Western technology companies' view of China as the biggest pool of potential customers ever is looking less accurate than ever, after the Chinese government called for the formation of up to eight super-companies through mergers and acquisition by 2015. The calls came as part of government plans designed to urge the …
All your Base are belonging to us!
A planned economy. How did that work out for the Soviets? I understand this seems to be more of a hybrid system but if empires could simply command enterprises to be sucessful then the Roman empire would still be going strong. Then again China has such a huge internal market they don't have to succeed overseas to be one of the big boys.
Well, it's been working out pretty damn amazingly for the Chinese over the last couple of decades. I wish them all the best.
China has had a very successful State planned export driven economy; it is now shifting focus. Their particular form of "planning" resembles dirigisme (I guess you'll have to Google that), rather than dictation.
"Well, it's been working out pretty damn amazingly for the Chinese over the last couple of decades"
So it has, so it has. A global leader in pollution, a contender for world leader in poor working conditions, also a contender when it comes to poor human rights and pretend democracy. Oh, and a world leader in its holdings of increasingly devalued US treasuries.
So I think what you meant was "it's been working out pretty amazing for shit-for-brains white collar Westerners over the last couple of decades, who get their shiney tat at rock bottom prices, no questions asked, and export their pollution (and their blue collar and manual jobs), paying for it all with IOU's that they'll never be able to honour."
It started working for them when they relaxed their direct control and created special economic zones for business to work in. Imagine what would happen in the US government ordered all the companies in silicon valley to merge to create a new IBM or Oracle? When the UK government picked British Leyland as a winner to back it didn’t result in a British domination of the car market. I am not saying that any state can't play a role in the market, far from it but it is impossible to guarantee success, even for a state as rich and powerful as the Chinese one. I suspect the move is being prompted by some manufactures moving to places that are even cheaper than China to operate it in (now that wages are starting to rise a little bit and pollution is becoming to serious to ignore). They are trying to move up the food chain which is highly desirable from their point of view but you can’t just order companies that may have very little to offer each other to merge and create something new and successful. The internal Chinese market would probably be enough to keep the new companies going but internationally there’s already protectionism/security concerns being thrown in the face of Chinese firms. New state generated entities would face even greater problems.
It's a good idea, one western economies should follow
If the ultra paranoid USA won't allow Chinese sons to come and marry their darling NASDAQ daughters, then this is a great way for China to force western economies to give consent to future marriage proposals, if not, hen China and rest of Asia can pretty much set the pace of technological development for the rest of the world and eventually the US and EU will have to play ball or be left out of next generation tech developments. Silicon Valley is not the hotbed of innovation it once was. Cambridge and MIT still do great work but it's he Asian tech giants that are taking new developments from R&D into the market.
Re: It's a good idea, one western economies should follow
"If the ultra paranoid USA won't allow Chinese sons to come and marry their darling NASDAQ daughters, then this is a great way for China to force western economies to give consent to future marriage proposals,"
You need to read up on your industrial history, sunshine. The history of state involvement in industry is a grim one, whether in Soviet Russia, in 1960's Britain, or anywhere else. You can bang two companies together and call them a national champion, but you just end up having to subsidise the things until you can no longer afford to.
Britain used to make excellent and innovative aircraft - but the result of government industrial policy now means we have a single aerospace company that hasn't built an aircraft in its entirety for thirty years of more. France established Areva as its nuclear energy champion, but now its hoping to quietly fold that back into the state electricity monopoly in the hope of disguising the appalling performance of both.
Other evidence of industrial history is that competition generally strengthens an industry. So by reducing the number of competing outfits in China, they will reduce Chinese innovation and weaken the domestic tech base, but they will strengthen the rest of the world's technology companies who have to evolve or die (because for a few years post integration, the "new" combines can cruise on the innovation of the predecessor companies). Look at Lenovo, if we ignore last year, it's true to say that even underperformers like HP are earning net margins three times those of Lenovo.
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