Chinese firm pulls out of Pakistan's Gwadar, flags unworkable business environment

In a fresh blow to investor confidence in projects linked to the China-Pakistan Economic Corridor (CPEC), a Chinese company has shut its factory in Pakistan’s Gwadar Free Zone, laid off its entire workforce, and cited an unworkable business environment — at a time when Islamabad is seeking to revive foreign investment.

According to a report by The Express Tribune, Hangeng Trade Company said “non-commercial factors” and persistent operational bottlenecks made it impossible to continue operations, even though it met international export standards. The firm added that repeated delays in shipments led to mounting financial losses, ultimately forcing the closure.

The exit from Gwadar Port — a key node under CPEC — highlights the structural challenges confronting foreign investors in Pakistan’s flagship infrastructure corridor.

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Hangeng said it had been in discussions with authorities over the past three months to resolve logistical and administrative issues, but no solution emerged. Before winding up operations, the company cleared all outstanding dues, including three months’ salaries, penalties, electricity bills, and container demurrage charges.

Government steps in after export dispute

In the latest development, Pakistan has approved the export of donkey meat to China after the Chinese firm warned it could shut operations, prompting intervention from the Prime Minister’s Office.

The dispute centred on delayed export approvals for Hangeng Trade Company in Gwadar, where shipments had reportedly been held up for months. The clearance is seen as an attempt by authorities to address bureaucratic hurdles that have increasingly come under scrutiny in foreign-backed projects.

Firm reverses shutdown after intervention

In a partial turnaround, Hangeng Trade Company has since reversed its decision to shut operations following high-level government intervention, according to a report by Arab News.

According to the report,  the issue was resolved with support from Pakistan Prime Minister Shehbaz Sharif and the planning ministry, after export approvals were granted.

Investor concerns mount ahead of Sharif’s China visit

The development comes weeks before Pakistan Prime Minister Shehbaz Sharif is expected to visit China for a business-to-business investment forum, raising questions over the viability of foreign-backed ventures in the region.

Gwadar has long been projected as the linchpin of Pakistan’s ambition to emerge as a regional trade and logistics hub, offering China direct access to the Arabian Sea. However, recurring delays, regulatory uncertainties, and on-ground execution challenges have continued to hamper industrial activity in the free zone.

The latest development is likely to sharpen concerns among investors already wary of policy unpredictability and operational risks, complicating Pakistan’s efforts to revive foreign investment and accelerate CPEC-linked development.

With inputs from agencies.