China business strategy, four negatives

Spellbound by the geoeconomics progress made by China, global reaction to its business strategy is of mixed nature. Whereas the west is harping on human rights violations & business manipulations, developing world is awed by the stellar performance of China and line up to work more with her. Independent observers, however observe several negatives. Four of these negatives are culled for your reading pleasure:

Topping as number one is the selfish image of Chinese businessmen that irritates business partners be in east or west. “China never compromises”, is the refrain many are singing across the globe who have dealt with Chinese negotiators. Give and take as an ingredient is awfully short in China business menu. The famous Hugo Grotius dictum “pacta sun servanda” (agreement must be kept) is strictly followed by them. Even after the clause “Rebus sic stantibus” meaning unenforceability due to changed circumstances is added they would not compromise on their stand of strict performance.

Secondly, an item that detractors always spotlight is China does not forgive debt like the West. Once you are in debt, China requires you to borrow more from them to pay the existing debt with interest due. Known in the west as “Debt Trap” more countries are converted to hard core debtors across the globe. According to Hayward Business Review “In total, the Chinese state and its subsidiaries have lent about $1.5 trillion in direct loans and trade credits to more than 150 countries around the globe. This has turned China into the world’s largest official creditor — surpassing traditional, official lenders such as the World Bank, the IMF, or all OECD creditor governments combined”(Here).

China is not seen as an honest business partner when it comes to striking business deals is often highlighted by contenders. Hobnobbing with corrupt politicians and autocratic national leaders China gives them blank check to write the amount as they please. Known as “check book diplomacy” this type of largesse bestowed on politicians end in the country concerned losing valuable assets. Tajikistan was forced to part with almost one thousand kilometres of Pamir valley recently as part compensation for writing off debt that remained unpaid. Dramatizing the famous Shylock scene asking for the pound of flesh in William Shakespeare’s Merchant of Venice, this incident is self-explanatory.

Fourth and final negative is the singularity of the purpose of Chinese business which demand that other partner conforms to its demands in pursuing the goals & objectives of the China business rather than common objectives. In a critique on the unsavoury conditions that could emanate consequent to the funding by China for Gwadar Port of Pakistan by F.S. Aijazuddin published in the Dawn newspaper on August 29, 2013, the writer warns: “They have without blinking made unimaginable commitments to provide all the resources necessary — monetary, materiel and manpower — to make Gwadar a functioning reality. They have calculated the risks. They have quantified the costs. They are clear what dividends to expect (Here)”.

Needless to say, that unravelling Chinese business strategy at the backdrop of geoeconomics is the need of the hour now!

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist