Geopolitical Tensions And Multinational Brands: Evidence From China
Using brand-level sales data from Chinese e-commerce platforms, this study examines how geopolitical tensions affect multinational brands operating in China. Merging these sales data with a U.S.–China tension index, we use panel regressions and local projections to show that rising tensions significantly reduce the market share of U.S. brands in China relative to brands from other countries, with the effects persisting for up to 12 months. An event study employing a difference-in-differences framework, centered on brand-specific incidents of political tension with China, reveals similar market share declines among affected brands, highlighting consumer sentiment as a key transmission channel.
