Cost of doing biz with China: A $40,000 dinner

Broadcom Chief Executive Hock Tan shelled out $40,000 to sit at Xi Jinping’s table for the Chinese leader’s recent dinner in San Francisco with the heads of American businesses. Tan had a lot more at stake—a $69 billion deal he was waiting on China to approve.

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For months, Chinese regulators wouldn’t clear the U.S. chipmaker’s bid to buy enterprise software developer VMware, leading Broadcom to put off its date for completion of the deal—first announced in May 2022—three times. Beijing had held up previous mergers involving U.S. companies. Intel’s planned acquisition of Israeli firm Tower Semiconductor, for more than $5 billion, was scuttled in August after Chinese regulators failed to approve it.

A few days after the dinner, China signed off on Broadcom’s deal. Beijing also gave a long-awaited green light to New York-based payments processor Mastercard to issue yuan-denominated cards bearing its brand in the country.

Some observers saw the moves as olive branches to American corporations as firms grow wary of doing business in China. The moves also show how companies can become pawns in the intensifying geopolitical competition between Washington and Beijing.

 

As recently as October, officials at China’s antitrust regulator, the State Administration for Market Regulation, indicated to Broadcom that they were ready to sign off on the deal as long as the company met all its conditions, according to people familiar with the matter.