Australian Prime Minister Abbott gestures as he gives a speech at the Shanghai International Expo Centre in Shanghai
Australian Prime Minister Tony Abbott gestures as he gives a speech on a business event at the Shanghai International Expo Centre in Shanghai, April 11, 2014. REUTERS/Stringer

Businesses from the West, operating in China and Russia are feeling that they are becoming the victims of an emerging Cold War. Both Russia and China have reasons to be miffed with the West on issues ranging from Ukraine to Hong Kong. The internal boil may be manifesting in new forms.

Less Welcome In China

These days, foreign companies in China are an expendable lot. One reason is China's domestic firms becoming more sophisticated and competitive. In the meantime, China also lost the taste for cash or lower-end technology after 35 years of non-stop growth, and that is making foreign competitors pay a steeper price to gain access, according to a report by Fortune magazine.

A recent poll also revealed that 60 percent of foreign companies are "feeling unwanted in China than before." Notably, the Foreign direct investment in China plunged to its lowest level in four years in August. Despite high hopes on the reforms of President Xi Jinping's economic agenda, focused on structural reforms, Hong Kong became a disappointing scenario. China's interest in HK also lessened as the growth in the mainland surged, that the city-state become less crucial in Beijing's agenda. Its contribution too crashed from 15 percent in 1997 to less than 3 percent to the GDP, as of today. As a result, Beijing has no pangs in sacrificing western firms to propitiate domestic losers in the ongoing economic overhauls, while keeping its politics alive.

In Russia, sanctions are taking a toll on many Russian firms with U.S interest. The escalating costs of capital is the main issue and it is going to affect Russia's oil production too. Despite Putin's high approval ratings at home, the fall out of food import ban from the West is spurring price hikes, besides adding the pain of importing from riskier places. The flight of capital from Russia was an alarming $75 billion in the first half of 2014, and it surpassed the record of 2013.

Paying High Price

In both the countries, western MNCs seem to be paying a heavy price for the geopolitics. Russia's alleged involvement in the cyberattack on J.P. Morgan Chase is an example where 83 million households and businesses were crippled. In China, the American government played a narcissist role by injecting national interest into the IT sector. Google had to leave China amid cyberattacks, tussles on user data, and Beijing's interest in the promotion of its Baidu.

When US technology companies were made to comply with NSA-driven surveillance initiatives after the Snowden leaks came out, there were fall outs. Concerns of the US intelligence agencies led regulators into stopping Chinese telecom firm Huawei from selling its equipment in the US. Apple CEO Tim Cook had to tender "sincere apologies" to China despite Beijing's calibrated media campaign against his company. The result is there-- many western companies are pulling out. Adobe is the latest to shut down its R&D in China.

Many western banks are also at the receiving end in China and are adding more NPAs after Beijing started a crackdown on company executives and started seizing assets as part of the anti-corruption drive. This gave many firms the chance to escape repaying liability. Bankers, including HSBC Holdings, Hang Seng Bank Ltd. , Standard Chartered, have lost millions in loans to firms which are under state crackdown, reported Perth Now. If the Soviet-American Cold War forced nations to choose sides, the new Cold War on business is exhausting the firms, despite their penchant to "go global."