China’s expansion : threat or opportunity ?

An interesting article on China, on the fact that it is buying a lot of companies in the world, and whether that is a threat to the world or not.

Some facts on how large China’s “ownership” in the rest of the world is :

  • Chinese buyers—mostly opaque, often run by the Communist Party and sometimes driven by politics as well as profit—have accounted for a tenth of cross-border deals by value this year
  • China’s firms are giants that until now have been inward-looking but are starting to use their vast resources abroad.
  • Chinese firms own just 6% of global investment in international business.  (Britain and America peaked with a share of about 50%, in 1914 and 1967 respectively)

Why we are afraid, but should not be :

  • The idea that an opaque government might come to dominate global capitalism is unappealing
  • China is miles away from posing this kind of threat: most of its firms are only just finding their feet abroad.
  • Nor is China’s system as monolithic as foreigners often assume. State companies compete at home and their decision-making is consensual rather than dictatorial. Not all Chinese companies are state-directed.

The good for “us” :

  • To succeed abroad, Chinese companies will have to adapt. That means hiring local managers, investing in local research and placating local concerns—for example by listing subsidiaries locally.
  • As it invests in the global economy, so its interests will become increasingly aligned with the rest of the world’s;

 

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