NATO AIR
Senior Member
fascinating reading from the Economist....
http://www.economist.com/business/displayStory.cfm?story_id=4352026
Reasons to be fearful
Foreign fears about the expansion of Chinese firms are often compounded by the murkiness of their ownership. Take Huawei, a telecoms firm that is the most global of any Chinese company, and also among the least transparent. Although technically private, its shares are probably owned by local state telecoms customers. It also has a $10 billion credit line from China Development Bank, famed for its loans to support state policy. Its founder, Ren Zhengfei, was a former People's Liberation Army officer. But the fact that no one knows who runs Huawei could weaken it. It has grown fast in a booming market, but its unclear ownership means it cannot easily get a stockmarket listing, nor reward staff with stock options. It may also hinder plans for overseas expansionlike a rumoured bid for Britain's Marconisince potential foreign partners will be wary of a firm with such an opaque ownership structure.
Fears that Chinese firms are acting as the commercial arm of an expansionist state are thus belied by a more complicated and disorderly reality. The real reason to fear China's overseas expansion is quite different. Because Chinese firms have grown up in an irrational and chaotic business environment, they may export some very bad habits. As Mr Gilboy puts it: when Japanese companies took over American ones, they mostly made them better. If the Chinese run foreign firms like they operate at home, driving prices down, misallocating capital and over-diversifying, that is genuinely something to fear.
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