So, does this help or hurt the big unprofitable SOE’s that run the heavy industry, logistics and power industries?

Couldn’t agree more about Chinese car quality, a Chinese friend has a Chery that rides horribly.

Cheap knock-offs are the trademark of Chinese products now but my main point remains an open challenge to rebuttal: yes, of course the Chinese can make a world-class, quality product and in time that quality product can and most probably will become an international brand, especially when Chinese businessmen opt to enlist overseas talent. There is the example of Japan, Korea, Taiwan and Hong Kong as historical precedents, first producing cheap goods then graduating to dominate certain industries by reason of a developed, local infrastructure of materials sourcing, manufacture and supply; there is the historical precedent of Chinese porcelains which was the most important trade item during the Song, Yuan and early Ming dynasties (no, I’m not stretching for examples); there is the very fact that mainland Chinese are in the main an intelligent and industrious people under relatively good governance, and highly opportunistic to boot, ready and willing to invest human capital and money to make a buck. I compare those qualities against the stodgy gate-keepers in charge at most US corporations and I weep.

Dan, I agree that there are probably thousands of industry specific Chinese brand leaders as there are from any of the EU countries and the US. The point wasn’t that in each industry there isn’t a significant Chinese presence, I know there is. The point is that China is the #3 economy in the world but they are no where near #3 in terms of leading brands.

Further, the idea that “made in China” taints rather than supports a brand, even within China (or maybe especially within China) says that there is much to be done before successful individual industry players become household names in the US.

I don’t buy brand because of where the “home office” is. I realize that means nothing anymore. But obviously many (most? some?) people do since melamine hurt car sales. How did it affect other industries?

Scott, what Chinese airlines, heavy industries and power consortiums are world leaders? I really don’t know. I know that the China airlines (not including HK) are in the red–as are most national carriers. But again, you’re right, profit isn’t the point.

And the concept of acceptable levels of government ownership, I’ll admit, has been RADICALLY changed in the last year, not for the better either, I don’t think. But that doesn’t mean that just because a country is self sufficient in, say oil, that it has an ability to export either soft or hard power. When the recession is nothing more than a fun memory (3-5 years from now) will we be as cavalier about the socialist/capitalist balance. By then it’ll be too late.

Have you ever driven a BYD car? I did just to test it out. It’s far worse than any Hyundai. BYD is getting a lot of press right now, but is any one in the US/EU going to buy it? A couple of reasons that Hyundai was successful so quickly was 1. decades of success (govt sponsored, I know) at home. 2. design centers in Western countries. 3. a 100,000 mile/10 year guarantee that made taking the risk of buying one worth it. Remember, even with rock bottom prices, no on bought Hyundai in the US until that program came out and showed people they could save money and have security at the same time. BYD has none of these things going for it. Yes it moves cars in China, but the quality is so poor that it’s almost comparing apples to oranges. No foreign presence, no original design, no successful marketing campaign–hell even their logo is a BMW rip off.

NO DOUBT the Chinese brand rush is coming. I just am wondering how much of the current system and brands will still be in tact when it arrives.

just one example, many indians migrated to usa, and are returning as things change …

and china will certainly have global brands, west is sort of ignorant still

You’ve got a great blog.

North Korea is dependent on China for a lot but it is not a client state, North Korea’s foreign policy and attitude is distinct and separate from China, and as evidenced again and again North Korea does not truckle to any outside power other than to advance itself. You give the examples of China applying pressure to Taiwan and Vietnam, both instances in which Chinese pressure accomplished nothing but a border war in Vietnam and the election of Chen Shuibian in Taiwan, hardly successes. North Korea is true to the national character to the extreme: stubborn and fearful of factions.

Yes, Chinese want their kids in US schools for the same reasons Koreans want their kids in US schools and pay beaucoup bucks and immigration maneuvering to do so. Your decision to where to send your child for a few years of rote memorization is your own and does not reflect the attitudes of Chinese or Korean parents who generally hate the educational system unless their child somehow manages the very top percentile and is so ensured of a spot in the top several universities. Note I do not entirely dismiss rote memorization, but at best it is an adjunct to an education which transmits the cultural heritage and enables a student to collate, analyze and express – in short, teaches them how to think rationally and express those thoughts; memorization should not pass as an excuse for an education .

You use cars as an example of possible government-funded losers and I counter with airlines, heavy industries and power consortiums, all three of which can be argued as strategic and essential to a nation’s economic independence and projection of soft power (I’ve finally used that word! perhaps inappropriately). Yes, the brands you quoted are China’s only face and are losing money – for now, but the future of very large and multinational corporations seems to be moving towards SOE’s and away from private bank or shareholder funded companies. Also, as recent events prove, there is very little advantage to a nation’s well-being and a lot of probable harm in short term profitability at the expense of the long term, a fact that seems to escape managers beholden to the quarterly results.