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Fred predicts Chinese companies will make a big entrance to the US market in 2015. At the same time, China restricts US companies in their markets (Gmail block

by andyl 12y ago

Fred predicts Chinese companies will make a big entrance to the US market in 2015. At the same time, China restricts US companies in their markets (Gmail blocking being the latest example) Why do we (in America) allow this asymmetry? Is it a mistake to give Chinese companies an open door?

fredwilson 12y ago
that is a great question. there are two sides to this argument. one side says if they block you, you should block them. the other side says blocking trade backfires and that open markets create more opportunity even if you can't sell into their market
- wslh 12y ago
  You can also block them or negotiate a better deal later once Xiaomi is well positioned in the US market.
api 12y ago
There is serious money in labor arbitrage for the top financial and executive class. We've had decades of heavy lobbying for these kinds of asymmetries to break the back of domestic labor and smaller competitors.
- avanishgiri 12y ago
  What does labor arbitrage have to do with protectionism in favor of domestic firms? e.g., RenRen over Facebook or Baidu over Google
  - deleted 12y ago
    [deleted]
  - Retra 12y ago
    Those two companies spread mostly by word-of-mouth, so I don't see how either of those applies.
npalli 12y ago
General Motors makes 58% of its entire profit in the Chinese Car market. Ford makes 18% of its profit from China. So clearly, US gains by trade in cars. This is clearly one example. The broader point is that a whole lot of US companies make money in China. http://www.wsj.com/articles/detroits-road-through-china-narrows-ahead-heard-on-the-street-1419922609 http://www.wsj.com/articles/detroits-road-through-china-narr...
- seanmcdirmid 12y ago
  But don't that have to split those with their JVs, or is that their actual non divided take? (Forgive me, WSJ is blocked by the GFW) The US has a decent case against China if they want to go to the WTO, but I guess they've decided for now at least, it's not worth it.
  - tacticus 12y ago
    Wouldn't the US need to at least follow WTO findings if they wanted to use the WTO for that or risk China just ignoring it.
    - seanmcdirmid 12y ago
      Sure, but I don't think the case is weak. Much of China's internet blocking is blatantly economic, and whats more: China refuses to officially acknowledge that it blocks these websites at all, it just does. However, like everyone says, US companies make money in China, while the US wants to maintain a strong relationship, while WTO action would probably just devolve into another pointless tit for tat, so why bother going there?
venomsnake 12y ago
Depends on which side will be hurt more. Chinese companies have limited direct sales in US. As the congress/ Huawei affair a couple of years ago showed that they are just not welcome. While a lot of stuff is made in china, it is OEM-ed for american companies.
x1798DE 12y ago
You mean why doesn't our (hopefully non-authoritarian) government not prevent Americans from buying things from Chinese people? I don't think we should be taking our policy advice from the Chinese government.

by andyl 12y ago

fredwilson 12y ago

that is a great question. there are two sides to this argument. one side says if they block you, you should block them. the other side says blocking trade backfires and that open markets create more opportunity even if you can't sell into their market

wslh 12y ago
You can also block them or negotiate a better deal later once Xiaomi is well positioned in the US market.

api 12y ago

There is serious money in labor arbitrage for the top financial and executive class. We've had decades of heavy lobbying for these kinds of asymmetries to break the back of domestic labor and smaller competitors.

avanishgiri 12y ago
What does labor arbitrage have to do with protectionism in favor of domestic firms? e.g., RenRen over Facebook or Baidu over Google
- deleted 12y ago
  [deleted]
- Retra 12y ago
  Those two companies spread mostly by word-of-mouth, so I don't see how either of those applies.

npalli 12y ago

General Motors makes 58% of its entire profit in the Chinese Car market. Ford makes 18% of its profit from China. So clearly, US gains by trade in cars. This is clearly one example. The broader point is that a whole lot of US companies make money in China. http://www.wsj.com/articles/detroits-road-through-china-narrows-ahead-heard-on-the-street-1419922609 http://www.wsj.com/articles/detroits-road-through-china-narr...

seanmcdirmid 12y ago
But don't that have to split those with their JVs, or is that their actual non divided take? (Forgive me, WSJ is blocked by the GFW) The US has a decent case against China if they want to go to the WTO, but I guess they've decided for now at least, it's not worth it.
- tacticus 12y ago
  Wouldn't the US need to at least follow WTO findings if they wanted to use the WTO for that or risk China just ignoring it.
  - seanmcdirmid 12y ago
    Sure, but I don't think the case is weak. Much of China's internet blocking is blatantly economic, and whats more: China refuses to officially acknowledge that it blocks these websites at all, it just does. However, like everyone says, US companies make money in China, while the US wants to maintain a strong relationship, while WTO action would probably just devolve into another pointless tit for tat, so why bother going there?

venomsnake 12y ago

Depends on which side will be hurt more. Chinese companies have limited direct sales in US. As the congress/ Huawei affair a couple of years ago showed that they are just not welcome. While a lot of stuff is made in china, it is OEM-ed for american companies.

x1798DE 12y ago

You mean why doesn't our (hopefully non-authoritarian) government not prevent Americans from buying things from Chinese people? I don't think we should be taking our policy advice from the Chinese government.