

"The bigger question to me is what's the end game? If President Xi called up and said yes, yes to everything President Trump, whatever you want the answer is yes, then what happens?"

Mark Cuban speaks onscreen during WIRED's The Big Interview 2024 (Image via Getty)

The Shark Tank investor mentioned opening the market as the primary reason to allow the business to encourage companies to change their production location to China because of the size of this market.

Mark Cuban, in a discussion about the intricacies of global trade, warned businesses to be aware of the long-term implications of their choices. He emphasized the importance of considering the full impact of trade policies and international relations, stating:

“And so I think we have to be careful what we ask for and really follow through on the consequences of what we're trying to accomplish.”

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