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Time for the United States to Learn from China

by Elizabeth C. Economy
July 11, 2011

Employees decorate a Buick Regal car at a General Motors auto dealership in Suining, Sichuan province on November 18, 2010.

Employees decorate a Buick Regal car at a General Motors auto dealership in Suining, Sichuan province on November 18, 2010. (Stringer Shanghai/Courtesy Reuters)

The United States has spent over thirty years trying to “teach” China with, at best, mixed results. I think the time is well overdue for a turnabout in roles. We need to start learning from China.

I have been thinking about this issue for a long time, but reading Michael Dunne’s terrific new book American Wheels Chinese Roads: The Story of General Motors in China, has convinced me that we can’t wait any longer. While not the central theme of Dunne’s book, it is an important concluding thought. Dunne underscores what I think should be the strategy for the United States as we anticipate a wave of Chinese capital flowing into the United States, and it boils down to taking a page from the Chinese playbook.

1) If the Chinese want to do business here, they have to invest in manufacturing and jobs.

2) If a Chinese industry requires joint ventures for our firms to do business in China, then we require the same when that business comes calling here.

3) “Profits from operations stay inside the United States. Repatriation to China will be limited and will require approvals from the U.S. government…it’s just quid pro quid.”

For most of the book, Dunne leads up to this point with a fascinating story about GM’s adventures in China. He does what a lot of business books on China do—albeit in an entertaining way that only a few rival (Mr. China and Poorly Made in China come to mind in this vein): He helps us  understand what it takes to make money in China. First off, you need nerves of steel. Dunne tells a very entertaining story right up front about Peter Badore, who negotiated on behalf of Chrysler. Badore would routinely arrive two days before his meetings to get adjusted to the time change in order to take away the advantage the Chinese had come to expect from Americans who were disoriented by the day to night transition. Badore defied all logic by talking non-stop for hours on end until the Chinese finally called uncle and gave in to his demands.  You also need a license, relationships, persistence, and an understanding of how Chinese culture and preferences differ from those in America.  For example, as Dunne discusses, over time, GM reworked its Buick to adjust for the fact that the Chinese like big cars but small engines that don’t guzzle gas.  They don’t care nearly as much as Americans about passing or getting a fast start off a stoplight.

Dunne’s book is worth reading for an inside scoop on an American company’s successes and travails in China, but the real value comes with his implicit warning:  The United States has a very slim window of opportunity to get our policy on Chinese investment right. If we don’t play tough up front, we will quickly be out of the game.

Post a Comment 5 Comments

  • Posted by Jackson

    Very interesting book indeed. A roller-coaster ride for GM, but one that cannot be easily reproduced

  • Posted by Joao Pedro

    Ok, but there is one thing I dont understand. If I got your article right, your are supposing chinese (or foreign. in general) investments should be treated differently from the american’s inside the US. Is that legal (considering the WTO´s rules)? Ifthose rules would apply to american business too, how would they manage the other parts of their business abroad?

  • Posted by Anon

    Joao Pedro,

    Inconsistent with the spirit of WTO norms and broader US policy on international investment, perhaps. But, it would put the ball in China’s court to raise a challenge, and, in doing so, they would be challenging a central tenent of their own economic policy. It would be a dangerous precedent for them to risk establishing.

  • Posted by God

    its not the economic issue the CFR cares about in this case here. i mean in both countries we don’t have a free market, for that we have central bankers who control everything.

    so its much more important to know, that without the rockefeller oil and banking-dynastie, there wouldnt be neither the CFR, nor todays china. the rockefellers were financing the nationalists and the communists in china(banking families always finance both parties in a war), until they stopped their help to the nationalists after 10 years and let the communist mao and his friends win the war.

    dictator mao and the communist system, which they installed, killed maybe more than 100 million civilians, which david rockefeller, founder of the CFR, described as following:

    “The social experiment in China under Chairman Mao’s leadership is one of the most important and successful in human history. How extensively China opens up and how the world interprets and reacts to the social innovations is certain to have a profound impact on the future of many nations.”

    so they made todays china, the suppressing police state dictatorship we know, through companies like bechtel and co.

    and it is indeed since then the plan of families like rockefeller and all the institutions they have(not only CFR) to turn the USA into a similiar police state in 3th world country style, with the people working for 1 dollar, destroying middle-class and the economy etc.

    as david rockefeller, founder of CFR, mentioned many times, he doesn’t have good things in mind for the american people:

    “…Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as ‘internationalists’ and of conspiring with others around the world to build a more integrated global political and economic structure — one world, if you will. If that’s the charge, I stand guilty, and I am proud of it.”

    so i’m not american, mrs elizabeth economy, but if you have the same in mind, i’d like to tell you that this is high, very high treason against the republic and people of the USA(to put it mildly). you should be aware of that fact each and every second you talk to a free american citizen, or write your next story.

  • Posted by Dave Wang

    New York Times introduced in 2009 Dr. Dave Wang’s study on Benjamin Franklin’s efforts to learn from Chinese culture. Here is the link

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