We've been saying for almost a year that U.S. and European automakers need to watch their backs when dealing with their government-owned Chinese joint venture partners. Now that GM is paying a quarter billion dollars to hand over all their hybrid research set up an environmental research center in the military dictatorship known as The People's Republic of China, the Gerson Lehrman Group is sounding the same alarm. Jack Lifton says GM's "business model based on a shortsighted belief in mainly short term solutions to long term problems" has "led them to their latest mistake with regard to the Chinese OEM automotive industry." After decades of building up the Chinese auto industry, they now "have to bring to China as a gift the latest technology required for cars made to be sold in the American and European markets" to sell their products in the Chinese market. If a Chinese company should offer to buy Ford or even Chrysler in the near future, "we should thank GM for so generously giving China a good part of the technology it will have needed to close the [market] gap." Ruh-roh.
Find Reviews by Make:
Read all comments
I am astounded at the willingness with which western companies have transferred intellectual capital and patents to China – and I say that as someone who works/has worked with companies guilty of this “sin.”
We are dealing with a nation that does not recognize patent rights, and that openly copies designs, technologies and intellectual property, galore. In fact, they copy entire factories – including car assembly plants – from their western blueprints.
Why are western companies doing this? Because manufacturing in China is dirt cheap, which helps management look good on the balance sheet for the few short years in which they are managers of the company. The quarterly statements keep the shareholders happy, and no one considers the long view: what happens down the road.
James Dyson, the inventor of Dyson’s Vacuum Cleaner, fought outsourcing for as long as he could, yet in the end he was forced to relocate manufacturing. He remains convinced that the West is committing a serious mistake – manufacturing know-how is being dismantled in Europe and the US, work forces are laid off, skills are lost — we simply won’t be able to retool efficiently, particularly as manufacturing ability will develop in the countries we outsource to, while ours will soon be non-existent.
Dyson also permits himself to raise doubts about “the finance and service industries taking up the slack in the economy after manufacturing is gone.” In his opinion, no society with advanced infrastructure can exist which does not build upon strong engineering and manufacturing skills.
Any politicians who thought that hedge fund managers were the path to economic salvation, are probably having sleepless nights now.
At least the company executives behind this madness are all equipped with handy parachutes.
Does no one in government see this kind of trade with a communist-like state as a national security risk? China will be a superpower above the USA in 20-30 years and we are just handing it to them.
I can’t even find the words to describe how terrible of an idea this is. GM seemed to be on a semi-decent roll lately and then they announce this? You want to see them succeed so badly, but no good can come from this plan (at least from the US viewpoint).
Nice job choosing China (over hmmm, Detroit?) just to save a few bucks. I’m astounded that GM actually believes they are going to sell their future cars in the Chinese market. Anyone else planning on buying Chery stock in the near future?
“China will be a superpower above the USA in 20-30 years …”
China seems to be putting its efforts into public works rather than Naval or Air power. My hope for the US is that, as oil declines, mobilizing their population to wage intercontinental war will simply be too expensive for China.
The US isn’t a superpower because they have a lot of impressive military hardware, or because they have a huge army. The US is a superpower because it is the world’s largest economy, and it has been able to leverage that economy to dictate terms (and, yeah, to buy a whole bunch of impressive military hardware) and influence other nations.
In the near future China will take over as the world’s pre-eminent economy (with a little help from their multinational friends) and they will be in a position to dicate terms.
I’d suggest we all start taking Mandarin lessons, except I believe that peak oil will begin to unravel the globalisation phenomenon and undo the whole concept of global superpowers before we really need to worry about the six ways to pronounce a kanji symbol.
Didn’t former President Bill Clinton sell missile technology to China during his administration ? I can’t seem to recall what America got in return.
GM is use to threats of violence from the “Legal Mafias” and their mini-me Labor Unions…No biggy.
GM has technology? Who knew.
Donal, don’t count on it. The US ability to project power looks pretty weak going forward. The fighting forces are just the tip of the spear, logistical capabilities pretty much determine what can and cannot be achieved militarily.
While it is true that the US “outspends” the rest of the world’s militaries combined, they also out-waste them as well. Congress has funded many systems based on Pork barrel politics alone. Successive administrations have championed initiatives that would do nothing beyond line the pockets of their cronies and supporters.
Case and point: pre 911, the former Sec of State Baker was at Yale to promote missile defense. I got a chance to buttonhole him and ask him how he could justify such horrendous expenditures when the primary method of attack by rogue elements seemed to involve Ryder trucks. His answer was: why not defend against both. Hey, your tax dollars at work…
Anyhow, as 911 shows, it’s never what you expect, it is never what you are prepared to defend against. North Korea, or any rogue actor could make more effective use of nuclear torpedoes from freighters…you can’t shoot those down. They are many times more accurate than unguided missiles. They are cheaper than any non preemptive defense could be.
With regard to China, it’s patience is being rewarded. America is being bled white in Iraq, and the return on that investment is decidedly meagre. If/when China upgrades its military, it will project power with vast quantities of shiny new equipment, choosing a time when the US is exhausted from dubious commitments. China will have clear, unpoliticized objectives, short supply lines and brilliant, unexpected strategies.
“Johnny Canada
Didn’t former President Bill Clinton sell missile technology to China during his administration ? I can’t seem to recall what America got in return.”
America got Bill Clinton as President again – due to some nice fancy footwork with dubious monies being given to the Dumocratic party machine.
Not that I’m a Republicrat. I’m not.
I wouldn’t get so worried about China as a superpower. They are hard-pressed to feed 1.3 billion people, and India is rising as a natural counter-weight to them in Asia. Going to the interior away from the coast and China becomes third-world really fast. The disregard for intellectual property in China hurts them more than it hurts us because it dooms them to be forever imitators, never realizing their best human capital. They will not invent the Next Big Thing if there is no incentive to do so.
GM shipping hybrid research over to China is obviously not in the long-term interest of the company, but only if you perceive GM to be an American company. In my opinion, GM has metastasized into an example of the sorts of Ivy League incompetence you normally see in government bureaucracy or the fifth estate. Look at the way all these Ivy League-types run Iraq or Homeland Security (Katrina anyone?) and you see parallels to the kinds of blinders and organizational/cultural disconnects between management and operations you see in GM (or Ford for that matter).
GM is a doomed outfit as an American company, their success in China is the result of the company essentially having a clean slate to work with instead of the legacy problems stateside they are constantly massaging and managing, but never solving. Eventually, GM will make and sell more cars in China than it does here, and unlike its American counterpart, it will make money making and selling those automobiles. As the American GM slowly kills itself the one in China will fill the vacuum and take its place whether they build a hybrid research facility in China or in Lansing.
Giving China technology to use to compete directly against GM in the American market would be worth it if they had a legitimate chance at selling vehicles tarif free when the Chinese market reaches its peak…
Missile defense is not invalidated because non national groups (terrorists) can fly aiplanes into buildings or sail nuke laden ships into harbors. Legitimate threats can come from:
Rogue nations that aquire nuke and missle technology. N. Korea and Iran could be just the beginning.
Terrorist groups that might take over an exisiting nuclear power (Pakistan, for instance, or even Russia)
Terrorist groups that are able to temporarily take over a launch facility, even if they don’t overthrow the entire government.
Remember the power in nukes is not just in having them but in the threat to use them. It limits the options of the nation being threatened unless they have a counter measure in place. MAD won’t work with a terrorist entity because they are already willing to die in suicide attacks.
Also consider that a an effective point defense system is also good because it helps you protect your allies from threats (think Israel) and not have to commit combat troops because of treaty commitments to defend them if attacked.
Cost is a legitimate argument as it is with all weapons systems, but the above is just my thoughts on the rationalization for wanting such a system if it can be afforded.
China is racing to achieve second-world prosperity before it is overwhelmed by a demographic Tsunami. Like many other countries with too-low birth rates, it is going to become a nation of geezers. An aging population will make internal economic growth more difficult. Worse, that may lead it to become more aggressive in foreign and military affairs.
The father of modern communism Mr. Lenin used to say that the capitalists will sell the rope with which they will be hanged.
Well, he was wrong. The corporate Aparatchiks will actually build the whole rope factory for the hangmen and do it for free.
I like the tag line:
“GM – short term solutions to long term problems”
This china bashing has been going too far.
Had it not be China and India buying 60% of commercial jets from Ford CEO’s former employer, Boeing would have filed chapter 11 by now.
Thanks to outsourcing of call centers to Asia, Cisco, Lucent etc made a windfall by selling telecom and networking equiment to those countires. Sure some folks working in call centres in rural Nebraksa and Mississpi lost jobs, but even presidential candidates do not care about them anyway.
Pop quiz: identify the dicitatorship which war started that killed half-million civilians in this decade.
Hint: It not communist military dictatorship of China.
windswords:
Missile defense is invalidated because of the opportunity costs for the national treasure involved.
What’s more the current system couldn’t shoot down a pie in the sky, under strict test parameters, let alone deal with a surprise attack. In short, despite funneling untold billions into the project, America does not have a counter measure in place.
The logical place for such a weapons system is in orbit, but Russia and China would treat such a provocation as both a threat to their national security, and a skeet tournament.
I guarantee military and intelligence agencies are not holding their breath for a comprehensive umbrella. If Pakistan dissolves into chaos, it will be neutered in a day. I understand the contingencies to do so have been in place for years and that teams constantly monitor Pakistani sites. B-52s from Diego Garcia would quickly crater hot spots, and perhaps give rogue states everywhere a sense of what the US military can do when the gloves come off.
I say again, missile defense is a nebulous project designed primarily to line the pockets of well connected businessmen, ex-military brass and former politicians. It is only a priority because money can be siphoned off without real scrutiny.
drifter:
I don’t see much evidence of China bashing, and I look for stuff like that. Everyone seems to be criticizing the strategic decision making of both the US government, and American industry.
One such decision was of course, to go to war in Iraq, and that region is now steeped in blood. The US remains a robust democracy however, and as a Canadian, I see little evidence of a drift towards dictatorship. Just tons of graft and corruption.
There are several problems with China becoming the preeminent power. One, they still don’t have real property rights and a tradition of respecting them. It’s a simple concept but very difficult to implement in a culture with no history of it. And without that concept, a culture will always lag behind on the innovation front. Why should a Chinese citizen be creative if someone with more connections can just take it away from you? It’s why a tiny Hong Kong or small Taiwan have done so much with much less than the mainland.
Two, and this is critical — demographics. China, thanks to the continuing One Child Policy and it’s preference for sons over daughters, is rapidly aging. Already, it looks like China will actually begin to lose population in about twenty years. In fact, these estimates keep on getting worse and worse each year for China’s growth. Unlike America, it isn’t going to be attracting hordes of immigrants (outside of starving North Koreans) so the low total fertility rate is the looming disaster that will limit China’s projection of power. It’s very hard in a society with a history of ancestor worship to casually send a son off to war when he is the sole descendant of two parents, four grandparents, eight great-grandparents, and soon sixteen great-great grandparents. And once Chinese woman move in great numbers into menopause, it’ll be impossible to change the demographic trends.
The reality is that the US is continuing it’s steady march from nearly empty continent to the most populous nation on Earth not south of the Himalayas.
Innovation and creativity is necessary in the long run for a society to become top dog. If you rely on stealing it, you’ll always lag behind. It’s one reason why the USSR never could catch up to the USA. You can’t steal it fast enough. Furthermore, your people lack the incentives to properly take advantage of what you steal.
I’m Chinese. I think the tone is a little alarmist, but at the same time,
1) There are plenty of Chinese who say and believe much worse things about the US, so I guess it all evens out at the end, and
2) Compared to some of the things said here about GM, Chrysler, or even Mr. Bush, all of which are notionally American, it’s pretty tame.
In any case, I guess throwing around alarmist tidbits about China is kind of like going to other countries telling people that the US was founded by slave owners. Trying to establish any kind of historical and/or cultural context alongside the tidbits is very hard. I don’t know what journalists could do to help people with this, it’s the same in any country, people just aren’t interested enough in furriners to see beyond it.
[Kevin Smith]I think we should all have sex with each other.[/Kevin Smith]
Innovation and creativity is necessary in the long run for a society to become top dog. If you rely on stealing it, you’ll always lag behind. It’s one reason why the USSR never could catch up to the USA. You can’t steal it fast enough. Furthermore, your people lack the incentives to properly take advantage of what you steal.
Perhaps, but its hardly uncommon for developing nations to steal technology. How do you think US industry got off the ground? By hiring British ex pats and ignoring British patents of course. In time they will catch up. People said the same thing about Japan back in the day. Toyota got its start making knockoff Dodge and Chevy products. Hard to imagine that today, but its the truth.
KBW:
Good one! The major difference is that Britain did its damnedest to prevent the brain drain. Even enacted laws to prevent the emigration of skilled tradesmen and ban the export of technologies/processes.
eh_political,
You can’t have it both ways. In one post you say “the US ability to project power looks pretty weak going forward” and in another post you say “If Pakistan dissolves into chaos, it will be neutered in a day”. Which is it?
As for missile defense technological hurdles there have been many things throughout history that people have said was impossible or would cost too much. This computer that I am typing away on was not possible just 30 years ago. Actually it was but it would have taken up the entire floor of a building, cost many times my yearly salary and I would be using a punch key machine instead of a keyboard/monitor. Oh yea and no spell checker. So I don’t write off something because the technology is not mature or developed to it’s fullest potential. It is the nature of human beings to tackle big obstacles and overcome them. After all, we all still hope for viable battery technology for cars and even though were not there yet I believe it will happen.
windswords,
The US military has been issuing fairly blunt assessments about future capabilities going forward. I am sure you are aware of that. The difference between occupying Iraq, with all of the logistical headaches and major troop commitments, and a surgical strike using some of the most elite elements of the US military couldn’t be more, um different.
As far as comparing a single purpose weapons system to the incredibly versatile PC, I would have aimed a touch lower. First, its like comparing “apples” (sorry Woz) to um, lets say unicorns. In fact missile defense is the modern day Maginot line. It soaks up massive amounts of national treasure, and adversaries will find a way to work around it.
So I agree, the technology is not mature, it is in fact immature. And useless. And costly.
So, “the US ability to project power looks pretty weak going forward” and “If Pakistan dissolves into chaos, it will be neutered in a day”. I sincerely hope Pakistan muddles through.
Its funny, we had a mostly working ABM system in the 1970s called Safeguard. It was some pretty amazing stuff even by today’s standards. Missiles which could reach Mach 10 in less than 5 seconds. And you though a 5 second 0-60 time was fast. Alas, Nixon canceled the program and now we have to start from scratch.
http://www.nuclearabms.info/Sprint.html
tentacles:
Does China have a restriction on highly educated people leaving their country? I have heard this rumor a few times, and in conjunction with the huge influx of foreign people (a vast majority are Chinese) becoming professors at the college I just graduated from, it seems plausible.
tentacles :
November 7th, 2007 at 8:28 pm wrote:
I’m Chinese. I think the tone is a little alarmist
Yes it is. No one need worry about China taking over the US. This is the country that built the Great Wall to keep out foreign (Mongol) invaders. The only imperialistic aspirations China has is to bring Taiwan back into the People’s Republic. Global domination is not in the culture of the Chinese.
As for GM, my take is that this is a lot of PR and not much teeth. After all, GM has been in China for over 10 years and has had lots of experience with intellectual property issues (remember the Chery incident) so give them some credit for not being so naive and foolish as to walk in with their latest technology and just hand it to them.
It is a good PR move to increase GM’s business in China. The country is an environmental disaster, and it will have far-reaching long-term consequences to their economic development and political stability. So GM appearing to take an interest in China’s environmental problems is a good business strategy. In China it’s all about appearances anyway.