Waiting For A Chinese Saviour
he classic London taxi – it is perhaps the most “nationally” iconic symbol one can think of. All in black, massively oversized, and a bit out of date style-wise - step into one with bags in hand and no similar customer experience compares. Yet even the London taxi, the traveler’s friend for many decades, is looking to China for salvation in uncertain times. John Russell, CEO of the London Taxi manufacturer Manganese Bronze, was recently quoted in the Financial Times (September 21, 2009) as saying: “We can’t stand on our own two feet without China.”
In a completely different industry and country, Christer Haglund, Finnair’s Senior Vice President for Corporate Communications, recently wrote in his Editor’s Letter in the airline’s Blue Wings magazine that: “There is no recovery in sight in the West …. In other parts of the world the reality may differ. In China, for example, the latest figures show impressive growth … These figures make it easy to predict that the sun will continue to rise in the East.” It is then notable that the airline bills itself as the “fast airline to Asia”! In fact, in 2008 alone, Chinese firms invested almost $56 billion in foreign companies (64% of which came from state-owned enterprises), many of which would not have survived without such investments and takeovers. Is this the way many of our firms will survive the crisis? Will China really become the savior for failing economic players in Western economies?
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Image: Reuters
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The new TX4 London taxi, which was manufactured by LTI Ltd, China | |
It was Beijing Automotive’s reported 275 Euro million investment, for example, that apparently enabled the recent Koenigsegg-led consortium to buy imperilled Swedish auto-maker Saab from General Motors, thereby “saving” a venerable European mark. And, now, of course, Saab is eagerly considering manufacturing in China for the Chinese market. Similarly, China-based Geely appears to be the best-bet to “save” Volvo.
Hummer, politely referred to as the “All-American Super Car” and which entered the market during the Gulf War, saw its luster fade with rising oil prices. Hummer was actually nearly saved by Sichuan Tengzhong Heavy Machinery Company, until the Chinese government stepped-in and cancelled the deal. Sinochem’s unsolicited offer for Australian fertilizer-maker Nufarm, while not a clear-cut “savior story”, represents the allure of a Chinese investor to a firm issuing profit warnings, whose stock prices were way below previous highs.
Whole countries and even continents have also joined the search for a Chinese “savior”. Much of sub-Saharan Africa is apparently relying on Chinese largesse to pull them out of their poverty. While some question China’s real motivation for providing such aid, for most Africans even aid with strings attached is an improvement over the absence of attention that has marked the continent for so long. In the industrialized world, UK Prime Minister Gordon Brown looked to China early in the crisis (October 2008) when he proposed a “bailout fund” for wayward national economies and included China among the donors (read “saviors”):
"I think it is the countries that have got substantial reserves, the oil-rich countries and others who are going to be the biggest contributors to this fund. Obviously I am going to the Gulf at the weekend and it is one of the items that will be on the discussion with all the international leaders. China also has very substantial reserves.”
Even Europe as a whole looked to China in October 2008 when European Commission President José Manuel Barroso, at the Asian-European summit in Beijing, stated: "We swim together, or we sink together."
A noble sentiment, to be sure, from someone who at that point was at risk of drowning, but the Chinese were too polite to merely say “sink.” Instead, Premier Wen Jiabao suggested that China’s first priority was to keep their own economy running smoothly. This, said Mr. Wen, was China's "greatest contribution to the world.” In the year following that statement, China has done little to adopt the savior’s role, at least at the national level, and there are good reasons why it is likely that they will continue to decline the opportunity to “save” the rest of the world.
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