No quick fix in war or business

All is fair in love and war; taking this business policy forward, four countries ganged up against China to make a quick fix of its rise as  business superpower. To do just that they were bent upon imposing sanctions. But what transpired was something unexpected, proving once again the theorem “no quick fix in war or business.”

In geoeconomics, we often see sanctions being imposed by a much bigger over a weakling. Iran for example, compared to US is a minion, so the suffering is immeasurable. On the other hand, China is a dragon and can withstand any number of body blows. Like a trained pugilist she can also deliver counter punch that can rattle her opponent.

It all started when US imposed sanctions against Huawei, TikTok, Semiconductor Manufacturing International Corporation (SMIC) along with payments platforms Alipay and WeChat Pay.  China did not respond but quietly strengthened her legal challenges that protect her interest in international forum and passed a slew of legislation targeting foreign companies and officials operating in China.

Emboldened by this mild response by China, US went overdrive and sought for a direct confrontation. To break the confidence stand of China, US corralled three more parties, namely, EU, UK & Canada prevailing upon them to impose travel restrictions and asset freezes on Chinese officials citing harassment of Muslims in Xinxiang. This time China did not play ball.

Instead, China counter punched selecting the weak link in the chain by targeting Ten EU politicians and four connected entities of European origin. Sanctions were imposed over the men and companies debarring them from entering mainland China, Hong Kong and Macau, and restricting their related companies or institutions doing business within China henceforth.

Here is the logic behind the plan of attack: 

EU business strategy is clearly focussed on improving the trade balance between her and China the last recorded figure being Euro 164 billion in 2019. To balance this, an agreement in principle was signed between EU & China in late 2020.  This agreement seeks to:

a) Create better balance in EU – China Trade relationship

b) Open China for European investment such that EU companies can operate and compete with Chinese firms inside China

Now EU is caught in a neatly laid trap. She must either opt to go along with US on confrontational path which needless to say a complete massacre for them or be sensible enough to retract all hostile actions and sue for peace. With or without this agreement Chinese steamroller rolls by the land of Europe because, all the EU members sans Ireland have bilateral trade relationship with China! 

 

Cheers! 

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist