Tag Archives: Business

Asahi: Stating the Obvious With a Little Attitude

The English version of the Asahi Shimbun article about the U.S. action against China in the WTO over intellectual property has a pretty obvious headline: “WTO complaints against China put Japan in a bind.” It addresses the fact that the U.S. government asked Japan to join the action (and they haven’t decided yet as far as I’ve seen), and how that’s kind of awkward when Chinese Premier Wen Jiabao is in Tokyo for a “thawing” visit.

But the final two paragraphs seem to make a point of sticking it to China more than the United States:

Honda Motor Co., for example, has won a suit against a Chinese company that made “Hongda” motorcycles. In the 10 years ending in January, Chinese authorities acted on about 2,000 cases of intellectual property rights violations involving Honda products and technology.

Meanwhile, Chinese vendors sell batteries labeled “Sqny” (not Sony Corp.) and pirated versions of Japanese anime DVDs.

U.S. Ethanol Partly Drives Brazil's Soy Exports to China

In a rare U.S. newspaper article that reveals the complexity of global entanglements over something so simple as food, The New York Times notes Brazil’s status as the largest soybean exporter in the world and looks at China’s involvement. Some history:

Once, the biggest bilateral food trade flowed between the United States, the world’s largest food exporter, and Japan. But countries with vast arable land available for expansion, particularly Brazil, are now racing to meet demand in China, whose population of 1.3 billion is 10 times that of Japan’s.

Farmers in the United States have started planting far more corn for ethanol at the expense of other crops, including soybeans. But after the United States grain embargo by President Richard M. Nixon in the early 1970s helped spawn Brazil’s soybean industry, American farmers are not giving up their leading role in the grain trade easily.

They’re not giving up, but even the United States isn’t big enough to feed China. Perhaps the most interesting angle of China’s involvements in countries whose exports fuel China’s population is the incentive for Chinese business and government to improve infrastructure in supplier economies.

The Chinese want to connect directly with Brazilian farmers, bypassing the multinational grain merchants. While they have yet to make a major purchase of cropland in Brazil, they are looking to invest in improved facilities and upgrade the antiquated rail system.

This presents a huge opportunity to Brazil, but it might not help as much as it could if not managed correctly. Developing a rail system for more efficient soy exports might not build the kind of rail network Brazil would want for general development. The challenge for Brazilian authorities is to make sure what Chinese groups build helps Brazil.

UPDATE: How could I miss the companion article about the infrastructure! (Although I feel like I’ve read something almost identical in the last year.) The short of it is that most of these soybeans are moved by truck on the Brazilian end—not exactly a model of efficiency. And China’s involvement has remained nominal and ambiguous:

“A lot was said a few years ago about big partnerships between C.V.R.D. and China to boost the country’s railroad infrastructure,” a company spokesman, Fernando Thompson, said. “None of those plans have gone forward, and we have no current discussions under way with Chinese companies” on expansion.

C.V.R.D. may help build a new north-south railway link, Mr. Bartolomeu said — but only if it “makes economic sense.” For now, amid sharp competition for space on cargo trains, the company has reduced the soybean products it shipped by rail last year by 11 percent, to 5.8 million tons. The level was still more than double the soy that the company shipped in 2001.

I still think it would be wise for the Brazilian government to try to use this opportunity and make it “make economic sense” for them to get better infrastructure.

How a Small U.S. or European Company Turns to China

China Law Blog tells the story of a worried client deciding whether to do business in China, revealing the decisions set before a small or medium-sized companies in the United States or Europe when faced with competitors who manufacture in China.

I talked a lot with my small company client today about the risks of China and what his company can do to minimize those risks, all the while emphasizing there is no way to wholly eliminate them. Towards the end of our conversation, he said, “it sounds like you are telling me I should not go into China.” I then told him I was actually telling him the opposite, but as his lawyer I felt it my job to highlight the risks and focus on minimizing them. I then went on to say that based on what he had told me, the biggest risk of all would be to not go into China even though it had become pretty clear that failing to do so would likely eventually mean the end of his business.

Is the U.S. Outsourcing Pollution to China?

A China Daily (state-supported media) report asserts that the “western” media ignore the environmental impact of international business moving manufacturing to China. The story is on a think tank report from the China Council for International Co-operation on Environment and Development (CCICED).

The report suggests that when trade between China and its partners exerts an environmental impact, the responsibility should be borne by all parties, including manufacturers, traders and consumers in the product chain.

For example, it has been alleged that China poses a threat to tropical forests by importing timber from Southeast Asian countries. But 70 per cent of the timber is made into furniture and exported to the United States and European Union countries.

China’s environmental impact on Southeast Asia is far more exaggerated than the economic benefits it brings to the region, the report noted.

“China has been playing its role as a global workshop in the past two decades,” said Shen Guofang, vice-president of the Chinese Academy of Engineering and core expert of the CCICED. “We import the raw material, produce, send the products abroad and keep the waste and pollution ourselves.”

The Corporate Social Responsibility in Asia blog notes that the effect may be even worse than moving the pollution.

The West is basically sending its pollution to China and that benefits the West! But when you consider China’s huge energy inefficiency and serious poor implementation of environmental regulations, I fear the net impact is probably far worse.

Indeed, if businesses move manufacturing from a country with a strict set of environmental regulations to China, the motivation to be clean disappears, and the externalized cost to the environment increases.

It seems that this should be a major topic of concern for U.S. activists, who might exert pressure on U.S. businesses.

For Foreign Businesses in China, the Peril of Law and Order

Some foreign businesses in China may not see the need to register. Today brings an urgent warning from Dan Harris on China Law Blog:

Consider this China Law Blog’s first URGENT ALERT.

For the second time in a month, we are hearing of mounting Chinese government efforts to crack down on unregistered foreign companies doing business in China. We see this as part and parcel of Beijing’s attempt to moderate rising Chinese resentment against foreign companies operating in China. [link]

I found this informative blog recently. It’s worth keeping an eye on, full of reminders about the minefield of law and regulation in a marketizing China.