Protectionism in West is often just blocking business competition & hiding behind sinister politics?

My comments:  One or two decades ago, Western government and companies---especially American---complained against the rise of Japan, South Korea and Taiwan as "threats" to their economies and even national future. Is it now the turn of China and its flourishing export industries?

My question is this, should all companies---whether Western or Asian---compete based on business strategies, quality and pricing of products or services, and not misuing politics to block trade?

Here is an interesting Philippine newspaper column I just read today, and which I want to share:








Business World newspaper      October 24, 2012

Made in China

Static Marvin A. Tort

M.I.C. Made in China. Many items sold in the Philippines now, and perhaps in the rest of the world for that matter, are made in the People’s Republic of China. PROC, without doubt, has become the world’s factory for many consumer and durable goods. It is likewise a major source of many commodities. In fact, many fruits sold by vendors on Manila streets are from China.

 

Late last year I bought a Toshiba laptop in the US. It was a Japanese-brand computer, but made in China and then sold in the United States. It was as “international” as my wife’s iPad, which carried the US-brand Apple, with parts presumably from other parts of the world including Asia, and the tablet itself actually “assembled in China.”

I checked my Samsung phone recently and realized that it was made in Vietnam, although it carried a Korean brand and was presumably assembled from parts and components made in Korea and other parts of Asia. I wouldn’t be surprised if it carried China-made parts as well. My Nokia phone carries a Finnish brand but was made in China, too.

Aside from electronics, many electrical appliances and tools and equipment are now made in China. And they remain saleable despite concerns over quality and lifespan. Simply put, for many buyers, they feel they get better value by buying inexpensive items despite the possibility of more frequent replacement, as opposed to buying expensive for long-term durability.

It all depends, I guess, on the purpose and use. In any purchase decision, there will always be trade-offs. And as long as the buyer is willing to face the consequence of his purchase decision, getting things “on the cheap” may not be that bad a choice in the end. This has been my experience with my son’s toys, for instance. MIC works just as good as made elsewhere.

And this being the case, it becomes difficult for me to appreciate the great concern of the US Congress with respect to “spying” in relation to the sale of China-made telecommunication equipment in US territories. Somehow, I tend to think this is the consequence in part of the security paranoia that started after Sept. 11, 2001.

 

In recent weeks, local and international media have reported on a US Congress committee report warning against the use of China-made equipment, particularly those supplied by China’s Huawei and ZTE, for sensitive telecommunication infrastructure. US lawmakers noted that Chinese firms may not be free of state influence, and thus raised the possibility of these firms being pressured by the Chinese government to “spy” on the US and its citizens via the equipment they supply.

Of course, at the time the report was released by the US Congress, after months of investigation, it was still to receive or disclose any actual evidence of spying by the two firms. In short, US lawmakers are only warning against the possibility of espionage, not necessarily against the likelihood. And they take issue with the fact that Huawei’s founder used to be with the China military.

Frankly, I think the US Congress has gone overboard on this. Sadly for the Chinese firms, the US report seems to have made an impact on US allies like Canada and Australia, who are reportedly adopting a similar stance against China-made telecommunication equipment for sensitive installations such as national broadband networks and military communication.

In this line, I cannot help but admire the United Kingdom for taking a contrary stand. Perhaps the UK has gained a new sense of objectivity when it comes to US security concerns. Based on some accounts, there seems to be some regret over diving immediately in support of the US as was the case with going after weapons of mass destruction in Iraq.

One cannot blame the US Congress for its warning, however. Since 9/11, the US has been constantly under the threat of attack and terrorism. Tension in the Asia-Pacific of late has also been then result of the “repositioning” by both the US and China in the region. The US economy likewise needs a shot in the arm, and perhaps one way of doing this is by mitigating competition posed against US firms.

Huawei and ZTE are now among the biggest, if not the biggest, telecommunication equipment suppliers in the world. One report indicates that Huawei has already overtaken Ericsson as the world’s biggest telecommunication infrastructure maker. And in the networking business, particularly routers, it has reportedly bested former top dog Cisco Systems of California.

 

As such, there may be some truth to the allegation that US networking giant Cisco is partly responsible for the US congressional attack on Huawei and ZTE, with online talk of a “Cisco marketing campaign” that was allegedly aiming to cause suspicion about its biggest competitor, Huawei, and discrediting it particularly in the US market.

Cisco chief executive John Chamber was earlier quoted in press interviews as saying that he felt “Huawei is our biggest ‘long-term threat.’” The current situation is made amusing by the fact that Cisco itself also manufactures in China, and was at one time partnered with Huawei’s direct competitor, fellow Chinese manufacturer ZTE. Only recently has it severed ties with ZTE after accusing the Chinese firm of selling Cisco technology to Iran despite a trade embargo.

One report online indicated that Huawei has reached the top spot despite its very limited presence in the US, which along with China are the two biggest telecommunication markets in the world. And by going after Huawei now, the US market -- and the markets of its allies Canada and Australia -- can continue to reserve themselves for US suppliers only, i.e. Cisco.

For its part, ZTE wants the US Congress to even expand its investigation to “include every company making equipment in China, including the Western vendors.” ZTE said this was “the only way to truly protect US equipment and US national security. Virtually all of the telecom infrastructure equipment now sold in the US and throughout the world contains components made, in whole or in part, in China. That includes the equipment manufactured and sold by every Western vendor in the United States, much of which is made by Chinese joint venture partners and suppliers.”

And this is the crux of the matter. That China makes many of the things in use in the world today is the undeniable fact. And this is not likely to change overnight. Given ZTE’s assertion that most equipment sold globally now carries components made in whole or in part in China, what then is the real point of the US Congress’ warning?

 

(Huawei vice-president for external affairs William "Bill" Plumber)

One online report quoting Huawei external affairs VP in the US, William “Bill” Plummer, seems to put things in perspective when he said that “sinister perceptions of Huawei have cost it a huge amount of business in the US, even though European and Canadian carriers haven’t shied away from dealing with the vendor.”

He said Huawei was already on the verge of becoming the third supplier in a major US telecommunication company’s LTE contract and CDMA network overhaul, but politics got in the way and “non-market forces dictated the result.” The contract reportedly went to a Korean supplier instead. Obviously, politics was only the tool, but the objective was business.

matort@yahoo.com