Tag: China

Revolution talk spurs China to block LinkedIn (via SFGate)

On By southwerkIn business ethics

Whoa, I thought China was the wave of the future? Gonna’ be the biggest economic power on earth just any day now.

So, the great Chinese Communist Goliath is shaking in its jack boots over a social networking service with one million customers out of China’s tiny population of one point two billion.

Yeah, I lay awake at night worrying about the inevitable Chinese economic hegemony.

James Pilant

From SFGate – (San Francisco Chronicle)

LinkedIn Corp. was being blocked in parts of China on Thursday after members in that country began using the professional social networking service to discuss the revolutions that have toppled governments in the Middle East.

The Mountain View company doesn’t have a major presence in China, which has about 1 million of LinkedIn’s 90 million members worldwide.

However, the blockage may be further evidence that the Chinese government is now even less willing to reopen its firewall to social networks Facebook Inc. and Twitter Inc., which have played key roles in anti-government upheavals spreading through the Middle East.

“What would they have to do to become less threatening than LinkedIn currently is?” said Andy Smith, a social media marketing expert in Lafayette.

CSR statements are easy; sustainable procurement is harder (via Fair For All)

On By southwerkIn business ethics

I have written before about my doubts as to China’s coming status as the number one economic power. These kinds of articles and posting tend to reinforce my beliefs.

My great thanks to “Fair For All.”

CSR statements are easy; sustainable procurement is harder As Dell and HP have discovered this month, it’s a lot easier to write a CSR policy than it is to ensure that it is carried through. Their plight is not uncommon and is the unfortunate result of treating CSR as a public relations function, focused on appearance and not on substance. To be credible, CSR needs to be built into the operations of a business, which r … Read More

via Fair For All

A Lecture by Richard D. Wolff (Concerning Our Current Economic Crisis)

On By southwerkIn business ethics

I found these lectures online and very much enjoyed them. These lectures are given by Richard D Wolff.

This quote comes with the video –

These Tuesday evenings will each begin with an update and analysis of major economic events of the last month and their contexts of longer-term economic trends shaping politics and society here and abroad. We will focus on the evolving global capitalist economic crisis and its consequences. We will examine topics such as the social costs effects of the historic long-term US unemployment, national debt crises and “austerity programs” in Greece, Ireland, Spain, and beyond changes in today’s Chinese economy and their global effects, tax reform and the entire tax issue in the US today, continuing crisis in the US housing and credit markets the economics of immigration.

These are the first four –

Despite China’s might, U.S. factories maintain edge (via MSNBC.com)

On By southwerkIn Capitalism1 Comment

U.S. factories out-produce Chinese manufacturers by more than 40%

Surprising statistic. My impression gathered from the media is that manufacturing is long gone. But America is still number one.

Yet America remains by far the No. 1 manufacturing country. It out-produces No. 2 China by more than 40 percent. U.S. manufacturers cranked out nearly $1.7 trillion in goods in 2009, according to the United Nations.

The story of American factories essentially boils down to this: They’ve managed to make more goods with fewer workers.

The United States has lost nearly 8 million factory jobs since manufacturing employment peaked at 19.6 million in mid-1979. U.S. manufacturers have placed near the top of world rankings in productivity gains over the past three decades.

That higher productivity has meant a leaner manufacturing force that’s capitalized on efficiency.

China is using its political power to enhance its manufacturing, offering tax free zones, only allowing companies to enter their markets if they build in China, and bending or breaking the rules whenever possible. And yet, the United States still wins the contest.

The United States will be the number one economy in the world for the next fifty years. That is my belief.

I find America’s largest competitors to be a pretty sorry lot.

China is a totalitarian state. In terms of quick economic growth, they have great advantages over more democratic societies. They can do what the Chinese are doing. Let me make a brief list for you – subsidize any critical industry to make sure foreigners cannot make inroads in that area; require foreigners to “partnership” with locals for admittance to the economy; use the resources of the state, particularly the intelligence sources and the military to enhance competitive advantage; act ruthlessly against parts of the nation or its population or its minority groups while favoring others; and manipulate economic statistics to paint a rosy, optimistic picture of progress. They might even say something like, “We will bury you.” Perhaps not.

China is a Communist state. It seems at times, that this part of the equation simply doesn’t figure in economic and political discussions. What about the words, Communist State, do American and multinational corporations not get? There were 12 Communist nations in 1989. Now there are five. Does history favor the Communist system?

Will China be the world’s greatest economic power? No. Their economic statistics may one day say so, but reality will still be reality.

If we believe in the idea that capitalism is the most efficient and productive form of economy, how does China even figure in that? Look at the rules and regulations for business in China. Is that the free market?

In Communist China, the law is a creature of the state. In the United States business law is extremely stable and predictable. Is this a predictable safe business environment?

Let me predict what is going to happen to these foreign investments in China.

They will end badly. They will end whenever the Chinese see a profit in doing so. They will end whenever China has an international dispute with a country whose citizens are involved in that investment. And they will end whenever corrupt Chinese officials decide it is profitable and they have a good chance of safety.

China will not be the next great power on earth. What they will become is in many ways is not clear but the one thing we can be sure of is that a Communist dictatorships will not end well.

James Pilant

Does China Force Companies To Move There?

On By southwerkIn business ethics2 Comments

In an earlier article I reported that a writer had said that the Chinese used threats to force companies to move to China. At that time, I said I would look into the charge.

I have looked into the charge. This is what I found out.

China will not let some companies do business in their market without moving operations to their country.

Companies that move there are subject to unexpected laws and at least in one case, the arrest of its agents until they signed over their Chinese assets to the Chinese partner.

They are forcing companies to register thier patents in China giving that country a great deal of technology that is patented in other countries, particularly the U.S.

They are forcing auto companies operating in China to consolidate  with other companies to form new companies up to a certain size or lose the right to do business in China.

Corruption in China may be as much as ten percent of the gross national product with bribes and shake downs a normal part of doing business.

China has used threats in its foreign policy to gain access to markets, to force countries to accept its goods and it make sure its dissidents are not supported.

China has been doing industrial espionage on a large-scale for years.

China has developed an enormous cyber warfare apparatus and has used it against other countries, essentially an act of war.

Based on what I have found, there is no direct evidence of China telling a company, “move here or else.”

James Pilant

American Companies Forced To Move To China?

On By southwerkIn business ethics7 Comments

Innovation and Education Won’t Save Our Economy

That’s the name of the article which appears in New America web site. It charges that American companies are often forced to move to China by bribes and threats. In the first part, the author challenges the idea that a lack of innovation is why jobs ae moving overseas.

U.S.-based multinationals are not transferring production to China and other countries because those nations surpass the U.S. in innovation. The U.S. remains the leader in global innovation, with a sophisticated system of creative interaction among universities, business, venture capitalists and government. Other countries are trying to catch up, but that is nothing new. China recently alarmed many Americans with its policy of “indigenizing” innovation. But ever since the 1970s East Asian and European countries have been trying to create their own artificial “Silicon Valleys,” usually with limited success despite huge investments.

Here is where, the author, Michael Lind, makes the shocking charge that China gets American companies to build factories there through bribes and intimidation.

American multinationals are not shutting factories in the U.S. and transferring production to China because of China’s superior innovation culture or superior educational achievements. Nor are low Chinese wages the major factor. For the most part, multinationals are pressured or bribed by the Chinese dictatorship into producing in China. In some cases, U.S. multinationals are told they must produce inside China in order to have access to China’s large and growing consumer market. In other cases, multinationals are bribed to relocate production to China by enormous subsidies from the Chinese government.

According to one trade expert in Washington, who spoke to me on condition of anonymity, Chinese government subsidies to individual American companies can amount to as much as 70 percent of the cost of a product. China’s artificially undervalued currency amounts to a government subsidy to Chinese-based manufacturers of around 30 percent. On top of the currency subsidy, the Chinese dictatorship often offers financial subsidies and gifts of free land and facilities that can amount to as much as 40 percent. China can afford to spend money on this lavish scale because it deliberately suppresses the consumption of its underpaid and unfree workers and controls investment decisions by its banking sector, while accumulating enormous surpluses from its artificially maintained trade deficit with the U.S. In other words, China recycles money spent on imports by American consumers to poach the factories of American producers.

I am familiar with the Chinese offering no taxation zones in coastal cities to attract American companies to move, but I have never heard these kind of charges before. Certainly many of the incentives offered to move plants to that country have the look and sound of bribery, nevertheless, the money advantages do not seem to rise to the definition of bribes. However, the Chinese government’s actions of international threats does give a certain credence to the charges.

I will see if I can find out more.

James Pilant

China Takes American Jobs

On By southwerkIn Capitalism4 Comments

From The Ethics Sage, Steven Mintz – The article is called, Offshoring in the Phillipines and China.

Here’s an excerpt.

In an effort to foster growth in its outsourcing industry, China  announced that the government will not be levying operating taxes on offshore service outsourcing business in 21 cities until 2013. The policy covers firms specializing in IT outsourcing, business process outsourcing and knowledge process outsourcing. The initiative is expected to boost China’s already robust growth in the industry, where the country enjoyed a 21 percent year-on-year increase to $23.6 billion in 2009.

China

So, the Chinese are pursuing a deliberate national policy of moving jobs to their country, jobs from the United States.

Don’t we have legislators and a government? Oh, I forgot, out sourcing is good for the financial industry. There is no concern for the rapidly dwindling middle class. It’s as if we had a government for and devoted to observing the flight of jobs in a thoroughly disinterested manner like a scientist examing microbes under a microscope. The middle class microbes have to be watched. They could interfere with profits.

James Pilant

A thought?

We Invite You To Predict When China Will Overtake America – The Economist

On By southwerkIn business ethics, Capitalism, ethics, Government Failure, Philosophy of Business4 Comments

The Economist magazine asks this intriguing question.

It posts a comparison of economic growth between the two countries and points out that at the current rate of economic growth, China will overtake the United States in 2019. They then suggest you plug-in your estimates of growth for the Chinese and Americans and arrive at your own figure.

Okay, here’s my prediction of when the Chinese are going to overtake the United States.

Never.

It’s all nonsense. Chinese corruption is endemic. Their real estate market crashed two years ago. They had to do an economic stimulus of 400 billion dollars two and a half years ago. They have foreign policy disputes with almost every bordering country and a large number of those that are not. They are building a fleet to challenge the American Seventh fleet in the South China Sea. The difference in economic development between the coastal and interior provinces borders on the incredible. There are rumors (probably true) of gathering Muslim unrest in the far West. I could go on.

It seems likely to me that the estimates of economic growth put out by the Chinese government bear a strange similarity to East Germany’s constant high economic growth before the country disintegrated in 1989.

And watching the Chinese lurch from one foreign police misstep after another hardly gives one any confidence in the nation’s future. If you’re willing to force the Philippines to take your lead painted toy imports by threatening economic retaliation, you have only the vaguest concept of a) right and wrong and b) how you appear to the rest of the world. If one of your ship captains decides to deliberately ram a Japanese naval vessel and you get him out of it by threats, that might not have long term positive results. If a dissident gets a Nobel Peace Prize and you demonize the award rather than keeping a discrete silence and resort to every measure short of blackmail to discourage other countries from attending, you’re not demonstrating balanced judgment. If when faced with a dissident receiving a Nobel Peace Prize, you create, fairly instantly,a bogus “Confucius” prize which you then present to the former President of Taiwan who admits he doesn’t know what it is and fails to appear for the ceremony, you don’t impress anybody.

Never.

This is all just part of the policy narrative from the media beltway. As always, they only ask hard questions of ideas they oppose. This isn’t one of them. The terror of Chinese competition, of their eventual success, is a reproach to criticism of free trade and authortarianism. It calls the very importance of democracy for economic success into question. It makes the idea of open society with rights of privacy seem unnecesary to a nation’s future.

When China has failed to become number one, it will have outlived its usefulness, their will be a new narrative of America losing out. Will it be India, Islamic nations, South Asia or even a resurgent Japan? Who knows? But its’ necessary. It’s a club against policies you don’t like and it works.

James Pilant

Chinese Corruption

On By southwerkIn Capitalism

Russell Flannery covering the China beat for Forbes has an interview with Chinese ethicists. This is an excerpt from the article. This is only the introductory part I recommend you read the rest.

Last week brought a reminder of China’s troubling business ethics landscape when the government was forced to investigate reports that infants who consumed milk powder supplied by Nasdaq-listed Synutra International had premature breast growth. The Ministry of Health cleared Synutra, yet the allegations recalled the sale of tainted infant formula in 2008 and a long list of product safety and other problems involving business ethics  in the country.
Ultimately, what can be done to improve business ethics in China? I talked to two professionals working at the front line of research and education here, Professor Hengda Yang and Stephan Rothlin from the Center for International Business Ethics at the University of International Business and Economics in Beijing.  Yang is the author of a pioneering Chinese book about business ethics, “The Conscience of Business.”   Rothlin is also associated with the University of Zurich and the Insead Business School in Singapore.

Wikipedia has an entry on Chinese Corruption. Below is an excerpt.

The People’s Republic of China suffers from widespread corruption. For 2008, China was ranked 72 of 179 countries in Transparency International’s Corruption Perceptions Index. Means of corruption include graft, bribery, embezzlement, backdoor deals, nepotism, patronage, and statistical falsification.

Cadre corruption in post-1949 China lies in the “organizational involution” of the ruling party, including the regime’s policies, institutions, norms, and failure to adapt to a changing environment in the post-Mao era. Like other socialist economies that have gone through monumental transition, post-Mao China has experienced unprecedented levels of corruption, making the ruling Chinese Communist Party (CCP) “one of the most corrupt organisations the world has ever witnessed,” according to Will Hutton. Public surveys on the mainland since the late 1980s have shown that it is among the top concerns of the general public. According to Yan Sun, Associate Professor of Political Science at the City University of New York, it was corruption, rather than democracy as such, that lay at the root of the social dissatisfaction that led to the Tiananmen protest movement of 1989. Corruption undermines the legitimacy of the CCP, adds to economic inequality, undermines the environment, and fuels social unrest.

Since then, corruption has not slowed down as a result of greater economic freedom, but instead has grown more entrenched and severe in its character and scope. In popular perception, there are more dishonest CCP officials than honest ones, a reversal of the views held in the first decade of reform of the 1980s. China specialist Minxin Pei argues that failure to contain widespread corruption is among the most serious threats to China’s future economic and political stability. Bribery, kickbacks, theft, and misspending of public funds costs at least three percent of GDP.

Corruption as a key factor in the collapse of the former Soviet Union and its Eastern European client states. While there are no numbers to tell us the gravity of the problem in economic terms, it would a reasonable to conclude that only the rapid growth of manufacturing, the huge quantity of national resources, and the highly favorable media portrayal of China have prevented an accurate perception of the problem.

But there are stories of economic corruption in real estate and manufacturing. There are troubling accounts of disasters both natural and artificial concealed from the West and unreported in China itself.

I predict that by the end of this decade, corruption in China will become a brake on foreign economic investment.

James Pilant

China targeting 8% growth in 2010 ?

On By southwerkIn Capitalism

That’s the BBC headline. My question is how accurate is it? We aren’t talking about a Western Democracy. This is almost the last of its kind, a communist state. It is easy to find numerous web sites discussing the lack of accuracy and inflated claims made by the Soviet Government during its time. Eastern European Communits countries have a similar dismal record of accuracy. When China’s Great Leap Forward had already become a disaster (1956) government statistics showed it to be a great success. Now that foreign investment, exports and international agreements are on the line, is the temptation less? It was explained to me over and over again by many news articles and “analysis” (sometimes even by my Chinese students) that China would be the big winner during the world economic crisis, that it was immune to economic downturn. If that is so, why did the Chinese Government create a 586 billion (U.S.) dollar stimulus package for its economy?

What about the issue of corruption? The only real information about the critical nature of corruption is anecdotal. Try these two stories. About 80% of the foreign money sent to help survivors of the earthquake in 2009 wound up in the hands of the government. Researchers estimate that 73 billion dollars a year are spent on government banquets.

How about this quote from the Carnegie International Endowment for Peace:

Failure to contain endemic corruption among Chinese officials poses one of the most serious threats to the nation’s future economic and political stability, says a new report from the Carnegie Endowment. Minxin Pei, an expert on economic reform and governance in China, argues that corruption not only fuels social unrest and contributes to the rise in socioeconomic inequality, but holds major implications beyond its borders for foreign investment, international law, and environmental protection.

Are Chinese economic statistics accurate? I have my doubts. What about the greater question? Is China going to be the next world superpower? My prediction is no. There are too many geographic, foreign policy, economic  and cultural difficulties for the country to maintain its stability for even the next decade.

James Pilant