21 September 2006
Focusing in on China’s long-term view
By Jim Pinto
It’s interesting how people assume others have motivations similar to their own. There’s an old principle: “You can’t tell a liar you’re not lying.” Similarly, capitalists simply cannot understand non-capitalistic motivations. And therein lays the weakness.
Capitalism seems to have a myopic focus on short-term financial performance at the expense of long-term investment. Recognizing the gap between their present situation and Western advancement, the Chinese are exploiting that flaw.
China has already advanced to become America’s largest debtor, holding U.S. Treasury Notes that are financing America’s largest-ever deficit. While “money” is important to the U.S. in the short-term, few recognize it means little to China in the long term. China’s failed bid for Unocal notwithstanding (it failed by U.S. government intervention), it will steadily buy large and significant companies (e.g.: Lenovo buying IBM) as they progress to becoming a major world power. Its perspective is long-term.
In the 2 April 2005 issue of JimPinto.com eNews, Michael Ding wrote:
“There have been surprising technology developments during the last 200 years, and China was left far behind the advanced nations. But 200 years is very tiny compared with history. I am confident that China will catch up with advanced nations.”
You may have heard China will soon be selling a “Made in China” automobile in America. During recent discussions on this topic, someone suggested Hyundai gained significant U.S. market share within seven years, and perhaps China’s car will advance even sooner.
My point: We’re misleading ourselves by judging China by our own standards. China expects significant market share, but their perspective is NOT five-seven years; it’s 10-20 years. They measure time in decades and centuries, not quarters or years. They expect and intend to exploit Capitalism’s weakness for instant gratification.
In the past few years, many large companies in the U.S. and Europe have been rushing to do business in China. Perhaps in the pursuit of quarterly profits, they are trading away their advantages.
Related links:
Behind the byline
Jim Pinto is an industry analyst and founder of Action Instruments. You can e-mail him at jim@jimpinto.com or view his writings at www.JimPinto.com. Read the Table of Contents of his new book, Pinto’s Points at www.jimpinto.com/writings/points.html.
|
InTech Home