As trade tensions between the United States and China simmer, the chief executive of one of the world’s largest health-care companies said that open trade will ultimately be in everyone’s best interest.
China is an important market for Johnson & Johnson with 1.4 billion people, a rising middle class, technological developments and an aging population, according to Alex Gorsky, the company’s chairman and chief executive officer.
“We’re going to have to dig in and learn more,” Gorsky told CNBC Saturday at the China Development Forum in Beijing. “But at the end of the day, we think that having, first of all, fair, equitable trade around the world is in everyone’s best interest — Johnson & Johnson’s, but I think for all companies and all countries.”
Beijing on Friday said it may target 128 U.S. products with an import value of $3 billion as retaliation for President Donald Trump signing an executive order earlier this month that imposed broad duties on foreign aluminum and steel imports.
Trump also announced tariff plans for up to $60 billion in Chinese imports last week, but China did not officially connect its Friday threats to that White House action.
The chances of a trade war appeared to lessen, however, based on reports out Monday: The Financial Times said China had offered to buy more semiconductors from the U.S. to help cut the trade imbalance, and The Wall Street Journal reported officials in both countries are working to improve American access to Chinese markets.
When Gorsky was asked if he was worried China could restrict the investment opportunities for U.S. firms operating in the country, he said he hoped to be able to work with government officials from both countries to “find the right path forward, to work our way through the current issues.”
In the past, China has enforced crackdowns and heavy fines on foreign pharmaceuticals. For example, reports said that J&J and other major producers were fined more than 19 million yuan (currently $3.01 million) for price-fixing in China’s eye glass and contact lens market in 2014. In the same year, GlaxoSmithKline was fined a record 3 billion yuan for paying bribes to doctors to use its drugs, according to Reuters.
On the possibility that China might react to the U.S. import tariffs by toughening its enforcement actions against American firms like J&J, Gorsky said the company always wants to be proactive.
“That calls for making sure that we’ve got great products that are right for the market, that are following the appropriate marketing practices, according to the local laws and compliance, which we always try to do. And, again, to continue to work with our customers and the government here in China to be successful,” he said.
Gorsky added that J&J was in the process of building at least three new facilities in China for both manufacturing as well as research and development. “And I think that kind of collaboration builds an overall better understanding and I think better positions us for the future,” he said.
The CEO explained that he had seen some encouraging developments within the country in areas of regulatory procedures in approving pharmaceuticals, a greater willingness to think about using data from around the world, and reviewing life-saving medications in a more timely way.
“We are very encouraged by many of the changes that we’re seeing. There’s still work to be done, in areas such as [intellectual property] and others, but we’re hopeful that we can continue to have a productive and important dialogue going forward,” he said.
— CNBC’s Nyshka Chandran and Fred Imbert contributed to this report.