There have been a torrent of headlines around the rapidly changing state of business in China. This has been going on for quite some time. Now, it seems that things have come to a head.

When we think about strategy one of the most important decisions, from Playing To Win: How Strategy Really Works, is “where to play”. How to win is directly informed by first deciding the playing field on which you’ll compete. If COVID taught us anything it’s that overextended supply chains relying on the cooperation of multiple nation states can make business fragile.

Now, businesses that strategically chose to play in China have to acknowledge that things have gotten much trickier. Whether your team is trying to integrate horizontally, vertically, or in new geographies the question of where to play and how to win must incorporate the factors of risk that changing government practices can introduce.

American investment banks have been major beneficiaries of Eastern IPOs the past few years. Technology companies have been the major beneficiaries of competitive bids and M&A dollars from Chinese tech behemoths. All of that is good. Until it isn’t. So whether it’s on your teams, in your divisional reporting lines, or at the corporate level the news out of Asia shows that diversification & expansion in some ways can be the enemy of focus.

Play to win. But first choose where to play. And choose carefully.