In reading the June 30th Economist article: Welcome, bienvenue, willkommen, I was struck by the inconsistent attitude of Americans in regard to Chinese investment domestically. American companies are driven to grow into the Chinese market and gobble up every bit of revenue generated by the up and coming middle class and booming consumer markets created there. The American people encourage this initiative through continued investment into the stock market and the practice of rewarding companies and executives only for rapid, immediate growth. Given the mature status of most developed markets, making this kind of growth sustainable is predicated on continued advancement into emerging markets. So of course, it seems more than a little hypocritical that the American public and political leaders are providing such a hostile environment for potential Chinese investors. Isn’t this another typical case of the American practice of “do what I say, not what I do?”
Right now China has lots of “disposable income”, and the likely activity when one is in such an enviable position is…drumroll please…to invest. European nations, albeit in some cases begrudgingly, have taken the opportunity to “welcome” Chinese investors. This stance allows for more than just an infusion of cash. European companies get direct line access into the Chinese marketplace. According to Sweden’s Volvo, recently purchased by Chinese car manufacturer Geely, China has become its “second home market.” France’s Club Med, happy recipient of Chinese investment funds, is another success story from the article having opened its first resort in China. For investors to be happy, the company invested in needs to prosper, so obviously it is in everyone’s best interest that the venture succeeds. Chinese investors observe this rule just like everyone else.
The most often cited mode of failure for the China entrance model is lack of knowledge of Chinese market forces whether they be from consumer, political or local competitor pressures. Why is it then, that the American government is assisting domestic firms in turning down a gift-wrapped opportunity to partner and collaboratively work out these issues with willing, cash-laden potential partners? Sure, the Chinese are looking for technological and marketing expertise and as intelligent humans are using a common method of joint venture entry to access it. How is this any different from American firms buying up or joining forces with those in China?
With the world flattening more and more each day, it seems clear that a homogenous mix of business across the globe is the most likely future view. The United States needs to take a step forward out of isolationism and start thinking of what we can learn from emerging markets and opportunities instead of hiding our heads in the sand and pretending that the only acceptable means of global expansion is FROM the United State, instead of TO it.
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