April 17, 2008
Sensitive University Research and Export Control Laws
You learn something everyday. Throughout the United States, university science departments perform sensitive research with military applications. The first case of spying I'd become aware of involving Chinese graduate students occurred at Cornell University in the early 1980s, evidently involving satellite imaging technology.
The grapevine through which I'd heard the rumor informed me that a former Chinese national Ph.D. candidate -- whom I once may have met at one of those awfully unproductive "you teach me Chinese, I teach you English" get-togethers -- had left the program to start a Chinese restaurant in the nearby town of Danby, where his contacts with the school allowed him a certain amount of access to confidential information performed on behalf of the Defense Department. I forget how much time he did. Of course, spying is not limited to Chinese -- it's just that my eyes are open to happenings in the Chinese community, rather than any other.
Some of the industrial spying stories are simply fascinating. Like the Ohio company, a leader in its field of metals processing, inviting a potential Taiwanese distributor into the factory. He was caught wearing shoes with magnetized soles to pick up metal filings on the floor of the factory, which would have later undergone metallurgical analysis. How such subterfuge was caught is anyone's guess. The Ohio company must have been on its toes. (Get the pun?) Of course, 10 years later, they've made significant investments in R&D sites in various cities in China, thereby heightening exposure to theft of secrets. One wonders the extent to which they 've been able to keep the door of the safe closed and locked.
I, for one, never knew that the assignment of a foreign national to a military research project in a university may require an export license. In today's recommended link, technology espionage meets university researchers meets the Defense Department meets export control laws. A fascinating web of intrigue for the lawyer to unravel.
Posted by Richard at 9:46 PM | Comments (0)April 10, 2008
Shipping Container Shortage in the United States -- What Gives?
Just a few years ago, container ships returned to China with much of their capacity unfilled. This situation has apparently changed.
Does a shortage of containers used to export product from the US imply a notable change in the balance of trade, as this article posits? or, is it simply that, as the article states:
Many shipping lines, including Maersk, have shifted container capacity away from the U.S., just when U.S. producers need them most.
I'm not sure I understand exactly what's happening. Are we genuinely seeing a reduction in total imports, in the rate of growth in imports or some other phenomenon? Posted by Richard at 1:55 PM | Comments (0)
March 21, 2008
Guest Post: Security, Chinese Imports and American Ports: the Current Status of the American C-TPAT Initiative
[Editor's note: The safety of consumer products imported from China now makes national news. But what of national security? Directly after 9/11, news reports on poor security oversight of major American ports flooded the media. Many federal programs, it seemed, were proposed to combat the gaping hole in American armor. Then silence.
To what extent have these programs succeeded? Indeed, no terrorist activity -- or none we know about -- has arrived on American shores via the container yards. Surely it would appear that the federal government has been most successful in deterring hostile activity.
Containers from China may or may not present significant security problems, but due to their number, the perception is, perhaps, too frightening to ignore entirely. We’re grateful to Juli Schwartz of Stein Shostak Shostak Pollack & O'Hara LLP for today's post on the C-TPAT program with regard to China. C-TPAT stands for Customs-Trade Partnership Against Terrorism. For more information on the program, click here.
The firm practices exclusively in the areas of customs and international trade law. Ms. Schwartz was joined in this article by colleagues Elon Pollack, Jason Li and Brian Murphy.]
China signaled its willingness to enter into an MOU [Memorandum of Understanding] on C-TPAT validations in late 2007, following Customs Commissioner Ralph Basham's meeting with his Chinese counterpart, Mu Xinsheng. [Editor's note: “A C-TPAT validation is a process through which the U.S. Customs and Border Protection (CBP) C-TPAT program meets with company representatives and visits selected domestic and foreign sites to verify supply chain security measures contained in the C-TPAT participant’s security profile are accurate and are being followed.”]
However, it does not appear that a final agreement has yet been reached. Negotiations are, ostensibly, ongoing, so an announcement later in the year may be forthcoming. Since 2003, however, there has been a cooperative agreement between the United States and China in place with respect to the Container Security Initiative (CSI). As implemented, the program affords CBP [US Customs and Border Protection] limited access to participating ports upon information that certain containers are high risk.
When these identifications are made, CBP may request that General Administration of PRC Customs (GACC) liaisons conduct electronic inspections of U.S. bound cargo. (CBP officials, however, are not allowed to perform law enforcement functions, including such inspections, directly.) The CSI program has been operational in the ports of Shanghai and Shenzhen since 2005. See this page.
Initially (for obvious reasons, given China's sensibilities), Chinese officials bristled at requests to permit factory inspections under the auspices of C-TPAT. Partially in response to this reluctance (and partially due to CBP personnel constraints), U.S. Customs developed a pilot program to outsource factory validations in China to private, third party companies that are properly vetted. There is nothing controversial about this program; many companies openly engage in similar in-house practices to secure their supply chains, anyway.
But while this solution may circumvent Chinese concerns about national sovereignty/extraterritoriality, the program remains underutilized; only eleven importers have registered under the pilot program. If China does enter into an agreement on CBP validations with the United States, C-TPAT inspections could potentially become as routine as, say, U.S. Department of Commerce visits made in the course of anti-dumping investigations.
Nonetheless, unless C-TPAT participation becomes mandatory, Chinese suppliers generally have little incentive to comply with C-TPAT requirements -- especially in view of the large number of intermediaries, such as trading companies, involved in China trade. In cases involving large U.S. buyers registered for C-TPAT, such entities have the bargaining power to force its suppliers to allow onsite inspections, but cost allocation (of validation fees, security upgrades, etc.) remains problematic. Anecdotally, the firm has at least one client that has confronted this realization as a result of its experience with C-TPAT.
In short, the prospects for greater C-TPAT acceptance in China are less than rosy. This projection notwithstanding, it is not the case that only those few ocean containers subject to C-TPAT requirements will be under increased scrutiny from U.S. Customs. In January of this year, CBP announced its proposed rule on the Advance Data Elements Project (a.k.a. "10 + 2" Security Filing), in which U.S. importers must supply ten additional data fields through electronic manifest, including, for example, the "container stuffing location." See this page. Under the proposed rule, failure to provide complete and accurate information may result in "no load" instructions.
Given the fluid and -- from the importer's perspective -- nebulous sequence of export processing functions in China, such an onus could pose a considerable challenge to parties on both ends of the transaction.
February 7, 2008
Federal Indictments in the "Melamine in the Pet Food" Scandal
An update on this story from 2007. Claiming thousands of pet deaths on Chinese imported gluten, adulterated with melamine, the U.S. Attorney's Office in Kansas City has indicted three companies on a variety of counts. Two are Chinese; one is a Nevada company located in Las Vegas. Felony counts were brought against the Chinese companies; misdemeanor counts against the American company. [Indictments here and here, courtesy of WSJ.]
The U.S. Attorney's Office claims that the manufacturer's custom's broker purposely mislabeled the gluten in order to deceive the Chinese government. The likely of success appears negligible at best -- there is scant, if any, cooperation between American and Chinese governments by law or by practice:
[U.S. Attorney John F. Wood] added that Chinese authorities took Linzhun into custody at the time his company was shut down, but he said he didn't know if Linzhun was still in custody.
The government's case against the sole American company also appears weak.
[Wood] added that prosecutors aren't alleging that the Millers and ChemNutra knew that the product was toxic, only that they were aware the product had been shipped into the U.S. under false pretenses and failed to notify their customers.
Is it possible for someone to be aware that a product has been shipped under "false pretenses," but not be aware of what those pretenses are?
Posted by Richard at 1:48 PM | Comments (0)January 23, 2008
Legal Outsourcing to India and Its
More on the nascent outsourcing of legal work to India. One shudders to see it, if only for reasons of professional ethics.
Gregg Kirchhoefer, an outsourcing lawyer with Kirkland & Ellis who spoke at last week's LPO summit, said there were still no industry standards for how a mishap or mistake would be handled.
"With U.S. lawyers, you always have the rules of ethics," he said. "Going to a service provider offshore, you have to replace that gap-filler with contract."
Good luck monitoring outsourced labor -- it is difficult enough when your people sit in an office down the hall.
But beyond the ethical problem lies greater danger to the welfare of the working American. When manufacturing left the United States, the battle cry was "Retrain for Services!" This left the man who works with his hands in the proverbial lurch.
And now, as service jobs begin their trek to balmier climes -- radiologists in India, customer service reps in the Philippines -- what will we have left here for the man of average drive, intelligence and skill to do?
Cheap goods at the local megafranchise. Adults earning just above the minimum wage for mindless work with ever lessening opportunities to advance. Serfs captive to bureaucratic business units -- are you not frightened by what this portends for the future?
Posted by Richard at 12:07 PM | Comments (0)December 15, 2007
Avoid Chinese Farmed Seafood Products
Having observed several fish farms in China -- shockingly unclean conditions -- I have always avoided the purchase of farmed fish and fish products originating anywhere in Asia, except for Japan. David Barboza's article strongly suggests that you do, too:
“Our waters here are filthy,” said Ye Chao, an eel and shrimp farmer who has 20 giant ponds in western Fuqing. “There are simply too many aquaculture farms in this area. They’re all discharging water here, fouling up other farms.”
One nervously laughs, hearing of outlandish harvesting methods illiterate peasants use on fish they themselves consume. Thai farmers using cheap pesticides to kill whole schools of fish for easy netting; Cambodians using grenades.
We absolutely can not trust the safety of seafood raised on farms in China. Regulatory schema adopted by the U.S. can not possibly be adequate protection. The FDA has been as ineffective over the past 10 years as any branch of the federal government, having been completely aware of the breadth of this problem, with evidently little movement. Only 210 import refusals for illegal drugs for the entire U.S.? (However, the FDA appears to be pleased to announce its advice on the safe sources of puffer fish.)
The Wall Street Journal reports:
A Chinese seafood company exempted from U.S. safety inspections under a pilot project has been cited by Canada after a cancer-causing antibiotic was detected in a shipment of frozen shrimp.
Wonder how that one got by us?
Only about 1% of most imports are subject to FDA inspections. But the FDA blocks all imports of five types of farm-raised seafood from China -- shrimp, catfish, eel, basa and dace -- until they are proved to be free or contaminants. Importers pay for the tests, which run up to $3,000 a shipment.
But tilapia, monkfish and pollock from China appear on our grocery shelves more often than any of these, except for shrimp. And shippers can become expertly creative at misnaming their exports. As Mr. Barboza writes, farmers are not about to give up on their livelihoods simply for the sake of the health of those who buy from them:
Farmers have coped with the toxic waters by mixing illegal veterinary drugs and pesticides into fish feed, which helps keep their stocks alive yet leaves poisonous and carcinogenic residues in seafood, posing health threats to consumers.
Close your wallet to these products. You can have no idea what you might ingest. On the other hand, I know what I am eating when I fry up the bluefish I caught as they ran the waters off Montauk in late summer.
Posted by Richard at 2:44 PM | Comments (1)December 4, 2007
Fairclough Visits Chery Factory
Gordon Fairclough of the Wall Street Journal visited Chery's main auto plant in Wuhu City in Anhui Province. As you may recall, Chery was -- remains? -- a focus of intellectual property disputes and safety concerns (crash test pix here; video, here). Rather surprisingly, Fairclough was allowed to video the main production line. Then again, perhaps not. Chery's deal with Chrysler to sell cars under the Dodge name in the U.S. is ample reason to garner positive publicity. Here's the WSJ video, courtesy of the WSJ site:
Posted by Richard at 1:24 PM | Comments (0)November 3, 2007
Diamonds for the Chinese Masses
Baseball for the Chinese masses? The State Department sending Cal Ripken to Shanghai? Yes, yes, I know something of the hallowed traditions of Japanese baseball and more recently the Taiwanese leagues. Those were begun on sandlots by boys imitating the American soldiers stationed on military bases, and they grew organically.
In the case of China, as with so much else, Chinese "interest" in the sport, of which there is extraordinarily little, is a top down affair, undoubtedly spurred on by the highest levels of sporting administration simply as a result of baseball's inclusion as an Olympic sport. Although eliminated from the 2012 Games, baseball may return in 2016. Surely, there is some long-term planning going on in the General Administration of Sport.
From the American State Department's viewpoint, what is the value in assisting a fledgling Chinese Olympic effort? Not, apparently, the expansion of commerce for sporting goods makers, whose manufacturing base has been China for many years. (Think about it, Mr. Rawlings said to his underlings, a glove for every boy in China! If it had never been said aloud, it was surely thought.)
An effort in fostering Friendship between the Great Chinese People and the Great American People? (That phrase circa 1975.) If so, the substance of our relations has not ventured far from Ping-Pong Diplomacy, but surely it has.
It looks more like a charm offensive. If media is to be believed, and I am not suggesting it should, much of the world has recently come to think very poorly of America. Baseball, strongly identified with the American, is a happy game -- a typically American pastime that might be used to get good press at a time of extraordinary need.
Baseball in China -- bizzare meeting place of the American tendency to proselytize; a State Department whose public relations operates in crisis mode; an aggresively competitive Chinese officialdom; and little boys who just want to play. I hope the kids have at least some fun while the adults make use of them for their own ends.
Posted by Richard at 3:26 PM | Comments (0)October 31, 2007
Chinese Chemicals Flow Unchecked to Market -- New York Times Investigative Piece
Apologies for sparsely posting of late, but my practice has not allowed me much spare time. In the meanwhile, read this article on unregulated Chinese chemical exports finding their way into the pharma drug chain. Podcast available.
Posted by Richard at 12:28 PM | Comments (0)September 21, 2007
Mattel Apologizes to China!
A shameful kow-tow.
"Our reputation has been damaged lately by these recalls," Thomas Debrowski, Mattel's executive vice president of worldwide operations, told China's quality watchdog chief, Li Changjiang, in the Chinese capital.
Mattel takes full responsibility for these recalls and apologizes personally to you, the Chinese people and all of our customers who received the toys."
"But it's important for everyone to understand that the vast majority of those products that we recalled were the result of a design flaw in Mattel's design, not through a manufacturing flaw in Chinese manufacturers."
As of 1300 UTC on the date of this posting, the Mattel website does not display any such statement.
Beware, all ye who dare to accuse.
UPDATE (2100 UTC):
Even the Wall Street Journal, that supposed bastion of the free market ideal, and its interviewees miss the point entirely:
it also would also seem logical for Mattel officials to take a respectful stance toward Chinese officials, as 65% of its products are built there. Drew Thompson, the director of China Studies at the Washington-based think thank, the Nixon Center, says maintaining good government relations is crucial for companies that want to build a lasting corporate presence in the country. "It's incredibly important," Mr. Thompson said. "It's everything." Bates Gill, who has worked as a China specialist at the Center for Strategic & International Studies, agrees, noting that while it's important to maintain good governmental relations in most countries, it might be more so in a country like China. "The government has a lot of control over the full range of factors of production in China," Mr. Gill said. "From land usage, regulatory questions, licensing, labor, all of these inputs for profitable production in China are, you know, controlled and can be manipulated by state authorities. So you have to be cautious and make sure that those relationships are positive."
Why is it that, when discussing China, shameful bootlicking subservience under threat, a requisite of behavior before the ancient Imperial court, is tolerated by the most modern of businessmen and academics? Why is it blithely explained away, simply as an act of necessity, even of survival? Lord Macartney refused to bow to Qian Long:
In Peking Macartney refused to kow-tow, or make the nine prostrations, unless a magistrate of equal rank would kneel, and bow nine times before a portrait of George III. Both sides declined to yield. Finally, not in the palace, but in a garden, informally, the British minister obtained audience of the emperor, but in reality he was received and treated as tribute-bearer from a vassal state. Trade was opened at Canton, but the British foreigners agreed to obey the local magistrates. In a word, there was no "extra-territoriality" as yet. The foreigners' place of business was called a "factory."
[Note: If enough readers ask for it, I will find the incident in Macartney's journal of the trip, published ca. 1793.]
Bravo for that Brit! Who has the spine now?
Mattel's apology should be publicly and vociferously deplored, not simply for the craven act itself, then for its assuredly lasting after-effects upon other foreign firms, who will now find themselves pressured to act similarly, at pain of who knows what sanction.
I regret to say I can not commiserate with Mattel executives on their decision to cave. Instead, this is a lesson to all those who would foolishly place most of their eggs in one basket. I've been saying it for years, boys, China is a tough town. They play for keeps. Diversify or suffer. Or they're going to have you by the short and curlies. If they don't already.
Posted by Richard at 1:55 PM | Comments (0)July 17, 2007
What Happens When Your Chinese Supplier Says: Sure, Go Ahead, Sue Me!
Because American states must, in most cases, enforce a judgment issued by the court of any other American state, Yanks in business tend to take for granted that fabulous feature of our legal system, known as "full faith and credit." [A dear relative was wont to say "for granite," but the malapropism is nevertheless just as valid, i.e., written in stone.]
But nations do not fall within the American constitutional system: American court judgments aren't not often enforced outside of the U.S. Unless, of course, there is a treaty between the U.S. and a foreign nation, there is little chance a court of that nation will recognize and enforce an American judgment. And, lest we forget, vice-versa.
For this brief post to be of any value to you, I must mention Don Clarke, who teaches at Harvard. He's written a brief article, entitled "The Enforcement of United States Court Judgments in China: A Research Note," and even if you are not an attorney, it is worth your time. Don says, in essence, that Chinese courts do not recognize and haven't enforced an American judgment.
My point in recommending you read Professor Clarke's article is this: here lies an important lesson for American companies who do business with China. Don't expect you can take an American judgment against a Chinese company to China and sue upon it. Your American judgment will not be recognized. Your more likely remedy would exist when the Chinese company has established sufficient presence in the U.S., such that you can sue the company in an American court. But unless that Chinese company has assets in the U.S. upon which you can levy, you are unlikely to recover very much at all.
What implications does this have, exactly? For importers, for example, the Golden Rule is to guard your money carefully -- before you even enter into a transaction with a Chinese exporter. Do not pay up front and then expect to receive product. You may not receive it once the money has left your hands. You will simply have no recourse.
The wise prefer to spend the extra fee to open a letter of credit, payable upon your acceptance of the product, rather than resort to prayer. Now prayer is a good thing, but its efficiency in trade is yet to be proven. Who wouldn't spend the extra? Many inexperienced traders. Perhaps you. Especially if you are new to importing -- and some I've spoken with are sourcing via the internet without even visiting the physical location of your provider -- you should never blindly pay cash up front. [If you haven't visited your supplier, you are neglecting essential due diligence.] But even if you have longstanding relationships with your suppliers, I would not recommend anything but L/C based transactions, except in the rarest circumstances (emergency circumstances where a mold needs to be opened immediately, etc.). Continue to pray, by all means, but, with some recourse in your own country, you won't need to pray so very urgently.
More on the practical aspects of Don's article in upcoming posts.
June 9, 2007
China Rejects U.S. Food Imports!
More of the old back and forth.
Only a piddling amount of money is involved -- as yet -- if any. It appears to be a simple statement without any details of the offending shipments. Did it really occur, i.e., is it an agressive tactic or only a mouthful of threat?
But that's not the most important question. Instead: who'll cave when the stakes are truly high? Will the Americans even last that long?
UPDATE (June 28, 2007)
From the New York Times:
The Food and Drug Administration today issued an alert challenging imports of five major types of farm-raised seafood from China, including shrimp and catfish, because testing found recurrent contamination from carcinogens and antibiotics.
The alert means that the fish will be allowed for sale in the United States only if testing proves that it is free of certain antibiotics and carcinogens
UPDATE (June 29, 2007):
American consumer reaction to Chinese food imports has been overwhelmingly negative. See for example this page.
Posted by Richard at 4:29 PM | Comments (0)May 31, 2007
China Tells the World Its Food Exports Are Completely Safe: Guaranteed! FDA Confiscates Six Tubes of Poisonous Chinese Toothpaste in the U.S.
Denial ain't a river in Egypt. It's in China.
UPDATE (June 1, 2007): FDA cries out to American public, DON'T BRUSH WITH CHINESE TOOTHPASTE. Of course, we are now aware it is a serious problem. After all, there is $3 million worth of it in the country in any one year. In other words, it's nowhere around, except perhaps Monterey Park, California, and Flushing, NY, both large centers of Chinese immigrant populations.
To the FDA -- What about the teas, the frozen fish, the shrimp, originating in China, that Americans buy in great quantities just about anywhere in the US?
UPDATE (June 2, 2007): The results of a nationwide search: FDA officials have discovered six (6) tubes of Chinese toothpaste.
Posted by Richard at 5:17 PM | Comments (0)May 24, 2007
Hold the Presses! FDA Stops Imports of Chinese Toothpaste
This suffices for an entire weekend's hilarity.
The government is stopping all imports of Chinese toothpaste to test for a deadly chemical reportedly found in tubes sold elsewhere in the world.
"There is absolutely no evidence of this toothpaste in the U.S. but it is what we believe a prudent and cautionary measure to protect the health of the American public," Arbesfeld said.
Just how much Chinese toothpaste is imported into the U.S.? About $3.3 million. Enough fluoride, tartar agent and humectant for Flushing, NY, perhaps. The American toothpaste market has been estimated at $1.5 billion annually.
An FDA ban -- taken the day after the Chinese negotiating team has left Washington, DC -- of a product stated by the FDA to be "absolutely" harmless is not the kind of symbolic action to impress the Chinese. It certainly doesn't impress the American public.
UPDATE (May 25, 2007): This podcast is really worth listening to. Sorry to spoil your dinners. (Click through to the webpage and then click the LISTEN button under the title, "As Imports Increase, a Tense Dependence on China."
UPDATE (May 30, 2007): Yumm... Honey, that monkfish from China is delicious. ARRGH! GAK! Oh, no, it's actually poisonous puffer fish!
Posted by Richard at 9:09 PM | Comments (0)May 22, 2007
US Treasury Secretary Critical of the Home Crowd, the new Trade Winds and more...
WSJ's article on Treasury Secretary Hank Paulson notes his frustration, not in dealing with Chinese officials, but with Americans. With respect to Social Security:
Mr. Paulson says it's "frustrating to be in an environment where well-meaning people on both sides of the aisle see there's a problem" but don't have the political will to act. "I've been asking people to come to the table, saying all options are on the table, and I'm getting a little tired of playing solitaire."
As to China, he appears to think that patience will, over time, result in the gains he is looking to achieve.
Under pressure to take a tougher stance, the administration has unilaterally imposed sanctions on China for alleged improper pricing of exports, and in a World Trade Organization complaint, has accused China of lax enforcement of copyright violations. Mr. Paulson didn't oppose the moves, although he knew it would be an obstacle to discussions, Treasury officials say. The Chinese reacted angrily, and Mr. Paulson spent about four hours on the phone with Ms. Wu to smooth over tensions, people familiar with the conversation say.
A quote verbatim would have been more revealing than this paraphrase. Did Mr. Paulson really say that the WTO IP complaint was an obstacle to his discussions with China? Isn't it, instead, a valuable tool of negotiation with China? The article thus leaves the reader wondering about his priorities and methods.
UPDATE (May 24, 2007): Chinese authorities have proven as incapable of restraining its prolific counterfeiting as American federal departments were of providing humanitarian assistance during hurricane Katrina.
On Tuesday, Ms. Wu said that efforts by some to “politicize” the Chinese-American relationship were “absolutely unacceptable.” This was taken as a reference to the American challenges to Chinese subsidies of exports and piracy of DVDs.
IP is precisely the kind of issue that the U.S. can not let go of. US representatives in China have been banging away on IP -- with words alone -- for at least 4 years, but it is chopping a redwood with an invisible axe.
The hot air -- the new Trade Winds? -- that has blown forth and back between these two Great Nations has accomplished scant little over these many years.
Action -- even if it is only symbolic -- will speak far louder. [Symbolic acts are typical of Chinese political tradition, e.g. to disarm an enemy by executing the leaders of the group and not the entire group itself.]
Susan C. Schwab, the United States trade representative, speaking at the conclusion of the talks Wednesday, made it clear that her own session with Chinese leaders had done little to narrow differences on these issues. “Suffice it to say we had a healthy exchange of views,” she said.
Meaning that the banquet was terrific.
But this quote gives us serious gastric distress:
Mr. Paulson said he was impatient for more concrete results himself and hoped there would be further progress before the third session of the dialogue, in Beijing in December.
“I have no doubt that we’re getting more results than we would have without this dialogue,” he said.Everyone expects results. And therein lies the problem. Posted by Richard at 2:03 PM | Comments (0)
May 18, 2007
US Treasury Dept. Efforts Move Exchange Rate by 67%! Melamine in the Pet Food, Trade Talks and More
All the news that fits, we print:
"The People’s Bank of China said in a statement posted on its Web site that it would allow the currency, known as the yuan or renminbi, to rise or fall up to 0.5 percent in each day’s trading. The current daily limit is 0.3 percent."
WOW!
***
UPDATE (May 19, 2007): Here we go again!
"There was hope that broader cooperation was on the way, but a lot has changed in a few months. On the American side, with Democrats in control of Congress and a presidential campaign gearing up, there's a growing impatience with the pace of economic reform in China and a slew of anti-Chinese trade bills pending."
Does Miss Cha mean that under the Republicans progress could have been made?
"In recent months, official rhetoric on U.S.-China trade has grown increasingly hostile."
Rhetoric is an empty tide that ebbs and flows between China and the U.S. For all the hot air, the Americans have been entirely unwilling or incapable of acting. As I have written for years, empty American threats prove worthless in the face of Chinese political administrators who are just as canny and talented (or stupid incompetent, as the case may be). The money continues to roll in. How can the Chinese be expected to step in and stop it?
Now, however, ammunition has passed up to the front lines. The melamine-in-the-pet-food scandal (see my post and podcast) has already galvanized the American consumer to avoid Chinese food products, and the FDA's response appears to be earnest. Will an American negotiator in a position of substantial authority make the link between the food impurities case and the trade war at large?
UPDATE (May 20, 2007): This morning's Washington Post picks up on this thread. The strong language of this front-page piece made me stutter for a second - I thought it was an editorial!
For years, U.S. inspection records show, China has flooded the United States with foods unfit for human consumption. And for years, FDA inspectors have simply returned to Chinese importers the small portion of those products they caught -- many of which turned up at U.S. borders again, making a second or third attempt at entry.
Now the confluence of two events -- the highly publicized contamination of U.S. chicken, pork and fish with tainted Chinese pet food ingredients and this week's resumption of high-level economic and trade talks with China -- has activists and members of Congress demanding that the United States tell China it is fed up.
Chinese food imports are a serious public health concern. Some have begun to see the extraordinary value of the pet food scandal in the context of trade negotiations. Let us hope the American negotiators are hammering away at it with the clobberingest mallet they can find.
UPDATE (May 21, 2007): Bloomberg:
``Paulson, as somebody who understood China, was trying to reach a conciliatory approach,'' says Nobel laureate Joseph Stiglitz, an economics professor at Columbia University in New York. ``The question is, has the political pressure taken away his freedom to move?''
With respect to Mr. Stiglitz, that is not the question. Rather, it is the validity of conciliation in negotiation. Conciliation is ineffective with Chinese, unless paired with its subtle black sheep twin brother, Threat.
And neither can be made of straw -- they will both go up in flame. As we've written in the past, one hand must caress while the other is held ready to strike.
Posted by Richard at 8:13 PM | Comments (3)October 13, 2006
IBM Moves Division HQ to Shenzhen
The New York Times reports that IBM has moved its procurement division from Somers, NY to Shenzhen.
Just 20 years ago, IBM had only a handful of staff resident in China, not buying, but selling PCs made elsewhere in Asia and the U.S. Yes, even in the U.S.
Tempus fugits. One is only surprised how long it took IBM to place its most senior procurement manager and his staff nearest its suppliers.
Posted by Richard at 12:08 PM | Comments (1)March 1, 2006
Audio: Not Made in China -- Another Danish Cartoon Scenario?
Click the little triangle to hear today's post.
"Not Made in China" -- Another Danish Cartoon Scenario?
[UPDATE: Shanghai Securities News picked up our post below and commented on it in the last two paragraphs of the article. In Chinese.]
[Editor’s Note: "China is coming," says Malcolm Bricklin, the entrepreneur who intends to introduce Chinese-manufactured automobiles to the American market. Does the American consumer need a further addition to an already overwhelming choice of middle-market cars that aren’t terribly well made? Gee whiz, we already have our stock of home-bred (home-brewed?) models.
Ah, but, it’s the price, you see. The export engine that forms the backbone of the Chinese economy incessantly pumps out passing product at low cost. And – everyone says this is the case – the consumer benefits. At least, plenty of consumers think they benefit from $75 microwave ovens, $50 DVD players and $7 reading spectacles. But casual conversation with Americans gives one the distinct impression that, while they acknowledge the savings, they are uneasy about its long-term effect.
Give me a dollar for each time this phrase has echoed in my ears over the past year and we would dine well (I’m salivating already): “We’re importing so much from China that soon no one will have the income to pay for it.” The point being the loss of manufacturing jobs. Despite the contrary claims of pols and economists, the general populace are very much out of step with the curious and often querulous statement that American manufacturing jobs have increased.
This writer, despite reading many studies and declarations, frankly doesn’t know which to believe. (When the logical mind fails to discern the truth, one falls back on the eyes and ears.) The fact is that the plethora of small factories that dotted my youthful stomping grounds here in the Northeast of the United States have all disappeared. Well, not entirely. Their corpses --- the hulks of their decrepit structures -- remain.
And those whose minds are flush with these memories – of men and women made to work with their hands and who easily found such work near home – are naturally concerned. Where, indeed, have they gone to find work? They’ve been retrained (whatever that may mean) for the service industry – stocking the shelves of those products they would have made themselves in an earlier time.
But they do so awkwardly, in my opinion. Their natural talents point them to manual factory labor, not the retail trade, and they crowd out those who are naturally inclined to services. Labor statistics showing job growth in the services industries – which exclude those who have “dropped out” of the labor pool because national statistics stop counting them -- fail to account for this serious disjointment.
Someone very bright will come along to cite statistics or studies in an attempt to prove my gut feeling wrong, but even I, who intends to purposeful objectivity in daily life and work, find it hard to dispel. Imagine the mindset of those Americans who haven’t been so trained.
Or those in Europe. Hence our post today. I have translated an editorial appearing today in the 上海证券报 (Shanghai Stocks), an influential newspaper. An entrepreneur in Europe has seized upon an idea evidently growing within the minds of consumers in Europe, and paralleling that in the United States. But Chinese, who view commerce as a natural extension of an ever-fervent nationalism, intend to fight back. Another Danish cartoon scenario?
This can’t be good. Goose liver pate is delicious, but the goose itself is force-fed and, it is said, would perish from an expanded liver if it weren’t sooner sacrificed on the altar of some gourmet. But consumers act of their own volition. They can’t be force fed in this capitalistic system. So, the question is this: if, knowing of the nascent Chinese attempt to prevent the legal registration of a trademark, would Americans ever see past their wallets to boycott products originating in China?
Unlikely, but one never knows. Chinese need to tread very carefully around this issue. It is not as simple as they seem to think. Fanning the proverbial flames may scorch the golden goose.]
Stopping the Registration of the Trademark “Not Made in China”
抵制"非中国制造"商标注册倡议书
“Made in China,” already a popular phrase, has given global consumers cheaper prices. But it has always gone hand in hand with defamation, even carrying with it a flavor of hatred.
This hatred has been transformed into an emotion, spreading globally as economies gradually become one system, and causing Chinese, who have themselves spread to all corners of the globe, to feel powerless.
This hatred has created ever greater misunderstandings, even causing some people to turn it into a commercial product.
Imagine what you’d feel when, like our friend, while in London, you picked up a microwave oven, and was shocked to find it printed thereon “NOT made in China.”
Imagine what it would be like if, like our compatriot in New York working in a job all would envy, receiving accolades, when one of his American colleagues waved a pair of shoes in his or her face that read “NOT made in China.”
This is not being hypochondriacal. The Alvito Company, registered in Gibraltar, has applied for the trademark to “Not made in China,” which was accepted by the “European Union Trademark Management Bureau.” If there are no objections from a third party within three months, the mark will become registered.
[Editor’s Note: The Bureau referred to is most likely the Office for Harmonization in the Internal Market (Trade Marks and Designs). Indeed, the mark exists – search here.]
When a trademark is registered, according to law, it becomes effective in the 25 nations of the EU. The chain reaction is that the U.S. may also approve the registration.
Truly, “Made in China” began with low value added products, and as China was situated in a period of economic development, “Made in China” left a bitter aftertaste. But China continues to develop, to “innovate,” and is precisely in that stage of moving upwards.
We can forgive them their eye to competitive challenge, but we must not look askance at their barbaric discourtesy.
As the saying goes, “all merchants are profiteers.” The initiator of this evil wind is a small company, and as such we may call this a small evil. When the brand is communicated to others, it will be distorted and not rectified. At that time, it will move toward an extreme: the subtle meaning of “not made in China” is that “Made in China” means “no good.” The greater its effect, the greater “Made in China” will be distorted.
Perhaps, when it comes to “Made in China,” we have a set of complicated feelings. But we obviously do not hope that it becomes as distorted as it has done here.
Fortunately, we have another opporuntity to prevent this situation from getting worse. We have the right to raise an objection with the European Community, and change the result.
We have one other directly viable road. Shanghai Securities News, China Stock Net, the United Nations and its personnel, and experts can raise a protest to the European Community. Our opinion is that it will receive close attention.
We hope that we all rise up to prevent the registration of this discriminatory trademark.
Pick up your pen, type at your keyboard, pick up your phone, use your emotional energy and your intelligence and do your part for the China you love.
Posted by Richard at 1:58 PM | Comments (0)
