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2005-12-09 China-Japan-Koreas
Chinese village in prosperous Guangdong province surrounded by armed policemen
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Posted by Zhang Fei 2005-12-09 14:34|| || Front Page|| [11133 views since 2007-05-07]  Top

#1 Do American corporations take these incidents into account when they are doing business in China? I know it isn't a question of ethics over money, I mean it from the possibility of economic riots that expand to where it is a problem for the country.
Posted by Penguin 2005-12-09 14:58||   2005-12-09 14:58|| Front Page Top

#2 Penguin: Do American corporations take these incidents into account when they are doing business in China?

A lot of them operate through subcontractors. McDonald's and KFC, which have 700 and 1500 restaurants in China respectively, have Chinese franchisees. No one has to *sell* in China. But many need to manufacture there just to stay cost-competitive with other companies, American or otherwise, that do manufacture in China. China's primary importance continues to be as a production base.
Posted by Zhang Fei 2005-12-09 15:08|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com]  2005-12-09 15:08|| Front Page Top

#3 No, I don't believe american companies take China's risk factors into account. Herd mentality drove everyone to china... "what's our china strategy" became a US company buzz phrase. They're just now waking up to the fact that the returns aren't as high as they thought... soon they may learn the risk factors were far higher than they thought.
Posted by Damn_Proud_American 2005-12-09 15:18||   2005-12-09 15:18|| Front Page Top

#4 All the years of cheap goods for the west and money pouring into corrupt government in China has caused a credit of expectedness from the poor farmers. The bill is now coming due. Remember China, the farmers fueled the last revolution that put your current government in power. They can take it away from you too.
Posted by mmurray821 2005-12-09 15:34||   2005-12-09 15:34|| Front Page Top

#5 ZF can contradict me, but my understanding is that every internal change of government in China has come at the hands of the peasants. Mao was very aware and concerned about that. Part of the logic behind the cultural revolution.
Posted by Jise Unung6614 2005-12-09 15:48||   2005-12-09 15:48|| Front Page Top

#6 DPA: No, I don't believe american companies take China's risk factors into account.

Actually, they do. Whether you believe it or not.

DPA: Herd mentality drove everyone to china...

Nothing to do with herd mentality. If you can't match your competitor on price because he can underprice you at the same level of quality based on low Chinese wages, you're out of business.

DPA: "what's our china strategy" became a US company buzz phrase.

This is ad world related horsecrap. Only ad people actually wonder about this. Most people are trying to figure how to stay in business as their competitor beats the crap out of them on price. Business people don't commit capital before figuring out the odds. Fact is that Chinese investments involve a lot of hassle (joint venture requirements, bribes, etc), and that's before figuring in political risk. However, in the long run, we'll all be out of business if we don't match our competitors on price. We can't come up with brand new inventions every day to stay ahead of the curve. And our competitors are hiring bright-eyed Chinese college grads at one tenth of the cost of slack-jawed high school grads domestically.

DPA: They're just now waking up to the fact that the returns aren't as high as they thought... soon they may learn the risk factors were far higher than they thought.

Returns in China are actually pretty high, because the domestic competition lacks capital, expertise and finesse. But no foreign concern wants to advertise this, because local officials will flock to them like locusts for baksheesh. Of the Chinese businessmen who landed on the Forbes list of China's nouveau riche, many were subsequently arrested and sentenced to long jail terms. Foreign businessmen on the up-and-up don't land in prison - but they can get shaken down for higher tax assessments - and there's no appeals process.
Posted by Zhang Fei 2005-12-09 15:52|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com]  2005-12-09 15:52|| Front Page Top

#7 JU6614: ZF can contradict me, but my understanding is that every internal change of government in China has come at the hands of the peasants.

Not true. Many of these changes may have started with peasant revolts, but the majority were hijacked by local officials who rode the momentum to the seat of power. Even when peasant leaders won, they did it with the help of local officials, who provided the organizational and administrative skills necessary for the revolt to succeed.
Posted by Zhang Fei 2005-12-09 15:58|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com]  2005-12-09 15:58|| Front Page Top

#8 Zhang I should have said "accurately take China's risk factors into account"

"Nothing to do with herd mentality. If you can't match your competitor on price because he can underprice you at the same level of quality based on low Chinese wages, you're out of business. "

There are many other locations that goods can be produced at the same cost. Additionaly companies didn't look into automation as from the top down "china strategy" was the mantra. Companies are just now waking up to this and automation and localized manufacturing (to avoid distribution/shipping and tarrifs) is becoming to new mantra.

The rest of your comment is some weird assertion that companies always act in their best interest, are effecient and are logical. Basically a bunch of nonsense. Companies for the most part follow herd mentalities... in the long run they usually end up focusing on what makes sense as the best of the best survive and grow. In the mean time they make huge mistakes in the short term, over invest in fads, misjudge trends etc. Time Warner buying AOL is a good example if you need one.
Posted by Damn_Proud_American 2005-12-09 16:02||   2005-12-09 16:02|| Front Page Top

#9 ZF, No question some slick operator took advantage of the turmoil to become new top dog, but my understanding was the initial impetus behind the turmoil was peasant unrest, not the War of the Roses.
Posted by Whons Ulomoger5955 2005-12-09 16:03||   2005-12-09 16:03|| Front Page Top

#10 DPA, is the stock market efficient?
Posted by Flaish Uloluns7807 2005-12-09 16:04||   2005-12-09 16:04|| Front Page Top

#11 WU5955: ZF, No question some slick operator took advantage of the turmoil to become new top dog, but my understanding was the initial impetus behind the turmoil was peasant unrest, not the War of the Roses.

I'll have to agree with that. Chinese political entrepreneurs have traditionally launched their bids for power upon detecting weakness in the central government, whether this relates to military incompetence or simple lack of self-confidence* (i.e. an unwillingness or inability to use force to crush demonstrations). The first sign of weakness usually manifests itself via some sort of peasant rebellion, typically unsuccessful, and crushed with great violence. Follow-on revolts are a sign of systemic misrule and widespread disaffection - grievances that these entrepreneurs can seize upon to discredit the incumbent regime.

* The latter is also why the Soviet Union fell. This is contrary to notion of self-confidence promulgated by Western liberals, which seems to see Gandhi-like non-violence as self-confidence. The reality is that any regime that is self-confident in the liberal manner is likely to become an ex-regime in short order.
Posted by Zhang Fei 2005-12-09 16:29|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com]  2005-12-09 16:29|| Front Page Top

#12 So how do we judge this? Isolated civil disturbance quickly brought under control by efficient law enforcement or the tip of an iceberg leading to excess force by out of control enforcers stretched too thin, or it doesn't doesn't make any differnece, it's only a matter of time?
Posted by Whons Ulomoger5955 2005-12-09 16:43||   2005-12-09 16:43|| Front Page Top

#13 WU5955: So how do we judge this? Isolated civil disturbance quickly brought under control by efficient law enforcement or the tip of an iceberg leading to excess force by out of control enforcers stretched too thin, or it doesn't doesn't make any differnece, it's only a matter of time?

Probably just the right level of force used for regime preservation. Enough so that others are deterred.* Not so many that other factions are given the opportunity to use massive loss of life to oust the ruling faction.

* The Romanized four-character expressions are: Cheng yi jing bai: Punish one, warn one hundred, and sha ji xia hou which literally means "to kill the chicken to frighten the monkeys."
Posted by Zhang Fei 2005-12-09 17:07|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com]  2005-12-09 17:07|| Front Page Top

#14 ZF: years ago it was remarked that China operated on an fire-earth-wind-water cycle.

That is, the first government in the cycle was very constructive, rebuilding China from the ground up.

Its successor government would maintain what their predecessor had built, managing everything and getting "the system" running smoothly.

The third government would allow the nation to fall into disrepair and decay, withdrawing to Beijing, and only acting to prevent any other organizations from performing government functions.

The fourth, or last cycle of government's purpose was to destroy what had fallen into disrepair, and often very violently. This would prepare the way for the new cycle to begin.

The concept was that this actually transcended the imperial dynasties, and still exists today, in some form or another. Ironically, Mao, had he been an emperor, would I believe have been a "water" or destroyer emperor. A role which he performed well, following the "last emperor", clearly a decadent emperor.

With this concept in mind, I suppose that Deng Xiaoping would fit the bill as a constructive leader, but I would have difficulty in seeing if Hu Yaobang, Zhao Ziyang, Jiang Zemin, Hu Jintao and the country as a whole would still fit into this model.
Posted by Anonymoose 2005-12-09 17:31||   2005-12-09 17:31|| Front Page Top

#15 Well, if you were on the central committee in Beijing looking at this, who would you decide were the chicken and who were the monkeys?
Posted by Abdominal Snowman 2005-12-09 17:33||   2005-12-09 17:33|| Front Page Top

#16 AS: Well, if you were on the central committee in Beijing looking at this, who would you decide were the chicken and who were the monkeys?

I guess the village leaders of Dongzhou are the chicken and other similarly-assertive village leaders are the monkeys.
Posted by Zhang Fei 2005-12-09 17:50|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com]  2005-12-09 17:50|| Front Page Top

#17 It could spiral out of control in the sense that officials can be sought out and killed by vengeful members of a village. Every one of them knows this, which is why a local official bothered to show up to say that it was all a misunderstanding. Now that communism is dead, except in word, the ancient Chinese concept of the blood debt immortalized in chop socky movies (you killed my father - I must kill you, whatever the cost) has made a comeback.
Posted by Zhang Fei 2005-12-09 17:57|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com]  2005-12-09 17:57|| Front Page Top

#18 Flaish Uloluns7807,

Of course the stock market isn't efficient. If it was people like Warren Buffett wouldn't exist.
Posted by Damn_Proud_American 2005-12-09 18:43||   2005-12-09 18:43|| Front Page Top

#19 ...waitasecond, the blood feud EVER existed???

In a "from the other POV" anecdote, "angry chinese blogger" had a December 5 post about a Chinese businessman who bemoaned Western companies buying into the "low cost" myth... and then tried to push Chinese manufacturers into cutting corners to make that myth into 'reality', even if that kept the "low quality" image, because all the companies wanted out of the manufacturers to begin with was low cost.
Posted by Snump Flaviper5941 2005-12-09 18:45||   2005-12-09 18:45|| Front Page Top

#20 ON THIS DAY IN GUANDONG, YET ANOTHER ANTI-SOCIALIST "INCIDENT" NEVER HAPPENED. As for Mao, the CULTURAL REVOLUTION came about because Mao himself recognized the constraints on national development that his own -ISM put on Chinese-centric modernity and industrialization. In true Lefty and Commie form, he blamed it on past Chinese civilizations rather than the defects of his own ideology. By destroying China's past could he control China's present. The Chicoms of today want development, industrialization, and modernity with only minutae de-regulation-libertarianism.
Posted by JosephMendiola 2005-12-09 19:46||   2005-12-09 19:46|| Front Page Top

#21 SF5941: In a "from the other POV" anecdote, "angry chinese blogger" had a December 5 post about a Chinese businessman who bemoaned Western companies buying into the "low cost" myth... and then tried to push Chinese manufacturers into cutting corners to make that myth into 'reality', even if that kept the "low quality" image, because all the companies wanted out of the manufacturers to begin with was low cost.

It's not a myth - China has some of the lowest wages and land prices around. Foreign companies that have moved their production to China (typically from other East Asian countries like Taiwan, South Korea, Malaysia, Singapore or Thailand) have cut their costs drastically. There's nothing low quality about Western brands produced in China - they are made using the same capital equipment and production processes moved from other East Asian countries.

Western companies don't push Chinese companies into producing crappy products - products made for the West are generally far superior to those made for Chinese markets. It is actually through exposure to Western markets that Chinese companies learn about quality control. In China, the consumer's motto is caveat emptor (buyer beware) - if a product breaks, you're on your own. In the West, returns are the responsibility of the manufacturer.
Posted by Zhang Fei 2005-12-09 22:04|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com]  2005-12-09 22:04|| Front Page Top

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