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Business in China: It's Complicated

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Ian Bremmer describes the potential risks private corporations face if they come up against the Chinese state. (2 min., 18 sec.)

NEW YORK, June 7, 2010 - The relationship between the United States and China has grown more complicated in the last few years, and perhaps nowhere more than in the world of business, according to a group of panelists speaking at Asia Society.

Moderator Rebecca Blumenstein, deputy managing editor of international news at the Wall Street Journal, noted that only two years ago the Beijing Olympics brought a renewed sense of optimism among foreign companies about the prospects for conducting business in China. But as Ian Bremmer, president of the Eurasia Group and author of The End of the Free Market: Who Wins the War Between States and Corporations? pointed out, the world has changed since then. In particular, the recent failures in major free market economies—in Europe, the US, and Japan—have made China more reluctant to embrace greater free market strategies.

"There is not much good news from the free market world right now," Bremmer said. "If you are China, looking out there, recognizing that you need economic growth long-term forpolitical survival, you must come up with a hedging strategy that makes you less dependent on the West long-term." This means less dependence on foreign capital and more support for indigenous innovation and developing domestic consumption, he explained.

Regarding Google's decision to pull out of China, Senior Vice President for International Affairs at the US Chamber of Commerce Myron Brilliant argued that leaving was perhaps not the best way to handle the situation. Bremmer offered his own take, eliciting chuckles from the audience. "I would have advised China to get rid of Google a long time ago. Get Google the hell out."

So what exactly do the US and China want? Brilliant said US businesses do not want "to beundermined by illegal activity in the realms of intellectual property and technology." He went on to say that American businesses want to compete on a level playing field. 

Bremmer agreed that the Chinese also want a level playing field, just not the US version ofone. He also pointed out that while China may no longer need US capital as much, they will still need management, entrepreneurship, healthcare improvements, technology, and distribution to achieve long-term growth.

"The US and China need to have a great relationship," said Bremmer. Brilliant added, "[The US and China] have a mature relationship—bumpy, full of challenges. [It] has evolved, and we need to evolve with it."

Reported by Jennifer Tippins

philippe mckay | 10:03:10 10:02am
this was a great discussion compared to main stream american media. my suggestion: would linking up to fora.tv or another media site increase exposure in a positive direction? but i gotta ask...did Myron Brilliant namedrop the FBI? i think i saw a smirk of "how cool is that!" :-)
MYZ | 06:02:10 05:22pm
Si Min is right on, just a hypothetical litmus test (question): let's see whether GM or Chrysler or Ford will not blink an eye about quitting China? The answer, I am pretty sure, is not a difficult one. Good luck foreign frenemies!
Vivi | 06:02:10 05:08pm
I agree - corporations are feeling small strains right now but not until these strains affect the bottom line in a significant way will we see the business community taking any "principled stances" or making an effort to publicly criticize China. Google was an exception, not the coming norm.
Lemon | 06:02:10 04:57pm
Si Min lauds Google's departure as admirable, but it is difficult to say how principled its decision was. Google's business was growing slowly in China and only accounted for 1 to 2 percent of its revenue. And it did go along with Chinese censorship rules for years until it got burned by Chinese hackers. Nevertheless, Google's decision is surely unprecedented and has opened up a crucial discussion on business practices (and compromises) in China. But I doubt others will follow suit as a means to protest Chinese industrial or censorship policies unless they find it similarly financially convenient.
Si Min | 06:02:10 04:23pm
China's government policies and domestic competition are not the same thing, and calling the government's policies protectionist grossly oversimplifies the question. China remains, without a doubt, a market with massive untapped potential for US companies. US technology companies must find a way to function in the Chinese market if they are to remain competitive in the future. Chinese companies will have no qualms about toeing a government line at home, while aggressively competing for market share in more open markets abroad. Google's position, while admirable, does little to change the status quo of information control in China. Without engagement and integration between the US and Chinese economies, a breakthrough in China will not happen.

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