2006-06-30

Translation: There is no downside selling to foreign capital

Original: 张五常:外资收购何害之有? 6/2006

Here is the translation:

There is no downside selling to foreign capital -- Ng-sheung Cheung

Three years ago anti-trust law was passed proposed by Beijing, it was supposed to go into effect on 1st Nov 2003. While reading it, I thought, there were many good things in US to learn from but you got this, anti-trust in American style; what kind of people would copy this from some so-called textbook? I wrote 10 essays in a row, it seemed that repelled it. Last year I read again that Beijing was going for anti-trust again, with another methodoloy. Not knowing the details, I thought, maybe it is good this time. So many SOEs rely on monopoly to survive, seems fun to go against them. One problem, the monopolies are protected by the state, isn't this left hand fighting right hand?

Recently anti-trust got on news again in the mainland, reportedly it was already 'preliminarily passed' [passed one stage]. [The content seems] Not easy to understand, it seems that the most important item is anti-merger, i.e. anti-merger by foreign capital. I may not have the precise interpretation, but [from what I understood] it basically says, for enterprises or groups with annual sales over RMB12bn, unless the deal is approved, cannot acquire another with sales over RMB0.8bn [is this a typo? should be 8bn?]. In recent months many commentaries flow around the internet are against foreign capital taking over Chinese enterprise -- concerned about so-called 'control', so-called 'drifting away fo assets', etc -- showing co-incidental similarities [with this part of the anti-trust law].

These are my opinions:
1) Anti-mergers is not a simple task, because there are many ways to get around it. It you really want to control this, you may need to go for litigation, and litigation may cause severe headache. If not done properly, this would only increase the transaction cost of merger and acquisition, or encourage splitting into smaller entities just to be merged in a number of transactions of smaller sizes [to get arounf the rules]. This does nothing good for the economic of the country.

2) When foreign capital acquires a Chinese company, for example, if the company suffers from capital squeeze when there is upheaval in China's economic cycle or macro-control, it will not be surprising that they may get a good deal. There is no need to be jealous, I do not know a single Chinese entrepreneur who is stupid [enough as to sell cheaply]. On the one hand, the foreign capitals are the best of the best in their home country, on the other, "a fierce tiger from foreign land may not rival a local bug' as Cantonese saying goes. I would put my money on the 'local bug'. [Harbin Brewery comes to mind]

3) For foreign companies operating in China [including the acquired companies], they will have to hire [some] Chinese managers. Knowledge, expertise and technology move into China accordingly. We should not care about the skin color of the big boss in these cases. Will the capital be withrawn later? As long as China maintains its current investment environment, they won't, more will come in instead. If the environment is unfavorable, everyone (not juse t thforeigners) will flee. As for the worry about foreign capital controlling Chinese economy, what a strange thought! Not even Beijing is able to control Chinese economy! Whoever has such phobia need to talk more to the young entrepreneurs in China today.

4) Globalization has been a hot topic for some time already. Back and forth it has been about internet, international exchange, trade growth, and gadgets like such. True examples of globalization can only (begin to) be observed in China: along the Yangtze delta, almost all of the factories are world class - this scene cannot be seen in any other country in the world. I once took a few Gweilo for a visit, they were all surprised and awed at waht they saw. On true globalization, China scored first. I do not recommend China to fight for those so-called leadership position -- do not ever try that -- but "honor is given by others, humility is caused by self", as the Cantonese saying goes, if today honor is delivered to us, it is wrong not to receive it.

5) Lastly, I need to say something about international politics which I know nothing about. I feel something is wrong. American military is unrivalled in the world, no one can counter. But some people are working somewhere on nuke, some others on terrorism. Such 'polarization' in the beginning of this millenium, who knows how to deal with them? Only god know how it would evolve into after so many years. I personally feel, there is possibility that it would go really bad.
China is still under reform, still needs to focus on economy, improve the livelihood of the people. To do this political upheaval has to be avoided, not to mention war. A safe investment environment is important. We cannot buy insurance for this, but we can try to assure it, by encouraging foreigners to invest and build factories in China. The more foreign investment in China, the more safe China will be. Economical interdependency and mutual interests are the best assurance of safety.
Australia, Canada and Russia are friendly toward China, because China's demand for the natural resources supported many people in their countries. Korea is friendly, because Samsung and the likes are making big money in China. Heads of Japan are talkative, perhaps due to political motives. But Japanese has a lot of investment in China and they have been quite courteous. Over two years ago there was even some strange theories called "Japan-Japan trade" [one of the "Japan" refers to Japanese company in China]. The theory thanks China. What about France and Germany? the so-called luxury brands (there are genuine goods besides the counter-feits), machinery, auto, etc. are ubiquitous in China. Boeing is secretly laughing whenever they hear the word 'China'. Microsfot also begins to smile now.
There is only one stupid boy: Chen Shui-Bian. There are 3000+ Taiwanese-owned factories in Kunshan [near Shangahai], even if you are psychotic you do not have to shout "Taiwan independence" so loud every day do you? [To be fair, perhaps none of these 3000 businesses voted for CSB, but then isn't that a vicious circle? In a broader sense, should a politician answer for all voters or only those who voted for him?]

---
张五常:外资收购何害之有?

张五常


三年前北京通过反垄断法例,准备二○○三年十一月一日推出。读内容,好学唔学,是美国式的反托拉斯,不知是谁从不知所谓的教科书般过来的。我一连骂了十篇文章,看来是骂回去了。去年读到北京又要再搞反垄断法,是另一套。不知内容,心想:可能不错,那么多国企靠垄断生存,反一反倒也过瘾。但那些垄断由国家维护,岂非左手反右手乎?

最近国内提出反垄断法再见新闻,据说初步通过了。不易读得懂,最主要的一项看来是反合并(mergers),反外资收购也。可能解错,意思是说:每年生意额达一百二十亿人民币的企业或集团,除非事先得到批准,不可收购一家每年生意额达八亿人民币的中国企业。这与几个月来网上不少言论反对外资收购中国企业──恐怕受到什么控制,什么资产流失云云──有雷同之处。

我的意见如下。

(一)反对合并不是那么简单,因为有不少暗渡陈仓的法门。真的要管,打起官司很头痛。管不成,会增加合并或收购的交易费用,或鼓励公司拆细、斩件成交,对国家的经济没有好处。

(二)外资收购中国企业,在中国经济急升而宏观调控可能使某些企业周转不灵的情况下,偶尔「执到」不足为奇。不要眼红:我认识的中国企业家没有一个是傻子。于是,这边厢唔系猛龙唔过江,那边厢猛虎不及地头虫。我要赌的钱会押在地头虫那边。

(三)外资在中国境内,雇用的是炎黄子孙,科技知识传进来,老板是什么肤色不要管。资金会调离吗?只要中国维持目前的投资环境,不会,会继续进来。环境不灵,任何人都会考虑离开。至于恐怕外资控制中国经济,奇哉怪也。北京也控制不住!有这恐惧症的人要多点拜会今天中国的年轻企业家。

(四)「地球一体化」这个话题热闹了好些日子了。说来说去还是些什么互联网、国际交流与贸易增长之类的玩意。真正的地球一体化只有在中国开始见到:长江三角洲一带,绝大部分工厂都是国际级的──这景象在其他国家不存在。带过几个鬼子佬去巡视,没有一个不叹为奇观。名符其实的地球一体化,中国无疑先拔头筹。我不建议中国要争取什么领导地位──千万不要那样做──但面系人??俾,架系自己丢。既然今天老外给足面子,却之不恭才对。

(五)最后要说一下我完全不懂的国际政治,觉得有点不妥。美国武器无敌天下,斗不过,一些地方搞核武,一些搞恐怖。这种二十一世纪一开始就出现的「两极分化」,有谁懂得怎样处理呢?若干年后会演变为怎样只有上苍知道,但个人觉得,很坏的可能存在。

中国还在改革,还要搞好经济,改善民生。这些工作切忌政治动汤,更勿论战争了。一个安全的投资环境重要。没有保险可以买,但可取的保障,是鼓励老外投资或设厂于神州。愈多外资在中国,中国愈安全。

经济的互相依靠,互相得益,是安全的最佳保障。澳洲、加拿大、俄国等对中国友善,因为中国对天然资源的需求养起这些国家不少人。韩国友善,因为什么三星之类在中国赚大钱。日本的头头得把口,可能有政治原因,但日本仔在中国投资多,相当客气,两年多前推出了「日日贸易」这个怪论,感谢中国。法国与德国呢?什么名牌(假货之外有真货)、机械、汽车等,满布神州。波音提到中国会偷笑,微软也开始微笑了。
傻佬只有一个:那是陈水扁。昆山有三千多家台湾厂商,就是发神经也不应该天天叫台独叫得那么大声吧。
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3 comments:

bobby fletcher said...

Hmmm, isn't large % foreign ownership of demoestic production bad?

I seem to remember back in the 80's when America cried out about Japan practiclly owning Hawaii (never mind Hawaii's lease-hold system) and Congress stepped in on Japanese acquisition of US company.

Not trying to compare, but it reminded me of opposition to Chinese companies acquisition spree in US.

Seem nobody welcome this sort of things.

Sun Bin said...

true.

but even in US there are some people arguing selling Unocal to China holds Chinese hostage in US.

IMO it was US who lost by forbidding the sales. and in 1980s US made a lot of money selling Rockefeller Center & Columbia to the Japanese at inflated price (and later bought back Rockefeller at a bargain i think?)

i guess it comes down to these quetions
1) do you get a good deal (selling it)?
2) does this harm your national security at all? (don't you have the ultimate control if they are lcoated on your soil?)

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