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Business in China: It's Complicated

Business in China: It's Complicated

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

June 7, 2010
by Jennifer Mattson