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Beijing Pushes for a Direct Hand in Big Chinese Tech Firms
- wslh 9y agoIt seems the Chinese government is fucking everything up. Those Chinese firms are investing in many companies outside USA, including South America and Africa where top American VCs don't usually invest. These firms believe more in globalization than USA itself.
- Cacti 9y agoNo, they believe in using government money to invest/bribe overseas to build up a market for mid level Chinese goods. This is how they plan on moving up the goods ladder.
- wslh 9y agoWe are talking about different things here. It is true that the Chinese government is expanding its influence worldwide but also true that some Chinese firms have a genuine investment interest outside mainland. Chinese are more eager to build strategic partnerships instead of having a vendor/client relationship, and... they work really really hard, which is a natural strategic advantage.
- alfredallan 9y agoRephrasing the above post, sans adjectives: "building up foreign markets" - isn't that how globalization happens?
- charlesdm 9y agoThat's essentially what most Western European companies did (and probably) still do abroad, for the better part of two centuries.
- adventured 9y ago> These firms believe more in globalization than USA itself. You're confusing mercantilism and globalism. China's firms operate as an extended arm of China's domestic policies (or they don't operate at all). The US allows Toyota (Honda, Hyundai, BMW, Mercedes, whomever) to set up its self-owned operations in the US and compete largely at will with Ford and GM. That's globalism. The US is still the king of it by far, among major economies. Compare the US rules in that regard to Germany, Japan and China (the next three largest economies); and maybe take a look at Brazil, India and Russia while you're at it (see: all the barriers put in Amazon's way in India). Alibaba et al. are not busy in China aggressively arguing for the state to drop its one-sided economic policies. Those policies have gifted Alibaba the keys to a trillion dollar protected kingdom. In the US, as a foreign entity you can establish a business and own 100% of it. Your rules of competition and operation are almost entirely the same as a native US firm. You can acquire the radical majority of all types of businesses at will (with a few exceptions). The US will allow a company like Bayer to buy a very important strategic company such as Monsanto, for example (or Sanofi with Genzyme, or Roche with Genentech). Such a thing would never be allowed in a million years in China.
- l5870uoo9y 9y agoBesides a legacy of centralism, statism and being a one party state it is fairly simple; Beijing wants control over the strategic sector.
- justicezyx 9y agoChinese government is the least likely candidate for the word fucking around, they merely try their best to control and grow.
- xr4ti 9y agoI'll be very interested to see how this plays out over the long term. Positive: - Adds the voice of a civic minded, non-profit entity to the board. Maybe less brutal than pure capitalism? - Less risk of Frankenstein's monster (e.g. dual use adware) Negative: - Govt is now married to them, and the tech graveyards are littered with the corpses of behemoths who lost their edge.
- bkeroack 9y ago> Adds the voice of a civic minded, non-profit entity to the board. Wat. We are talking about the PRC here. A totalitarian communist regime. "Less brutal"?
- lovich 9y agoThan pure capitalism? That's caused enough human suffering that I'd give the PRC a 50/50 chance to be less brutal when all is said and done. Before anyone comes in and talks about all the pain and human suffering that capitalism allievated through progress, such as all the people lifted out of poverty, you have to give the PRC the same credit for what it's done for it's citizens
- SamReidHughes 9y agoWhat did it do to bring its citizens out of poverty?
- hnzix 9y agoSinologists have a long running debate as to whether the CPC should be praised for the Chinese Economic Miracle™ or if the Cultural Revolution just set the bar really, really low. Either way the "iron rice bowl" was as a genuine phenomenon.
- seanmcdirmid 9y agoThis is obvious: the Chinese government stopped interfering with the people who already had a culture for business and development. Deng simply stopped Mao's disasterous policies and china started to thrive.
- Canada 9y agoBeijing already has its direct hand so far up these firms it can reach the back of their teeth. Most likely this is Beijing offering a little liquidity to pay off some connected shareholders.
- oh-kumudo 9y agoFear, it is never enough. It is laughable, how insecure those Chinese red nobles are about themselves, while in absolute terms, they might be already among the most powerful human beings on earth.
- jiggunjer 9y agoThere seems to be a global correlation between people with power and reluctance to lose any of it. It's practically down to a science now.
- dforrestwilson 9y agoRandom, but I was thinking about this in the context of the U.S. democratic system. Why do we still have representatives all going to Washington D.C. to hash out decisions when each of us has the power and ability to vote remotely on single issues every day? I think it's due to your point, and I wish I had a candidate on the slate who was serious about having constituents vote securely on single issues rather than forcing us to choose a single party docket.
- y4mi 9y agothat would create a tyranny of the majority [1]. Direct Democracy is great on small scale, but a terrible idea with millions. Just imagine the damage that somebody like trump could cause within weeks with such a system. https://en.wikipedia.org/wiki/Tyranny_of_the_majority https://en.wikipedia.org/wiki/Tyranny_of_the_majority
- randcraw 9y ago
- nullnilvoid 9y agoThe big brother gets his hands in everything. They want to turn tech giants into corrupt, in-efficient, state-run companies? It is not going to be good for the Chinese tech giants. I feel bad for them.
- godzillabrennus 9y agoGood for the rest of the world.
- stephengillie 9y agoAs usual, we can depend on the Chinese government to ruin the (opportune for them) situations which they and businesses in China have worked so hard to create.
- pufferfish 9y agoI disagree, this is not a zero-sum game.
- justinzollars 9y agoBut there is only so much tech talent on Earth. I hope all the talent comes here.
- silipripang 9y agolol right. China: Widow of Nobel Laureate Feared ‘Disappeared’ https://www.hrw.org/news/2017/07/20/china-widow-nobel-laureate-feared-disappeared https://www.hrw.org/news/2017/07/20/china-widow-nobel-laurea... Tens of thousands protest in Hong Kong over jailing of democracy activists https://www.reuters.com/article/us-hongkong-politics-idUSKCN1B00CK https://www.reuters.com/article/us-hongkong-politics-idUSKCN... China Pushes ‘Human Rights With Chinese Characteristics’ at the UN https://chinachange.org/2017/10/09/china-pushes-human-rights-with-chinese-characteristics-at-the-un/ https://chinachange.org/2017/10/09/china-pushes-human-rights...
- wslh 9y agoI don't think so. Chinese investments in startups are reaching places American VCs are not interested in. If you read top VC blogs you realize that they don't want to flight far away to attend board meetings.
- elefanten 9y agoThere's the obvious state interference angle. But I wonder how that will interact with their intense protectionism and huge domestic market. Yes, the companies may not innovate as much and may lose their edge, but the Party can (and will have incentives to) just deliver a 1B+ user market by fiat. I wouldn't be optimistic about this model, but the companies may not feel as much of a disadvantage as business wisdom would dictate.
- silipripang 9y agoThere's no 1B+ user market automatically; There are so many poor people in China living on $1.50 per day. (I think maybe 8-900 Million)
- ekianjo 9y agoExactly. Many people forget that Chinais not just Shanghai or Beijing. During my travel in more rural parts I could see farmers who had virtually no tools to work their land, about everywhere. This is not a rich country, this is a poor country witha few pockets that are massively developped.
- neom 9y agoI presume Chinese tech companies are also aware of the pending large-scale, American tech negated, b2c push by China into the US.
- l5870uoo9y 9y agoI would imagine the Chinese leadership values state control of the strategic sector more than Chinese business' making money abroad.
- ragnarok451 9y agoInteresting. Do you have any articles on this? Would love to hear more.
- Rei_Murasame 9y agoThis will be interesting.
- justicezyx 9y agoIt's obvious that China is run as a state corporation. The party is like the board, which need and will have to control all major aspects of the whole "company". It's not so startling to think that any Chinese company should be controled by the government, just like any department inside a company should be controlled by the board too. This is just my observation. I do not offer any review on it's being positive or negative.
- bitL 9y agoSeems like Chinese really want to end their prosperity quickly. Qing dynasty mistakes all over again, pushing culture that doesn't work over culture that brought them prosperity.
- justicezyx 9y ago“culture that doesn't work” “culture that brought them prosperity” What are these 2 cultures?
- RikNieu 9y agoI'm assuming freedom VS authoritarianism.
- justicezyx 9y agoThe control over the economy is overall getting lowered instead of tightened. Internet companies appear to lose freedom not because Chinese government tightens control, but they are allowed to grow to certain sizes so that state control that has always been there now is applicable to them. Like everything, complexity adds up. Control comes with a cost, and needs careful planing and execution.
- bitL 9y agoQing dynasty tried to slap a modern sticker on its culture by importing western tech. It failed miserably. It seems this is something innate to Chinese mind in the frame of its historic culture - the tech aberration was tolerated since 80s, now the old way of thinking is taking over again.
- dmix 9y agoWhile Japan actually adopted western style industry and became a powerhouse quickly. Sadly Japan seems to be having their own problems albeit different but still regressive culture-driven. State-incentivized stagnation, focusing on the needs of a few small group of elite older companies from a past generation who are friends with the government, while neglecting the small young upstarts, disincentivizing risk and change. And trying to make patchwork fixes large under the guise of western economic theory.
- rdlecler1 9y agoThis is what hedgemony looks like. In 30 years we may see China making the same demands of top US/EU companies.
- mankash666 9y agoI think the appropriate response is for the West to block said companies from doing business in the West, as was done with Huawei